The magazine tablet business model sure looks a lot like that of the cable companies'.
David Carey, president of Hearst Magazines, explained at Paid Content's advertising conference:
How many people here pay more than $2,000 per year for their cable bill? A lot, but the companies don't ask you for that all at once. They want $160 per month.
For the magazine business, what tablets allow us to do is to get into continuous service monthly billing. We're selling a lot at a $1.99 per month. That's $24 per year, which is often more than you get in print.
Presumably, the lifetime value will be longer because we don't have to go through this archaic process to go back after 12 months and say, "Are you sure you want to continue with this?" So it takes all the friction out of the retention business.
We're seeing really good numbers there.
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