Wednesday, September 02, 2009

BoSacks Speaks Out: New 'Pay As You Go' Online Magazine Sub Service

BoSacks Speaks Out: New 'Pay As You Go' Online Magazine Sub Service

Sometimes I just sit in total wonder about our industry, and ponder how, if ever, are we ever going to get to the promised land? Here is an interesting idea by Contrix. If I understand this "new" service correctly, the intention in this digital age is to slow down the digital process, ignore the successful Amazon model and have new subscribers, pay two months in advance to wait like our grandparents did for about six to eight weeks to get their new printed magazines. Yes, I think that makes sense, don't you?

I also find it interesting that Contrix explains that they got the idea from Netflix. I'm OK with that, but perhaps they never actually joined Netflix. In most cases you get the damn movie the next day, not in six to eight weeks.

Both Maghound and MAGpass have the magic publishing formula only half right. The monthly format in the cable TV model for payments is spot on. The delivery system offered is not only counterproductive to success, it is an ancient formula that completely misses the expectation levels of today's consumers.

To add to that Contrix is offering no chance to experiment with multiple titles and is locking in clients to a full year subscription. I could be wrong, but I don't think so. This is a 20th century analog execution in a 21st digital world. I wish them the very best of luck, as I believe they will need it.

This is the third time; I hope good luck lies in odd numbers.... There is divinity in odd numbers, either in nativity, chance, or death. William Shakespeare (1564 - 1616), "The Merry Wives of Windsor", Act 5 scene 1

Contrix Inc. to Launch ‘Pay As You Go’ Online Magazine Sub Service
MAGpass will allow users to subscribe to hundreds of consumer magazines and pay a monthly fee.

By Chandra Johnson-Greene

Interactive marketing agency Contrix Inc., which operates magazine subscription Web site, recently announced that it will launch a new online magazine subscription service within the next few weeks called MAGpass, which will allow users to subscribe to hundreds of consumer magazines on a “pay as you go” basis.

Like Time Inc.’s Maghound service, which launched last year, MAGpass will allow registered users to browse and order multiple magazine titles from different publishers and pay one monthly fee. That is, however, where the similarity ends.

While Maghound’s titles are sold on tiered pricing levels and users are encouraged to swap titles whenever they like, MAGpass users will be locked into a one-year subscription rate (authorized by the publisher) that will be divided into 12 monthly payments. Customers can cancel their subscription at any time. At the time of renewal, the customer will lock in the next year at the current rate of the magazine listed on the Web site.

MAGpass sales will be classified with ABC as “individual net paid” subscriptions, while Maghound’s sales are classified as “single copy sales.” MAGpass and its partner publishers will retain co-ownership of subscriber names and addresses.

According to president/CEO Reha Kocatas, the idea for the MAGpass service came up in 2003, when the company was trying to find a way to get continuous service subscriptions to work online. “In the online space, price jacking is a problem,” he told AD. “A customer would order a subscription through a credit card program and then go online and find that the same subscription was being sold for less. Explaining how subscriptions are priced was futile. It was causing too many customer service issues.”

Inspired by the growing popularity of online movie rental service Netflix, Kocatas said he wanted to come up with a service that would bring magazine subscriptions more in line with other “pay as you go” services such as cable and cell phone. “The average customer buys 2.3 magazines a year,” he said. “If their yearly bill for those subscriptions is $46 and then a year from now they get a bill for $100, there’s an incentive for them to cancel. But by spreading those payments over a course of a year, the price is so negligible, that they won’t want to cancel.”

And unlike Maghound, which processes orders through its own fulfillment system, subscriptions sold through MAGpass will be processed through each individual publisher’s fulfillment center, therefore, users will not be given an actual date of when their first issue will arrive. Because of that, according to Kocatas, the company decided to have users pay for the first two months of the subscription up front. “It wouldn’t be good if we billed them today and then again 30 days from now and they haven’t received they first issue yet,” he says. “We want them to be in the fulfillment flow by the time they’re hit with the second charge.”

Kocatas declined to say how many publishers have signed up so far to have their titles sold on, but he says that the goal is have 200+ magazines available by launch time, which should be “within the next two weeks.”

He added that there are no plans to shut down, but that MAGpass will serve as a compliment to the site and there will be cross-marketing between the two. “We expect that MAGpass users will skew much younger than,” he said.

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