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March 27, 2017

Magazine Giants Roll Out ‘Texture’

Some days, the onslaught of digital news and stories just seems to roll over you. While the wealth of available “content” promises a luxuriant abundance in concept, many consumers may just feel flattened by the never-ending, impossible-to-keep-up-with rush of stories endlessly published, tweeted, shared, and god-help-us, saved. (Just this week, as I completed this column, a media friend told me about the wonderful mindfulness weekend session he’d participated in with the Peter Drucker Institute’s Jeremy Hunter, one tonic for the chaos management.)

North America’s biggest magazine companies sense this consumer frustration and, helpfully, want to tame it. They want to add a little warp and woof to our reading lives. Texture, the new product just launched by their Next Issue consortium, aims to do just that.

“We collectively worked together to really elevate the game of Next Issue, the company and product. Texture pivots to be not only what it was, which is a collection of high-quality content in the form of official magazines, but also has figured out the content in ways that consumers like to consume them,” says Lynne Biggar, Time Inc. Executive Vice President of Consumer Marketing + Revenue, told me last week. Biggar also serves as chair of the Next Issue board.

Texture then becomes the magazine industry’s ramped up attempt to curate and market itself, even as its major owners — Conde Nast, Time Inc., Hearst Magazines, Meredith, News Corp and Canada’s Rogers Communications, which signed on two years ago – test deals left and right with Apple, Facebook, Snapchat and two dozen other distributors. Why do it themselves as well? Texture offers a sense of control in a Wild West environment, but one that so far has yet to produce big dividends. Can a product that aims to be the Netflix of magazines sell subscriptions into the millions, when it’s only sold several hundred thousand in six years?

 

First published at Politico Media

Follow Newsonomics on Twitter @kdoctor

 

As a product, Texture – the name connotes breadth and depth — indeed ventures into more contemporary cross-title presentation. On a pure digital newsstand, you can pick a title and wend your way through it. On the new Texture, launched just last week, if you are interested in sporty cars, you can more easily pull content from Road & Track, Motor Trend, Car & Driver or Automobile. Seventeen women’s titles abound. You can now also browse “Collections” and create your own library. Call it faster-loading atomization, or call it the way we read today, and Next Issue’s newest product finally adapts to what the free associating web competition has long been doing.

Maggie Murphy heads up the Texture’s new, small editorial team of less than a half dozen. Several “top story” curations and collections provide new, nice entry points, and the search function of 500,000 articles opens up a Pandora’s box of great, useful archival content. It’s not just lots of stuff; it’s exclusive stuff as Lynne Biggar says 70% of Texture’s stories can’t be found anywhere on the free web.

The pitch: “Appoint yourself editor in chief.”

 

Re-Starting the Marketing Engines

Texture’s price point is Netflix-like, for similar worlds of content. For $14.99 a month, consumers get access to all the 145 titles. For $9.99, they get most of them, without such weeklies as The New Yorker, Entertainment Weekly, Newsweek, Sports Illustrated and Macleans. Subscriptions work across as many as five devices. It’s a non-desktop experience for the most part. Texture works on mobile Apple, Android and Windows devices, but not on a Mac; it does work on Windows 8 and Windows RT PCs.

While Next Issue itself has hardly become a household name — like the Netflix, an iTunes, a Hulu — in its six-year-life, Texture is one name you will hear more about. Owing it part to a $50 million investment by KKR in December, the new Texture product will be marketed more widely. As a non-publisher investor, KKR – which holds two board seats – is presumably focused wholly on the product’s success, without legacy holdback concerns.

After all, the magazine publishing owners of Next Issue and Texture have faced the cannibalization questions that all legacy media face when they move beyond their old comfort zones. Those old direct-to-consumer businesses – in magazines, newspapers and TV – produced great, reliable profits for decades. Now, we’re in this crazy-quilt Age of Distribution, one that has greatly accelerated this year.

You want Vogue via Facebook Instant Articles or Snapchat’s Discover? No problem. How about Fortune via Apple News or maybe Twitter’s new “Moments”? Why not? Of course, there’s that now-old standby Flipboard, with its own early take on semi-native magazine presentation.

While the magazine Brahmins have all better developed their sites and apps, spurred over the last half-decade by what could have been the savior of magazines, Mr. Jobs’ magazine-dimensioned tablet, the action is now moving quickly elsewhere. Magazine publishers must stare into the void of ubiquitous distribution – and try to make business sense of it.

 

Texture’s Premium Pitch

Chris Wilkes, VP of Hearst’s App Lab, is a man in the midst of this mad distribution world.

“It’s actual true consumption happening elsewhere, and it just presents a much bigger potential read for us, with all kinds of products… I think the lines get pretty blurry, if you look at it from a distance in terms of where the distribution happens, and what the business models are. As you narrow in and get closer to it, then you find the premium content play, that’s largely what our digital magazine business is comprised of. It’s an opportunity for us to do something that takes something that was once a pretty static experience and a pretty rigid experience, in terms of being able to consume the longer-form richer premium content, but in a magazine-like experience, digitally.”

Premium is the word Wilkes emphasizes – and using analytics smartly to track audiences gained through all the new discovery mechanisms.

“There are distribution plays where you’ll see free content maximizing the volume of eyeballs into that, but then you’ll see us collect email addresses as part of that,” he says Collecting social log-ins as a part of that. Over time, leveraging those audiences to steer them back into where the premium content is as an extension of that.” (“What are they thinking: Hearst’s Troy Young makes scale his friend”)

Take Cosmo for example, which Hearst has turned into a now-unavoidable digital phenomenon. It’s on the “digital newsstands”: Amazon Kindle Newsstand, Apple App Store, B&N Nook Newsstand, Google Play Newsstand, Zinio, Kobo and Magzter.

It’s on the “platforms”: Apple News, Facebook and Facebook Instant Articles, Snapchat & Snapchat Discover (US & UK), Instagram, Twitter/Periscope, Google+, Tumblr

Flipboard, MSN, Yahoo, AOL, YouTube

Or Time Inc.’s Entertainment Weekly. The company says you can find it on the iPhone®, iPad®, NOOK Color™, HP Touchpad, Kindle Fire, Next Issue and some Android devices, of course, on Facebook, Twitter, Instagram, Pinterest, Tumblr and Google + as well. Time content can now be found on everything from WeChat , Yo and Ello to Jott, Catchpool and LINE.

 

The Numbers

The business is a tough one.

Look at publicly traded Time Inc.’s tough transition, and you get a sense of the financial and product straddling in midstream.

Time Inc’s numbers are indicative of its more private peers. In the second quarter, it reported a four percent decline in overall and ad revenue, a three percent decline in circulation revenues and a four percent increase in digital ad revenues. That’s the same drumbeat we’ve seen in the industry as it transitions. Still largely dependent on print for ad and reader revenues, in unending decline, digital audience grows greatly, while digital revenue grows tepidly. Short translation: Much more transition ahead.

Publishers take a revenue split out of Texture. It’s a rev share, based on usage. If Time Inc. gets 40 percent of usage in a given month, it’ll get 40 percent of the rev share pool, profits remaining after Next Issue’s operating expenses are paid. While magazine subscriptions remain low-priced, compared to the close-to-doubling of price we’ve seen with many newspaper companies, the Next Issue rev share isn’t going to match up easily with more direct subscription sales.

Yet, Chris Wilkes says the numbers may work well.

“At $14.99 a month, that’s an annualized $180 a year for a consumer to be spending. That’s a much bigger pie to then slice up readers consuming magazines. We’re comfortable with that.”

Hence, the evolving analytics necessity. What will Next Issue yield its owners, compared to the Apple, Flipboard, Facebook and the others? That’s a big question for 2016 and beyond.

 

The Smartphone Challenge

One big challenge that Texture only begins to address: the smartphone. As we’ve increasingly seen mobile to be an obsolescent term – one way too general – the reality of the smartphone/tablet split is nowhere more insistent than with magazines. Consider shape, format, visuals and more and the magazine seemed a perfect fit for the magazine reader that Steve Jobs masterfully laid out, as he demonstrated its lean-back value prop in 2010. And, it is. And, yet so many readers – especially younger ones – don’t have that magazine habit; they’re addicted to the worlds permitted by smartphone entry.

The smartphone product is handsome enough, yet the smaller screen, even on a supersized iPhone, can’t take advantage of magazines’ visual splendor. Now that Texture has taken one major step, it must re-think, as Flipboard has done semi-successfully before it, how to make magazine content more valuable and useful on the phone. Indeed, a majority of those accessing Next Issue magazine content now do it from a tablet, though, has quickly entered middle age, by itself, it now offers an incomplete business strategy.

Wilkes acknowledges how that landscape has changed.

“It is impossible to ignore the shift from iPads and tablets, especially, as a focus to more against the mobile phone screen,” he says. “From the launch of the [Hearst] App Lab and our early digital magazine efforts, all of that was leveraging the wind at our back from the successful launch of the iPad. While no one would call that product not successful at the moment, they’re still selling so many of them, there’s obviously been an even bigger growth curve with the phone that wasn’t anticipated back when digital magazines first originated.”

Across all its digital distribution, Hearst has already seen major changes in device choice.

Overall, about 60 percent of magazine digital usage is now smartphone, 30 percent desktop and 10 percent tablet. Digital magazines – which aren’t served up at all on the desktop – used to find that tablets drove 95 percent of usage. Now that number is down to 70 percent — and dropping.

 

Beware of Cannibals?

We don’t have to dwell on the kinds of internal compromises such industry-owned consortia as Next Issue have had to work though. It has contended with familiar issues: how aggressive and competitive-to-their-owners should they be? Breakthrough success is hard enough in the digital business, and hemming and hawing by owners can limit innovation. In this case, it took Next Issue six years to finally put into the marketplace what audiences plainly want: multiple, intuitive ways to find the content they want, freed from the wonderful, but constraining, containers of yesteryear.It took that time as well to commit to a wider marketing campaign. In many ways, the Next Issue value proposition to readers has been one of the web’s best-kept secrets.

It’s a major transition time overall at Next Issue. Longtime Hearst Magazines senior executive John Loughlin has taken over as CEO, replacing founding CEO Morgan Guenther, and other top execs have left as well. Clearly, this is an enterprise aiming to get its next act together.

With all that great magazine content, Next Issue has signed up only couple to several hundred thousands subscribers, so far, a far cry for the company that wants to be the “Netflix” (65 million subs, with 42 million in the U.S.) of magazines. One other number stands out. The average number minutes spent by a Next Issue subscriber amounts to 100, says Biggar. That’s real engagement; the issue for Next Issue then is multiplying greatly the number of subscribers.

Yet, pay attention to other Texture-related numbers.

Wilkes notes that Hearst can count as paying digital subscribers those who subscribe to Texture, and access Hearst content.

“We’re closing on two million [digital-only subscribers at Hearst]. We’ve been working, obviously, with Next Issue on this Texture product, and on the consumer marketing piece of that. I firmly believe that we’ll move to over two million towards three million, on the backs of this new launch. It’s a critical thing for our digital magazine business.”

So, now Next Issue moves farther forward. Make no mistake, it is an advance, if you test out the product (30-day free trial, with credit card submission). One thing that still remains disconcerting: Your reading experience is that of articles formatted from the print magazine itself. That’s both a technical issue and one of brand integrity for the publishers, yet to younger readers it will seem oddly print-like, and may be a barrier to adoption.

Both Biggar and Wilkes say they are comfortable with the inevitable cannibalization of sales such products as Texture feeds.

It’s the magazine habit – in one form or many – that they hope to double down on.

Says Biggar, “We expect the product to be going forward, which is a much more day-to-day-habit-type product. I think we will be building habits and enabling habits that potentially the prior UI wouldn’t have necessarily before.”

Habits are the key here. In this crazy-quilt of available reading, how will we form – and maintain – new reading habits? And critical for Texture, how few, or many, of those will be wallet-paid habit, and how many free?

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