Can Maghound Spark a Sagging Magazine Industry?

Now in his second stint with Time Inc. Consumer Marketing, Dave Ventresca has seen his share of booms and busts since the rise of the Internet. Now president of Maghound Enterprises, a Time Inc. subsidiary and the group behind this week's launch of the online service for magazine subscriptions, Ventresca has worked for Internet startups (Uproar.com) and juggernauts (AOL). But since leaving Time Inc. in 1999, he's noticed most media channels tilting toward the consumer in their approach. The rise of services like NetFlix, TiVO and Apple's iTunes have empowered the consumer, and yet Ventresca believes the magazine industry has been slow to produce such an innovation.Enter Maghound. The magazine industry's answer to cable television, one-at-a-time song downloads and other media innovations that have transformed the consumer experience in recent years. Ventresca spoke with Publishing Executive Inbox about the genesis of the four-year-long project, his aspirations for the new service, and its significance to the industry.Inbox: When was the idea for Maghound initially proposed, and how did it get underway?Dave Ventresca: An industry consultant … Chip Block … had the idea along with Steve Sax, who's now publisher of Real Simple. The two of them did the initial brainstorming, and it expanded from there. They pitched it to Brian Wolfe, the senior vice president of consumer marketing for Time Inc. Brian seemed to like the idea and wanted to see what consumers had to say about it. At that point, we started to do some focus groups, which went well. Then we did an online, quantitative survey testing a variety of different variables, testing price points, etc. That's really when the program started to build some momentum.Inbox: How much of a driver was the success of online services like iTunes and Netflix in the decision to launch this service?Ventresca: That's a good point. We looked at a lot of other media channels -- music, cable television, books, DVDs -- all of these other media channels had these innovative and transformative new services that empowered the consumer. They offer the consumer greater flexibility, choice, control, personalization. … These services empower the consumer in ways that we didn't see happening in magazines. Suddenly, the ways that we traditionally sell magazines started to feel a little antiquated. We still sell annual fixed-term subscriptions like we have for decades. We still sell individual, single copies at retail like we have for decades. And so we felt that there wasn't really any transformative innovation in the magazine category like there had been in other categories. So that was the motivation. Maghound is our attempt to bring magazines on par [with these other media categories].Inbox: What is the percentage of titles being offered through Maghound that are not published by Time Inc.?Ventresca: Time Inc. now represents a smaller percentage, because we're increasing our title roster every week. Now, if you go to the Web site, there are about 240 titles already live. And we have another dozen or so titles that have already signed up [with Maghound] -- we just haven't loaded their digital assets yet. … We're signing up new titles all the time.Of the 240 titles on there now, 24 or 25 are Time Inc. brands. And that percentage will naturally decrease as we bring in titles from other publishers.Inbox: What is the strategy for pursuing publishers not already participating in Maghound?Ventresca: Obviously this is a new model and in many ways a test. This is a beta launch, so we want to see how consumers interact with the live service. But the pitch [to publishers] really is that we think this is an attractive circulation source. It's attractive financially to them, because we pay a fixed dollar amount to each publisher for every copy of every issue that we sell. So there's no upfront cost to participate, and they make money from every issue that we sell. Additionally, based on the research studies and marketing testing that we've done, we feel confident that we can bring incremental readers to each brand. And, perhaps more importantly, we can bring the right type of reader. We can bring good, attractive demographics.Inbox: Can you disclose any particulars on the revenue-sharing arrangements between Maghound and participating publishers?Ventresca: It's title by title. I can't really get into the full methodology, but it's title by title.Inbox: Going forward, how will Maghound be promoted?Ventresca: This is a beta test. We want to see how consumers navigate through the site. We want to get a sense of how many magazines per account they're ordering, how frequently they switch from one title to another, how frequently they cancel during the free month trial period, how frequently they upgrade from three titles to five and from five to seven. So we want to get answers to those types of questions and, at the same time, continue to roll out new features and functionality into the Web site. We want to accomplish all of those things before we do a large, expensive and aggressive marketing campaign. So our marketing is modest, but that's by design during this beta period.Inbox: It would seem that lower prices can be found than what Maghound is offering if consumers search for them. Is that a concern?Ventresca: We want consumers to view Maghound as a good deal. But this is not a deep-discount, bargain-basement pricing, lowest-place-to-go on the Internet type of approach. At its core, Maghound is a service brand, not a discount/value brand. And we think that's important because we don't want to devalue magazines in the marketplace. We think that's happening too much already in other channels. A lot of those [discount] offers are temporarily test offers anyway. So, yes, someone can always search the Internet to find the lowest price available, whether it's a price that's authorized by the publisher or not.But the second thing is that a lot of it too depends on the magazine that you're buying. … Depending on your title mix, you might be paying a couple dollars more [with Maghound] or a couple dollars less.Inbox: What's on the horizon for Maghound and are digital editions a possibility in the future?Ventresca: We definitely have expansion plans. We're already starting to design and program for additional features and functionality for the site. And digital is certainly one of those areas. How digital gets executed is yet to be determined, meaning are we going to have stand-alone, a la carte digital issues that we're going to charge for? Are we going to have a digital article or two that we would send to the consumer as a bonus or thank-you gift? Or are we going to post digital articles on the site to help improve the shopping experience so that consumers get a better sense of what each brand is about before they add to their account?So those are three distinct models we could go to. We're just not sure which model or group of models we will embrace, but we know that digital is part of our future for sure.

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Can Maghound Spark a Sagging Magazine Industry?

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