Next Issue Media CEO talks about launching on iOS, plans for Windows and more

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with Morgan Guenther, CEO of Next Issue Media

Morgan Guenther

   Morgan Guenther

Last spring, Next Issue Media--a consortium of magazine and newspaper publishers including Time Inc., Condé Nast, Hearst Corp., News Corp. and Meredith Corp--launched a digital newstand app for Google's (NASDAQ:GOOG) Android that let consumers purchase digital versions of periodicals such as Time, The New Yorker and Esquire and download them to their Android tablet. Next Issue Media's CEO Morgan Guenther calls his company's offering the "Netflix" of magazines because consumers can play a flat monthly fee to get unlimited access to the company's portfolio of titles.

Now Next Issue Media is bringing its app to Apple's (NASDAQ:AAPL) iOS operating system and the iPad and doubling its portfolio of magazine titles. FierceMobileContent Editor-in-chief Sue Marek spoke with Guenther about the company's launch of its iPad app, its plans for marketing its app to consumers, and when it will launch on other platforms, such as Windows Phone 8.

FierceMobileContent: Why are you launching on Apple's iOS now?

Guenther: We launched a partial version on Android on April 4, and we said at that time that we would be submitting and launching on Apple this summer. So here we are and we are launching on Apple July 10.  We will be available on all iPad models.  With Android we launched with 32 titles. With Apple we will launch with 39 titles all optimized for the tablet.

The new titles are mostly from Conde Nast, like Wired, Bon Appetit, GQ and more. We will have out the door about 350 total issues. What happens is if you are interested in Sports Illustrated or Vogue, you not only get the current issue, you can also get the back catalog starting with January 1. This will continue to grow.

The 39 titles we have will cover about 350 million readers and $8 billion in ad revenue in those properties in the print world. We are heading to where the readers are as opposed to the long tail to begin with.

We will have the same unlimited plans that we have been testing and launched on Android. The pricing is $9.99 per month for all monthly magazines and $14.99 per month for monthlies and weeklies.  

FierceMobileContent: Why did you initially develop an app for Android?

Guenther:  We started down this path a few years ago, and we knew at that time we would need to work on Apple and Android and even Windows Mobile. We also knew that the complexity of the application --creating a single app and then bringing in the content--was going to be complicated.  We wanted a beta and in Android, it's just a lot easier to beta a product and test it and adjust features in Android than with Apple.  So we started the development of Android and launched on those tablets first.  But the development to Apple was happening at the same time.

It's still very early in the market. The revenues are still 99 percent print and 1 percent digital. We needed to test and learn in an environment that was real.

We are only available realistically on two to three million tablets in the market.  We like Android and what we see with Google. It will always be an important platform, but we knew we had to be on Apple.   

We plan to have the same user flow with Apple as we do with Android. What I mean is that you go to the Web, and that's where you sign up.  Then, you download the free app, and you never go back to the Web.

FierceMobileContent: How do you handle discovery?  How do you let tablet owners know about your app?

Guenther: That's a big issue. We have one of the world's greatest apps with some of the world's greatest publications and that's a great selling proposition. But how do you get it discovered? We will be starting a marketing campaign in the fall. Not before then. You will see that in print and digitally.

At the same time, we are going to double the catalog. We will move from 39 to 60-70 titles some time by Labor Day.  And then we will kick off some marketing.  We will do some holiday focused gift promotions.

I think we will be able to build awareness and discovery over the next six months. We will use some of the assets that our publishers provide us with. At that same time, in the third quarter or the fourth quarter we will also be launching on Windows 8.

FierceMobileContent: Were your publishers waiting for you to launch on Apple? Is that why you are going to go from 39 titles to 60 to 70 titles?

Guenther: There was just a lot of complexity in bringing on the additional titles because they were in a different format.  What's happened is that we have been ingesting the content and the back catalog at the speed we can do it. We are a startup and just have 50 people.

These magazines have to be perfect. We really stagger it. For us it is paced by how quickly we can do it and do it right and make the presentation great for publishers.

FierceMobileContent: I see you as an aggregator.  Do you have competition now?  Are you worried about it?

Guenther: Our owners want to sell magazines as much as anything. For every magazine there are thousands of different distribution points. In our case we are the only ones doing a Netflix type of "all you can eat" model. The other methods of distribution are complementary.

There is competition, but no one has the unique proposition we have. We have applied the concept of unlimited access. No one has tried to do that.

FierceMobileContent: Are the publishers concerned about being bundled into an unlimited plan?

Guenther: Not really. We have a paid content model. We really believe that people will pay for these world-class brands.  

In 2011 the average household spent $49 on magazines. That's subscription and newsstand combined. We think if people migrate toward an unlimited plan you will increase how much they are spending by three or four times. If you do that consumers are going to read more, discover more brands and have more engagement.  And everyone wins.

FierceMobileContent: How many subscribers do you have on Android?

Guenther: We have been out there about eight to 10 weeks, and we have about 12,000 active users right now. Those are people that have used the app in the past 30 to 60 days. That includes everyone--single copy subscribers, unlimited subscribers, premium subscribers.

The Android user base is super-early adopter. We see some early trends but are not doing any marketing around it.

FierceMobileContent: Do you care about whether the tablet has a Wi-Fi or cellular connection?  Does that matter to you?

Guenther: I've got an iPad 3 with a 4G LTE connection. If I want to download a magazine to my iPad, Apple makes me use a Wi-Fi connection.  So there are some interesting pieces to this. We like the carrier distribution channel. We have always thought the carriers will be a real channel for tablet consumption. The 4G devices, we think are great, especially when you are reading magazines and making changes in your catalog.

From a wireless data consumption point of view, there are more people using more bits when they are downloading and reading magazines.

FierceMobileContent: How large is the size of your file? Is it like an ebook, which doesn't use a lot of bandwidth on the network?

Guenther:  The problem is when you get to high resolution Apple devices, there are very large files for high res. How can we manage the file size before you get to a streaming model? Over time, I think we move to a streaming model. That will be a while.

FierceMobileContent: Is HTML5 in your future?

Guenther:  We take HTML5 content right now. The issue is that the standards for these magazines that require the fidelity and experience and brilliant color, we are not close to HTML5 being ready. HTML5 until recently only supported six fonts. These magazines have hundreds of fonts.

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