Maghound Dynamics Not Competitive With Newsstand, Say Publishers 

Two non-Time Inc. publishers participating in Time Inc.’s Maghound subscription service, launched in September, say they view the service as presenting no threat to their newsstand sales because its model and consumer dynamics match those of subscriptions rather than primarily impulse-driven single-copy sales.

Maghound enables consumers to pay single, monthly fees for subscriptions to multiple magazine titles, chosen from a list that currently includes more than 200 titles. A consumer may change one or more of the magazines being received on a month-to-month basis, if so desired, instead of committing to a year or other predetermined subscription term.

During last month’s FMA Day, an annual event for publishing consumer marketing professionals, John McCarthy, VP, direct marketing for Rodale, and Rich Fontaine, SVP, consumer marketing for Martha Stewart Living Omnimedia, Inc., both said their primary potential concern about Maghound would be watching how many existing subscribers’ renewals, in particular, shift to Maghound. That’s because, on the subscription side, renewals via traditional sources like direct mail are generally publishers’ most profitable source.

However, asked whether they’re concerned about whether Maghound might “cannibalize” single-copy sales, each said that this is not considered a potential downside.

“Frankly, the newsstand question hadn’t even come to mind until a wholesaler brought it up,” said Fontaine, because “the consumer’s mindset [in using Maghound] is not like the newsstand mindset. Placing magazine orders on this system is not an impulse buy.”

As with any subscription source, consumers who order subscriptions through Maghound are advised that it will take four to six weeks to receive their first issues, meaning that consumers can’t obtain an issue currently on the newsstand when they opt to sign up for the service. Once they begin receiving issues, these are delivered on the same schedules as standard magazine subscriptions vis-à-vis when a given issue appears in stores.

The great majority of newsstand sales (nearly two-thirds, for some titles) are motivated by in-store, cover-driven impulse or an immediate, situational desire for a magazine such as wanting reading material for a trip or vacation, according to magazine purchasing behavior studies regularly conducted by third-party researchers for Time Inc. across several of its leading newsstand titles, says Maghound Enterprises president Dave Ventresca.

Circulation audit bureaus have for now classified Maghound copies as single-copies because they do not fit the standard model of a predetermined subscription term, but a new audit classification eventually may be needed to better reflect the service’s no-fixed-term membership model if it becomes a sufficiently popular means of buying magazines, Ventresca notes.

The two publishing executives on the FMA panel said that they view the service as a new way to attract younger people, in particular, to magazine reading by providing a more flexible, up-to-date and online way of trying various titles. Publishing industry studies have consistently confirmed that consumers who subscribe to magazines are also more likely than consumers in general to purchase magazines on the newsstand, adds Ventresca.

Fontaine and McCarthy also noted that Maghound’s subscription pricing levels are above the discounted subscription offers available for many magazines through traditional subscription sources. This makes this service a potentially attractive new-reader source for publishers on an economics basis.

At the same time, because Maghound’s pricing levels represent less of a differential between single-copy cover prices and subscription offers available through other channels, it’s unlikely to attract consumers motivated by bargain-hunting, says Ventresca.

“For many publisher-clients who are trying Maghound and of course for Time Inc. itself, newsstand sales are one of our most profitable circulation channels and also of key importance to  our advertisers in terms of demonstrating a magazine’s value to consumers,” he stresses.