Magazine Time Shares

by Braden Kelley

I came across an interesting online/offline service called MagHound yesterday that probably falls into the category of useful but not valuable.

Translation – While it may be a good idea, it is likely to fail to make money.

Why do I think it will fail?

Here are ten reasons:

  1. Do enough people really want to try lots of different magazines at once or actively manage switching amongst different ones every month?
  2. Maghound must build not only brand awareness, but also customer understanding of a new way of buying magazines
  3. Even if they succeed in building awareness, customer inertia is a powerful force to overcome
  4. Annual subscriptions are cheaper (I get a lot of $10 offers these days)
  5. Potential Supplier Revolt – The kind of customers Maghound may be most likely to attract, may not be the kind of customers that the magazine companies want (people who sign up for a short time and then quit or switch)
  6. Ultimately, magazines want subscribers because they can then provide stable demographic data to advertisers
  7. Consumers generally acquire magazines one at a time, which seems more doable to the consumer (Who has time to read seven magazines a month?)
  8. Subscriber acquisition costs are high, and acquisition of “switchers” is likely to be greater when you consider the additional costs to educate people on the value of the concept
  9. Maghound classifies certain magazines as “premium” (from $0.50 to $6.75 per month extra)
  10. If they are trying to pursue a value innovation strategy and go after non-consumers, are they really going to be able to attract them with this strategy?

How might they prove me wrong?

Here are five ways:

  1. Market size may prove larger than I imagine
  2. Average user tenure in any one magazine may prove longer than I imagine
  3. Maghound may find a market competing against the newsstand instead of subscriptions
  4. Maghound may find successful ways of pushing subscribers to magazines they haven’t experienced (hopefully by expanding their subscription instead of switching within it)
  5. Customer acquisition prove to be lower than the traditional subscription model instead of higher

What do you think?

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