The all-you-can-consume model of content distribution on the Internet made popular by Netflix and Spotify is set to infiltrate the magazine industry.
For $9.99 a month, readers can now access unlimited digital copies of ESPN the Magazine, Maxim, New York and 2,000 more magazine titles worldwide through a new online service called Magzter Gold.
As magazine publishers struggle to get a declining number of print subscribers to switch to digital magazines delivered to tablets and phones, they're experimenting with different delivery formats and subscription models, trying to hit on something that works. Magzter Gold, which went online Monday, is the latest attempt.
Worldwide magazine industry revenue — about $100 billion — has been in decline since 2010, according to report released in June by the business consulting firm PricewaterhouseCoopers. Meantime, data from the Alliance for Audited Media show that digital consumption of magazines remains under 4% of total U.S. circulation.
"Digital magazines are growing, but not the way publishers expected," said Vijay Radhakrishnan, a Magzter co-founder. "It's growing slowly and the engagement level of magazines is not that great."
Part of the problem is the same as that faced by the newspaper business: Readers have grown used to receiving news, stories and photos for free. As they experiment with ideas like Magzter, some magazines are likely to cut back on what they offer free online.
"You're trying to change consumer habits of having so much great content available for free," said Craig Huber, an independent media industry analyst at Huber Research. "That's been very tough for the past 20 years."
Good music and Hollywood-caliber videos are treated as a scarce resource. But the Internet is saturated with worthwhile articles, Huber said. That's among the challenges stifling growth in the magazine publishing industry.
Switching readers from free-of-charge websites to paid-for digital experiences is crucial to sustaining any increases in the Internet economy, Huber said. Magazines rely on subscribers for about $1 in every $3 of revenue, he said.
Magzter Gold isn't the first company to offer magazine subscription bundles online. Before introducing Gold, it already was offering digital subscriptions for around 5,000 magazines, but not the all-you-can-consume model.
One of Magzter's competitors, digital newsstand Zinio, offers access to six magazines out of its lineup of 250 titles for $5 a month through its Z-Pass package. Options are as varied as Southern Living and Playboy.
Another competitor, Next Issue, charges up to $14.99 a month for subscriptions to dozens of magazines. Its selection spans some of the nation's most popular titles, which Magzter Gold doesn't offer, such as National Geographic, People and Better Homes and Gardens. Six major media companies, including Time Inc., Meredith and Hearst Corp., are partners in Next Issue. But nearly three years since the service launched, the subscriber count is a tiny fraction of total magazine circulation, according to the company.
After the release of the iPad in 2010, magazine publishers thought they could build their own apps, draw tons of digital subscribers and coast into the Internet economy without the troubles that the newspaper, music, film and TV industries have endured. But it hasn't been so.
Consumers have found the experience of discovering new magazines to be poor. The steep print subscription discounts they had been used to aren't as widely available; barely 10% of readers traditionally have paid the full newsstand price, Huber said.
When readers did subscribe, they forgot to check for new issues on their tablets or smartphones, Radhakrishnan said.
Magzter has made apps for about 1,600 magazines, so it has seen the problems firsthand, he said. The subscription bundles are being pitched as a more affordable option for consumers. They might pay more than they are used to now, but they'll also have access to far more content.
To ease readers in, Magzter is also selling a $4.99-a-month plan that limits reading to five magazines of a customer's choosing. But those magazines could be different ones each month, meaning someone could potentially access as many as 60 magazines a year for $60.
Both of Magzter's plans include access to back issues. The company's revenue split with publishers is based on how many pages are read, the price of a magazine and the time spent on pages.
Magzter and its competitors are still struggling with making the experience of reading a magazine online consumer friendly.
For instance, how do they replicate the ability of friends to pass around copies of a magazine? Or with individual articles more important to many consumers than an entire issue, how do they create a service in which readers can browse articles by topic, for example, rather than by magazine title? Where does sharing content on social media fit in?
In general, the experience needs to become as fast and slick as picking up a magazine from the mailbox and flipping through it in a few seconds. The issues will be scrutinized by experiments in the coming months, Radhakrishnan said.
What he thinks is certain is that Magzter's 24 million existing users who pay for individual magazines want to read more magazines.
"This opens up an inventory," he said.