The service offers unlimited access to over 80 magazines on iPad, up from 39 at launch. Users can choose between an “unlimited basic” subscription, which offers access to monthly magazines like Glamour, Wired and Food & Wine for $9.99 per month, and an “unlimited premium” subscription, for $14.99 per month, that also includes weekly titles like People, New York, New Yorker and Sports Illustrated.

Next Issue Media, which started out in 2009 as a joint venture of Condé Nast, Hearst, Time Inc., News Corp and Meredith, was initially only available for Android 3.0 (Honeycomb) tablets before expanding to iPad — and, potentially, a wider audience — last July.

The Windows 8 launch is “the first time we’ve worked closely with a platform partner,” CEO Morgan Guenther told me. The app integrates features like “snap view” and multitasking from Microsoft’s interface; the software giant is also providing marketing and will feature the app in the Windows App store. “We saw the importance of moving beyond the tablet,” Guenther said, and Microsoft was a “motivated partner.”

Next Issue hopes that users will use the platform across devices. A single subscription can be authenticated on up to five devices. “With greater choice as to where, when and how they access their magazines, users can seamlessly switch from their tablet at home, to their Ultrabook on the road, to their company PC,” John Richards, senior director of Windows app marketing for Microsoft, said in a statement.

Less than half of Next Issue’s users pay

Discovery remains “an issue” on iPad, Guenther said, partly because the Next Issue iPad app isn’t available through Apple Newsstand. The company projects that by the end of this quarter, it will have about 120,000 total users — 50,000 of whom are actually paying for a subscription. Of that 50,000, about 60 percent have a premium subscription, Guenther said, and 40 percent have a basic subscription. The remaining 70,000 or so users are “authenticators” — users who already have a print subscription to a magazine and are accessing the print version through next Issue’s app.

In the next quarter, Next Issue plans to add Facebook integration and social sharing, followed by the integration of “clipping” technology that would let users virtually save individual articles or images from magazines. Guenther also says the library will expand to about 100 titles in the next couple of months.

Though Next Issue originally launched on Android, that platform hasn’t been much of a priority, Guenther said — to the extent that there are only 36 magazines available, less than half the number of titles available for iPad and Windows 8. In the next few months the company will “refresh” the experience on Android, Guenther said. It also plans to expand to Android smartphones and iPhones.

289 U.S. magazines reported that they’d sold 7.9 million digital replica editions in the last six months of 2012. That’s 2.4 percent of total circulation — up from less than 1 percent in the second half of 2011, and up from 1.7 percent in the first six months of this year. (AAM’s definition of a digital replica is that it contains “the same editorial and photojournalism as the national print edition,” though that material can be arranged differently on a tablet; nearly all digital magazines fall into this category.)

The growth looks more impressive on an individual title level, where some magazines made huge gains in digital copies: Game Informer, already by far the top magazine by digital circulation, increased that figure by 89 percent, while Cosmopolitan upped its digital circulation by nearly 40 percent in the second half of the year. Two Reader’s Digest titles – Reader’s Digest and Taste of Home — saw triple-digit-percentage growth of their digital editions, both entering the top 10 for the first time. The growth isn’t all paid: Reader’s Digest, for example, is offering print subscribers a free six-month iPad subscription. But Hearst sells digital and print subscriptions separately.

Here are the top 25 U.S. consumer magazines by digital circulation as of December 31, 2012, and how much that circulation grew (or shrank) over the first six months of the year. The Alliance for Audited Media cautions that these are preliminary figures, subject to audit.

1. Game Informer (GameStop), digital circulation: 2,305,816 (+89% over first half of 2012)
   
2. Maxim (Alpha Media Group): 259,529 (-8.9%)
3. Cosmopolitan (Hearst): 254,751 (+37.2%)
4. National Geographic (National Geographic): 160,077 (+18.9%)
5. Poder Hispanic (Televisa): 149,838 (-12.3%)
6. Reader’s Digest (Reader’s Digest): 147,149 (+248.8%)
7. Taste of Home (Reader’s Digest): 103,961 (+243.9%)
8. Popular Science (Bonnier): 98,389 (+5.8%)
9. ESPN the Magazine (ESPN): 92,197 (+20.4%)
10. OK! (American Media): 88,347 (+86.7%)
11. Parenting (Bonnier): 87,253 (+16.7%)
12. Men’s Health (Rodale): 85,842 (+44.2%)
13. O, the Oprah Magazine (Hearst): 84,632 (+4.2%)
14. Wired (Condé Nast): 84,118 (+22.3%)
15. Us Weekly (Wenner Media): 81,611 (+40.8%)
16. Nylon (Jaclynn B. Jarrett): 77,469 (+2.5%)
17. GQ (Condé Nast): 74,806  (+24.6%)
18. Food Network Magazine (Hearst): 67,727 (+65.1%)
19. Women’s Health (Rodale): 66,555 (+29.5%)
20. Star (American Media): 59,903 (+297%)
21. New Yorker (Condé Nast): 59,471 (+66.7%)
22. Esquire (Condé Nast Hearst): 57,795 (+41.7%)
23. Martha Stewart Living (Time Inc. Martha Stewart Living Omnimedia): 56,068 (+28.7%)
24. Glamour (Condé Nast): 53,794 (+56.8%)
25. Vanity Fair (Condé Nast): 53,735 (+47.6%)

But how long will these pricing strategies work? Digital still makes up only a tiny percentage of magazine publishers’ overall revenues: The Alliance for Audited Media (formerly the Audit Bureau of Circulations) reported in August that digital replica editions (which replicate most of a print magazine’s editorial and advertising content, and make up the vast majority of magazines’ digital versions) made up just 1.7 percent of overall circulation. The WSJ story says big magazine publishers think digital won’t hit 10 percent of circulation until 2015.

Pricing strategies that very early adopters appear to be accepting are not likely to work for a general population. Magazine publishers may need to adopt more nuanced digital pricing strategies as tablets take off. And they can look to book publishers — who are a lot further along in the digital revolution, with ebooks now making up over 20 percent of revenues at large publishing houses — for some help. Here are a few things they’ll have to think about:

The advertising conundrum

One of the biggest differences between the magazine and book publishing industries is that magazine publishers rely on advertising for revenue while book publishers don’t and never have. Print magazine subscription prices have plummeted, Hagey writes, because “magazine publishers have guaranteed advertisers their titles will reach a minimum number of readers and, to fulfill that pledge, they have long cut prices sharply for promotional subscriptions.” That’s why you can get an annual print magazine subscription for under $10. In tablet editions, magazine publishers see a chance to charge higher rates. Hagey notes that the average annual price of a digital subscription to a Hearst magazine is $19.99, “twice that of its average introductory print-subscription price of $10.”

At least for now, though, magazines’ digital editions bring the advertising from the print edition along for the ride. So digital readers aren’t getting an ad-free product in exchange for paying a higher price — magazine publishers are just charging more for the novelty of reading on a tablet. That’s a short-sighted strategy that probably won’t work as tablet adoption becomes widespread.

Will readers pay for enhancements?

The bells and whistles that magazine publishers are adding to digital magazines remind me of enhanced ebooks, which book publishers got very excited about a couple of years back. They hoped that by adding video and music to an ebook, they could charge more for it. Fast forward to 2013 and enhanced ebooks are widely considered a flop. So far, readers simply haven’t been interested in paying more for them. Book publishers have scaled efforts back and are no longer trying to charge higher prices for enhanced editions.

Magazines may be better suited to these enhancements than books are: E-commerce fits in well, for example, and videos and music may make more sense. But since a lot of this enhanced material is already available free online, readers may be reluctant to pay extra for it. The benefit for magazine publishers is that they can monetize those enhancements in other ways — through affiliate links to iTunes, for example, as Rolling Stone is doing. And Lucky is about to roll out a major e-commerce component that will likely rely on affiliate links as well.

Promotional pricing can work

Countless self-published authors have found that offering their books at initially very low prices is a great way to gain new readers: When the barrier to entry is low, readers are more likely to take a chance on an unknown name. This strategy is working less well as the ebook revolution progresses (and there’s a sea of self-published books out there), but magazine publishers, in the early stages of their digital era, can take advantage of it.

Magazine publishers already offer print subscribers discounts on other magazines they publish. Why not do the same thing with digital magazines? Or magazine publishers who sell print and digital editions separately could offer print readers a couple free digital issues or a discounted digital subscription for the first year. I also love the New Yorker‘s strategy of giving iPad subscribers free digital extras, like compilations of articles on a given topic and cartoon collections.

The good news for magazine publishers is that, with their digital revolution in the early stages, they can learn from those who came before them. The bad news is that many magazines are more threatened by free online content than most books are. As digital magazine reading moves from early adopters to a larger population, magazine publishers will have to find a way to give readers high-quality, no-substitute content at a reasonable price — or risk losing those readers to the internet.

Photo courtesy of Shutterstock / bernashafo

The “nearly 800,000 figure” falls short of the million digital subscriptions that Carey said was the company’s 2012 target in last year’s letter. (Last year, Carey did not break out how many digital subscriptions the magazines had.) The list of platforms also underscores how digital magazine reading changed in 2012: Last year, Carey mentioned subscriptions across “iTunes, Zinio, Nook, Amazon and Next Issue Media.” This year, Zinio, which is reportedly up for sale (and still without a buyer after six months), and magazine publisher joint venture Next Issue didn’t make the list.

Carey tells AdAge, “When I issued the one million goal, we had mid-300,000 e-subs in house, and while I knew it was going to be a real stretch, it was the right, super aggressive number to shoot for.”

A few other highlights from the letter: Carey says the company had 186 million monthly mobile page views by the end of 2012, up from 39 million in 2011; foodie site Delish.com introduced a print special that was sold with six titles at Wal-Mart, producing a 22 percent lift in single-copy sales; Hearts plans to “‘future-proof’ its digital business model at account for mobile viewing.

Full letter below.

Dear Colleagues,

Happy 2013! Welcome back after what I hope was a wonderful holiday break for each of you. If you were minding business at the office last week, I trust you also found it a peaceful place to be.

As we begin a new year, I want to take stock of our company’s accomplishments in the last year and look forward to what’s on tap for the coming one.

We have been thrilled by consumer response to the new print products we introduced, led most notably in the U.S. by HGTV Magazine and, globally, by 10 new Hearst international editions, including Esquire in Singapore and Colombia and Harper’s BAZAAR in Poland. We’re also enthused by the pace at which our content is ricocheting around an increasingly mobile world. At the end of 2011, we had 39 million monthly page views on mobile devices; by the end of 2012 that number had grown to 186 million.

But no question, 2012 will not be remembered as mellow in either media or meteorology.

Many of our businesses soared and produced record results. Others faced challenges, and the teams behind these brands have put in place fresh thinking for 2013. While in the past our businesses tended to move in unison—collectively, up or off—I believe that the variability and volatility of performance is here to stay, which puts a greater emphasis on the impressive can-do spirit and creativity of our teams.

Whether you were doing business in sunshine or in storm, so many of you pushed ahead—continuing the enormously imaginative work of expanding our company’s reach and influence. I want to thank all the teams that make Hearst Magazines great.

The barometer of our 2012 performance marked important developments. Our core print brands were honored with a raft of prestigious awards: three National Magazine Awards, total domination of Advertising Age’s A-List, including Magazine of the Year Marie Claire and Publisher of the Year Nancy Berger Cardone, numerousFolio: Eddie and Ozzie Awards, and an Adweek Hot List nod for HGTV Magazine.

More of our greatest brand hits last year:

• ELLE had very strong growth in its first full year of Hearst ownership, gaining market share and becoming our second-largest business in the U.S.
• HGTV Magazine, created in partnership with Scripps Networks, ended its first year with nearly 700,000 paid subscribers, producing average monthly newsstand sales of more than 250,000 and strong reception from advertisers. This year, the title will move to 10 issues annually.
• Harper’s BAZAAR had a perfectly executed redesign that has been a hit with readers and advertisers, and Good Housekeeping introduced a new look and feel in its January issue, a front-to-back revamp driven by extensive consumer research and testing. Now under way: a dramatic restyling of Road & Track and a new direction for Redbook.
• Marie Claire’s powerhouse publishing team delivered the most revenue ever in the magazine’s 18-year U.S. history.
• Already the No. 1 epicurean magazine on the newsstand, Food Network Magazine had a sales jump of 18 percent last year and earned the top spot for ad pages in its category. Projected FNM circulation for 2013: 1.55 million.

In keeping with our UNBOUND positioning, we made impressive gains in digital media. By the end of the year, we counted nearly 800,000 monthly digital subscriptions in the U.S. across iPads, NOOKs, Kindle Fires and Android devices—the highest in the industry. Those subscriptions are now generating profits after 24 months of investment. And how exciting to see how this business is developing organically: More than 80 percent of our digital subscribers are new to our files, and their engagement levels meet or exceed the high levels we see from our print products.

We achieved important digital milestones all across the company:

• The number of unique monthly visitors to our websites grew by more than 30 percent. Our brands have driven an explosion in social engagement with their audiences; Hearst has 7.7 million Facebook fans, 4.7 million Twitter followers and 5.5 million Pinterest followers, including the No. 1 brand on Pinterest, Harper’s BAZAAR.
• Cosmopolitan doubled the size of its digital edit team in December, with the goal of reaching 20 million monthly unique visitors. The magazine also used a multi-pronged social media strategy engineered by iCrossing to welcome new editor in chief Joanna Coles: 18 million tweets announcing Joanna’s move were sent in just a few hours. (The brand is also active on the TV front: Watch for Cosmoas a star of a new Mark Burnett series debuting in February.)
• Jumpstart, a key asset from our Lagadère acquisition, had the most profitable year in its history. Jumpstart grew to become the No. 3 website for auto shoppers, with more than 9.5 million monthly unique visitors.
• Innovation flows in all directions in our halls: Hearst’s popular foodie destination Delish.com introduced a print special that was sold with the November editions of six titles at Wal-Mart, producing a 22 percent lift in single-copy sales.

We welcomed new faces last year and, in some cases, rearranged places. Chief Technology Officer Phil Wiser, who joined Hearst Corporation last January, quickly became a key resource for our technology teams. In addition to Joanna at Cosmo, we named three new editors in chief: Susan Spencer at Woman’s Day, Larry Webster at Road & Track and Anne Fulenwider at Marie Claire. We were also pleased to welcome Carine Roitfeld as global fashion director of BAZAAR, who, in an industry first, will create fashion editorial that will run in all 26 international editions of the magazine at the same time. This high-profile creative initiative with Carine is among my favorite rule-breakers of 2012 and paves the way for more global content sharing.

Benchmarking industry leadership took a number of creative forms at Hearst in 2012:

• We created the Hearst Design Group by consolidating the editorial staffs of ELLE DECOR, House Beautiful and Veranda under Newell Turner’s leadership, bringing a streamlined, nimble, European publishing model to the U.S.
• Again, in the spirit of not holding onto established orthodoxies, we changed the business models of some titles, including Woman’s Day and Veranda, shifts that have dramatically improved bottom-line performance.
• You will see more brand extensions this year based on last year’s success; Cosmopolitan for Latinas, Delish and ELLE Accessories will all increase their frequency in 2013.
• From its genesis as a column in Good Housekeeping, 7 Years Younger is now a book and a website with extensive social media presence—and the launch has been a collaborative effort across our company.

Always looking for new ways to connect with our readers, Hearst developed fresh, effective commerce initiatives last year, including ShopBAZAAR.com and the House Beautiful Marketplace, a partnership with HSN.

After a year of close collaboration, the Cosmopolitan Collection debuted in September in 700 jcpenney stores nationwide. At year’s end, consumer sales were running more than $1 million per week. (Operating as entrepreneurs entails taking chances: Our 2011 partnerships CLAD and Gifting Grace were discontinued. There will be some swings and some misses—we learn and move forward.)

As you know, Hearst is the largest publisher of monthly magazines around the world, with 284 of our 304 editions outside the U.S. I’m pleased to report that in 2012 our international business grew by more than 50 percent. European shortfalls resulting from the ongoing turbulence in the economy were offset by the strength of earnings from our businesses in Russia and Asia—China, in particular, where ELLE has seen so much success that it moved to a semi-monthly publishing schedule.

Our other lines of business also made bold inroads in new areas. Hearst Integrated Media had its biggest year ever in 2012, selling more than 30 custom programs.

We welcomed new leaders, in the U.S., the U.K. and Latin America, to boost iCrossing’s digital marketing leadership. In 2012, iCrossing won two out of every three pitches and signed 30 new accounts—with its average deal size now 250 percent larger than two years ago. iCrossing’s fourth quarter revenues were the highest in its history.

CDS Global celebrated its 40th anniversary in 2012 and successfully focused on transforming its technology to offer new digital and e-commerce services and diversify its business across industries. CDS Global is a key part of the magazine industry’s tablet media infrastructure and at the same time is building business beyond media—it ended 2012 with nearly 20 percent of its revenue from non-magazine clients.

One thing that’s distinctive about Hearst is how important partnerships are to driving our growth, a key strategy established long ago by our CEO, Frank A. Bennack, Jr. We’re fortunate to operate joint ventures with many of the world’s leading corporations. (These ventures not only generate earnings, but also bring great talent—our just-named Hearst president, Steve Swartz, originally came to the company via a joint venture with Dow Jones). Because of our reputation of being such a good partner, we regularly receive inbound concepts from media companies looking to jointly create new products with Hearst. (So don’t be surprised if we test yet another new magazine by year’s end!)

Finally, a sad note and a heartfelt tribute: Helen Gurley Brown, the Hearst magazine editor who first made Cosmopolitan famous and single women proud to be smart and sexy, died on August 13 at the age of 90. She led Cosmo for more than three decades, leaving an indelible, personal imprint on several generations of women—and their men. Helen’s re-creation of Cosmopolitan produced profits that were quickly reinvested into a diversified set of businesses that helped build the modern Hearst Corporation.

Which brings me to 2013: Every member of the team has the chance to make a Helen Gurley Brown–level contribution, one that can have a long-lasting, positive impact on our company and colleagues.

Many are hard at work on achieving exactly that.

Esquire Editor in Chief David Granger and Publishing Director Jack Essig will soon announce a bold new partnership—an initiative that will dramatically expand the Esquire franchise. The brand also has big plans in the works to celebrate its 80th anniversary this year.

Our consumer marketing colleagues are collectively rethinking how we bring our titles to market by striking new partnerships with retailers—as they cast aside the “same old way” of doing business—and building world-class digital marketing capabilities.

The company’s digital leadership team is working on plans to “future-proof” our digital business models for a world where more than 50 percent of our traffic will be on small screens, and our readers will demand fresh, high-quality content from our brands around the clock.

The team at Hearst Magazines International is readying another dozen launches in 2013, from France to Australia.

And there’s so much more.

I’m also pleased to announce that in 2013 we will put greater emphasis on the training and development of our team. In the last few weeks we’ve had the good fortune to welcome to Hearst Tower inspirational executives like Facebook COO Sheryl Sandberg and HSN CEO Mindy Grossman to talk about how they are managing change at their companies. In 2013, we will significantly step up these programs and our exposure to some of the business world’s smartest minds. We will also invest more in digital training of all kinds.

Regardless of the headlines, change in GDP or cyclical trends, our teams are pushing ahead to create a successful 2013. This is the spirit that has put Hearst at the forefront of the industry.

Like you, I get a lot of e-mail newsletters. A few months ago, one contained an especially insightful passage that succinctly sums up the opportunities for our company and industry:

If one thing is clear, it’s that over the next 20 years the shortest distance from A to B is going to be anything but a straight line. To survive, much less to thrive, will require being both clever and smart. Clever means a willingness to try new things—be scrappy and make bold bets, even if they may not pay off. Smart means keeping your eyes on the year-2032 prize—be ready to cut off the experiments that aren’t working and cultivate your willingness to let go of the legacy as the time comes.

I am so proud of all the talented and smart men and women at Hearst who work to empower, educate and encourage our readers, advertisers and partners. In picas and pixels, you are simply the best, through all kinds of weather. And I know you are not alone—supported by family and friends who encourage you to do your best work and reach for the stars.

Thank you, again. I wish you a new year filled with personal and professional success and happiness.

Sincerely,

David Carey
President
Hearst Magazines
@CareyAtHearst

iQ editor-in-chief Bryan Rhoads tells AdAge that iQ’s goal is to “connect with a younger audience and tell them the bigger story of who we are as a brand. Many of them don’t know, so we need to tell them the story of Intel that is beyond PCs and beyond processors.”

He goes on to say, “We have Facebook, Twitter and blogs and all of that, but they’re really not tailored to a younger audience.”

Hope you kids like a lot of stories from those old-fashioned blogs, because that’s mostly what’s here: Right now iQ’s front page is made up almost entirely of stories from The Next Web, TechCrunch, Mashable and Engadget. There’s also some original content — bloggy stories like “Gamification breaks rules in the classroom” and “5 iconic soundbites in tech.”

A bar at the top of the page highlights three original stories: “What does your biometric shirt say to you?”, “What does the average design student have in their bag?” and “Schools powered by the sun.” Each of those stories has been shared zero times.

The project is reminiscent of the “Free Press” news section that Intel launched on its site in 2010 in an effort to get tech blogs to cover Intel more often. Free Press, though seemingly little read, is still running, and says it covers “interesting behind-the-scenes stories that provide insight into what’s going on inside Intel and indirectly, the tech industry.”

To be fair, it is only iQ’s first day and it has a big goal: “iQ is here to remind us on how fast we’re moving as a global culture, to be cognizant of how far we’ve come and to reflect on where are planet is headed.” Also, to remind the youngs that Intel thinks tablets are cool, too.

Condé Nast, Hearst, Meredith, News Corp and Time Inc. joined to launch Next Issue Media back in 2009 to sell digital magazines and other content from one cross-platform digital newsstand. But rollout has been slow, with little visible action since the company launched a digital storefront “preview” on the Samsung Galaxy tablet last May.

Now Next Issue Media launches for Android 3.0 and above with 32 popular magazines available. The company expects to add more later this year, eventually getting up to about 75 titles. The titles available are “premium, mass-market titles,” CEO Morgan Guenther told paidContent. “We’re taking a big, fat, short-tail content approach to this and going where the readers are.” Instead of downloading separate magazine apps, users download the Next Issue Media app and can read all the magazines within it.

The most innovative part of the launch is the “all-you-can-read” plan. Users can pay $9.99 per month for unlimited access to monthly and bi-weekly magazines, or $14.99 per month for monthlies and weeklies. Those prices include access to back issues — but the back catalog starts from January 1, 2012, so readers won’t see content from before that.

But will you be able to use it?

The cloud-based app only works with an Internet connection, though users can save individual issues to their device to read them offline. There are no social networking or sharing features yet, though Guenther said those are planned.

For now the biggest limitation is platform. Guenther said Next Issue will submit an iPad app to Apple “within an eight-week window” but it’s unclear how long the approval process will take. And because Kindle Fire runs a forked version of Android 2.3, it isn’t compatible with the Next Issue app.