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:
- Do enough people really want to try lots of different magazines at once or actively manage switching amongst different ones every month?
- Maghound must build not only brand awareness, but also customer understanding of a new way of buying magazines
- Even if they succeed in building awareness, customer inertia is a powerful force to overcome
- Annual subscriptions are cheaper (I get a lot of $10 offers these days)
- 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)
- Ultimately, magazines want subscribers because they can then provide stable demographic data to advertisers
- Consumers generally acquire magazines one at a time, which seems more doable to the consumer (Who has time to read seven magazines a month?)
- 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
- Maghound classifies certain magazines as “premium” (from $0.50 to $6.75 per month extra)
- 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:
- Market size may prove larger than I imagine
- Average user tenure in any one magazine may prove longer than I imagine
- Maghound may find a market competing against the newsstand instead of subscriptions
- Maghound may find successful ways of pushing subscribers to magazines they haven’t experienced (hopefully by expanding their subscription instead of switching within it)
- Customer acquisition prove to be lower than the traditional subscription model instead of higher
What do you think?