By Jennifer Saba
NEW YORK Aug 20 Magazine publisher Conde Nast
announced a major partnership with Amazon.com Inc on
Tuesday in which the Internet retailer will handle print and
digital subscriptions for glossy publications such as Vogue,
Wired and Vanity Fair.
Conde Nast is the first magazine publisher to collaborate
with Amazon on this type of service, a move that will simplify
and eventually save money on its subscription process and give
it access to a huge new customer base. Currently, subscriptions
involve direct mail and stacks of magazine insert cards.
Amazon will allow consumers to purchase, manage and renew
their subscriptions for seven of its top titles under a new "all
access" plan that gives them both print and digital editions of
select magazines using their Amazon accounts.
For the time being, readers can still subscribe using the
old paper-based method, but the idea is that Amazon will
eventually handle all Conde Nast's magazine subscriptions if the
arrangement is successful.
For Amazon, it marks a new step into handling content,
following forays into film and lending books. It gives the
online retailer a chance to offer subscriptions to its more than
200 million customers and cross-sell goods to Conde Nast
subscribers with the easy 'one-click' purchasing system.
"It's part of the Amazon initiative to improve its overall
content portfolio," said R.J. Hottovy, an analyst at
Morningstar. "It's a matter of getting more people to Amazon. It
entices them to make more purchases elsewhere on Amazon, which
should have some revenue and margin improvement opportunities."
But it is just one piece of Amazon's ever-growing business,
and likely not the lynchpin of any grand new strategy.
"It's a pretty small agreement in the grand scheme of things
for Amazon," said Aaron Kessler at Raymond James. "But it's
definitely a positive if Amazon can become the backbone for more
Analysts said it would make sense for Amazon to target other
publishers' subscription services, but the company declined to
give details about its plans.
An obvious target would The Washington Post, which Amazon
Chief Executive Jeff Bezos bought for $250 million earlier this
Conde Nast will offer readers a combined $6 introductory
rate for six months of both the online and print versions of one
of the following magazines: Vogue, Glamour, Bon Appetit, Lucky,
Golf Digest, Vanity Fair and Wired.
It plans to add its other 11 consumer titles, including the
New Yorker, later in the year.
Readers can still subscribe the old way through Conde Nast,
and can also subscribe online through existing partner Apple Inc
The digital subscriptions will be made available on several
mobile platforms, including the Kindle Fire, Apple's iPad and
Google Inc's Android tablets and phones.
It will introduce Conde Nast to new readers through Amazon's
massive customer base.
"We are using the partnership with Amazon to make purchasing
and renewing subscriptions as easy as humanly possible," Bob
Sauerberg, president of Conde Nast, said in an interview last
"We want to go from selling print subscriptions to selling
access to all our content," he added, referring to the
introductory offer that allows readers to get online and print
subscriptions bundled together for individual titles.
Currently, online readers count for only about 4 percent of
Conde Nast's total circulation of about 18.5 million copies,
according to the Alliance for Audited Media. That suggests the
glossy magazine as a physical object is not likely to disappear
any time soon.
"Magazines have real deep value in both formats," said Russ
Grandinetti, vice president of Kindle Content at Amazon. "A lot
of consumers want to keep one foot in both camps."
Sauerberg and Grandinetti started to talk about a potential
partnership over breakfast during the magazine trade
organization MPA's annual conference last year.
"For years we have worked hard at trying to make buying
anything really easy," Grandinetti said. "Even though people
really love magazines, I would not say they love the process of
maintaining their subscription."
Increasing digital copies is a key part of the magazine's
industry future success as more people choose to read on
smartphones and tablets, while advertisers are placing more
dollars toward digital displays at the expense of print.
At the same time, mobile device makers have a huge appetite
for media content, including magazines, newspapers and TV shows
to spur people to buy tablets and smartphones.
Bezos' move to buy The Washington Post ignited speculation
that he would transform the paper into a streaming news service
delivered to tablets, computers and phones. Grandinetti would
not comment on any plans involving the Post, adding that the
paper is solely under Bezos' ownership.
Even as tech companies court publishers, media companies
have had an uneasy relationship with Silicon Valley since
watching the music industry dwindle as people flocked to buy
songs on iTunes for much less than the price of a CD.
For example, Time Inc, a division of Time Warner Inc
, the largest magazine publisher in the United States,
was one of the last holdouts to join Apple's newsstand. The
standoff was because the world's largest technology company did
not want to share subscriber data with the publisher of Sports
Illustrated and People.
Subscriber information is critical to magazine publishers,
who use it to give advertisers a better picture about their
Conde Nast is usually one of the first to wade into the
water with innovations. For instance, it was the first to offer
subscriptions through Apple's newsstand with the New Yorker.
"We really try and connect with the tech companies on the
West Coast," Sauerberg said. "We know what we're good at and
they know what they are good at."
In the agreement with Amazon, Sauerberg said Amazon is
providing the same consumer data Conde Nast would get when a
reader subscribes directly through the company.
Amazon is taking a cut of the subscription revenue, although
both companies declined to provide details. In other
arrangements, Amazon typically takes 30 percent.