Magazine Innovation in Practice: Maggwire, the iTunes for magazines?August 3, 2009
If someone calls you and says, “We are going to be to the magazine industry what iTunes is to the music industry,” you can’t but stop and listen. Three investment bankers, Ryan Klenovich, Jian Chai, Steve DeWald, left Deutsche Bank to establish Maggwire. “The team’s mission is to establish the leading media distribution company for magazines online similar to what iTunes accomplished for music.” Two of the founders Ryan and Jian told me that “the Maggwire vision began with their passions for reading magazines and the need for an online magazine community.” The founders have a video that explains how Maggwire works and a plan to become the new distribution channel for great magazine content. Check below to see the video and read my interview with the founders below.
An ambitious plan that aims to be the target destination for any one interested in magazines and magazine articles. What follows is the phone conversation that I had with the folks at Maggwire explaining and expanding on their vision and the future of Maggwire and the magazine industry.
SH: What’s Maggwire?
Maggwire: We’re trying to become an online destination for reading magazines, similar to YouTube where users associate YouTube as the online destination for viewing videos. We’re not trying to replace print, but I’m really baffled by how there is no central online destination for reading magazines. That’s really what we’re trying to accomplish. In a lot of ways I think our website will never replace the print magazine itself, but what we can do is offer users a different avenue to look at a broad range of articles. A user typically has three or four favorite magazines and for that user to spend the money and subscribe to more than a dozen magazines is not really practical, because the person doesn’t really have enough time to read all the magazines. So what we can offer to the user is a range of magazine titles. Currently we have over 650 magazines and we’re pulling about 10,000 articles a week. A user can read articles from business to tennis, to automotive as well as outdoors, food and dining and we have many lifestyle magazines such as aviation, boating and so forth.
SH: How would Maggwire work and why should publishers be excited about this new website?
MaggWire: Our goal is to establish that brand name to become an online destination for reading magazines, and what we want to do is reach a critical mass with these free articles so we can start building a learning algorithm. This learning algorithm is very similar to the Genius play list in iTunes and also very similar to the Netflix movie recommendation engine. Once we reach that critical mass, we can truly become a distribution channel for the magazine publishers in that they can distribute premium digital content to the user. You have all these mobile e-ink devices coming out such as the Kindle and the Sony E-book reader, I expect in two or three years, these e-ink devices will have color capability, so that you can actually look at a magazine in color. Our goal is to be on the forefront of that technology shift and once we have this critical data on user reading preferences, we can use all the user data on behavior and trends and develop the software to sync up all this digital content directly into the users e-ink devices to be allowing both an online and offline experience.
Why would the publishers be excited about Maggwire? Initially, the excitement is going to come from the added traffic I believe we’re going to add to their site. Most magazines have a website, and they all have different levels of content they provide, everything from cover stories to blogs. Initially, we are trying to eliminate blogs from our site. We only want to aggregate the high quality print content that publishers decide to offer for free in the public domain online, and they’re making money by us driving traffic to their websites and now their serving more ads to more users and securing new subscribers. We’re trying to help expose these brands and articles to a wider audience.
Additionally, using our reader data and trend analysis, publishers will be able to deliver highly personalized advertisements based on a complete understanding of how each user behaves, which will help to raise online ad rates. Advertisement delivery has to be relevant, smooth, seamless, and user targeted for readers to actually enjoy beautiful digital ads as they enjoy print magazine ads. This level of real time targeting can not be accomplished with static “digital editions.”
SH: So what your are doing is scanning the web for the free articles that the magazines are posting up on their websites…
Maggwire: As of right now, yes. You can call us the Google of magazines, where we crawl the web for these great magazine articles, the users go on there to read and rate the articles, and the idea is that the best ones will come to the top. Users can simply come here and easily browse magazines. Obviously these new mobile E Ink devices will enhance the whole state of mind experienced when reading. Nobody likes to read on a computer as compared to holding a print magazine. But as these mobile devices come out, we believe that will change. As far as the publishers we have not spoken with any of the big publishers directly. We spoke with some smaller publishers about it, but not the big guys that host a bulk of the magazines we have.
Magazine publishers are putting this content out there and that’s how we came up with this idea. We realized there was so much great magazine content for free on the internet, and it was just, “How do you access that?” It’s very, very difficult. You literally have to go to your URL and think to type in Time.com, Cosmopolitan.com, etc. So the long term plan for Maggwire is to provide a central destination, so you can have one user ID, your Maggwire ID, and we can even hold your credit card and all the information about you. If you want to make a premium purchase such as a commemorative edition magazine, or maybe it’s a premium article, perhaps an instructional video series, all it takes is a single-click and the transaction will be executed. The ideality is to create this marketplace using one ID. Because our initial platform only requires a basic computer screen and an internet browser we feel we have a huge advantage as compared to the Zinio’s of the world. The Zinio’s of the world are not a convenient way to read a magazine; it’s not an enjoyable user experience until you have these large form color e-ink devices, which as you know, are a couple years away at least, and affordability is still in question.
SH: What are you trying to do to establish Maggwire as the central location for magazine lovers, magazine searchers, and people who read magazines?
Maggwire: I want to go back a little bit and finish up telling you how we’re going to add value to the magazine publishers. Another thing we’ve not mentioned is that we can help readers discover magazine titles that readers would never otherwise come across. Every user has 10 or even 20 magazine titles that they know of, but I’m pretty confident that there are at least another dozen magazines and magazine articles that they are not aware of and that they would be interested in reading. So, in that way, we do help the reader to discover new magazine titles and give more exposure to the magazine publishers. As we become more of a distribution channel for the magazine publishers, we’re definitely looking into sharing the revenue with the magazine publishers, because at the end of the day, they are the content creators and we realize that they have to be successful so we can be successful.
SH: How far have your conversations gone with magazine publishers, and magazine companies regarding what you’re doing? Where do you see Maggwire heading as a future business entity?
Maggwire: We actually just went public less than two weeks ago, so we had been developing this quietly for several months and we’ve just sort of opened the door. So we have not spoken directly with any large publisher. I’ve spoken with a couple small publishers who do regional magazines that have one or two titles.
Like I said, we’re not going to replace print, what we’re trying to do is compliment the print magazine. The magazines online offer a unique perspective in terms of having a discussion forum around the article you just read and on top of that, I think nowadays magazine publishers have very exclusive behind the scene video and other interactive features that kind of complements the reading experience.
Ultimately, what is our goal, three years, four years, five years down the road? Where do we see Maggwire as a business? What we’re really hoping is that these mobile ink devices are going to come out. Are you familiar with the iTablet that is going to come out soon? With those types of devices we really believe there’s going to be a shift in the state of mind experienced when reading. Everyone has been locked to their desktop or their laptop for the last couple decades and all of a sudden all this content is out there and you’ve got a lightweight portable device that you use your finger to make intuitive inputs on what to do, what article to read… We’d like to see Maggwire become the ultimate destination to read magazines because it’s customizable. You can say, I only want to see these 15 magazines and of those 15 magazines, I don’t have time to read all the articles, but present them to me in the most relevant order to me based on my historical rating pattern or my historical reading preferences.
The idea is to create another level to magazines, another level of efficiency to see the best content. There is so much great content out there and no one has time to read all of it, and they just want to see the best stuff for them. That’s what we see long term could be. We see more niche magazines can clearly charge for their content, especially when these mobile ink devices are at the right price point for mainstream America. That’s the idea. A lot of these magazines we aggregate offer 100 percent of their table or contents from their print edition online for free. It’s possible that they’re just experimenting with that theory and it may not work in the end and they may choose to put it behind a pay wall and Maggwire will make it easier for a user to signup. Providing the user the ability to use one user name to manage all their magazines and digital asset purchases will undoubtedly make them more comfortable to make that purchase. Another thing that we have thought about is, after we do reach a certain critical mass, we believe people will be willing to pay a nominal subscription for our service especially as the publishers continue to expand their offerings and partner up with us and our site will just get better and better and better. Imagine if you charged a dollar a month initially and it could go up to three, four, or five dollars a month depending on what premium titles you had or how we had it set up, but let’s say we were charging people five dollars a month, and all these mobile e-ink devices are in people’s hands and people are really using Maggwire a lot, they might not mind paying five dollars to have access to several hundred magazines and we can share a substantial portion of that revenue with the publishers on a percentage used method, based on how much time a user is spending with Time magazine or TeenVogue, we would share it with the appropriate publisher.
SH: Can you imagine with the advances in printing on demand, like MagCloud or other printers, readers can select the articles of interest and you will provide them with a printed product if so they wish, like what Time Inc. is doing with Mine magazine?
Maggwire: People in the younger generations are really in the “screen-ager” generations. Especially as these mobile devices are coming out, they are comfortable reading on the computer. It’s sad to say, but I don’t have too many friends who subscribe to The Wall Street Journal or any newspaper anymore because they read it online. Most of them have gotten rid of their magazine subscriptions and they’re either reading it online or reading elsewhere. It is sort of a scary time for publishers today. It’s hard to say where these mobile devices are going to go. Are they going to be richer than what MagCloud can output? You can’t have your video on MagCloud, you can’t have your user discussion on MagCloud and you can’t easily, quickly share that article with a friend or post it on Facebook or Twitter. If you don’t have a 100 percent digital experience, you’re limiting yourself on these features. It’s hard to fathom this, but I believe there will come a time five years, 10 years down the road, when the digital reading experience will be more rich than print.
SH: So, how do you see the future for you and the magazine industry?
Maggwire: What the magazine industry will go through might be similar to what the music industry went through when you think about the proliferation of the mp3 and the iTunes store. In the beginning, what really made mp3 and iTunes reach mainstream America was the iPod. It took Apple several years to perfect the iPod and make it cheaper for the consumer, but now you have iTunes commanding 60 percent of all the digital downloads for mp3’s. I think now we’re really in an interesting phase where you have these e-ink devices and iTablets coming out so the hardware will be there, so you need some kind of central destination to back that up. Over the years as the hardware gets better and better the software needs to be there to connect that missing link.
What really makes our strategy different from Zinio and Amazon Kindle and even Google’s magazine initiative; we’re not requiring any control over the magazine’s content. We’re not saying we need to host it, we’re not saying we’re going to handle the content. All we’re saying is, if you put the content on a public domain, we’re going to help users locate this information. That allows us to expand a lot quicker because over the next couple months we could add another 500 magazines. There are another 500 magazines with a lot of content on the internet that we can add because we’re not requiring any control. We hope the publishers will feel more confident in that strategy initially as we establish a critical mass and a brand name for reading great magazines online.
SH: Thank you.