Swedish Startup Space

Indian Readly-Killer Wants To Turn Around The Swedish Magazine Market

Written by on November 10, 2015

Magazines on the internet have proven to be a tough business. But that has not deterred Indian Magzter, who wants to get Swedes to read their favorite magazine on their tablets.

The Spotify model, to pay a fixed price every month for endless consumption, has so far proven to not revolutionize the magazine business. Swedish companies such as Readly and Ztory have tried – up until now has not taken off yet.

But Indian newspaper giant Magzter, which is the global market leader within this industry, hopes to alter this now.

Last summer Dagens Media reported that the company would make a move for Sweden. The deal with newspaper publishers has basically been sealed.

“We are within our schedule and everything will be settled in a week or so. The publishing business turns over more than the music equivalent but to manage the digitalization, the industry needs services like Magzter. Each publisher can’t create their own app since consumers want everything gathered, just like a newsstand”, Marcus Tilgmann says, responsible for Magzter in the Nordic countries.

Magzter was founded 2011* in India and have 27 million paying users combined worldwide. The headquarters are in New York, and at the moment Marcus Tilgmann commutes across the Atlantic Ocean.

A small office is shaping up in Stockholm.

“But it is really only a sales office. Development is still handled in India”, he says.

The business model is built on subscriptions where users get access to the company’s 7.000 publications. Price-wise, the company has decided to place itself about 30 percent cheaper than Readly, which costs about $12 a month.

The publishers, in turn, are paid in part based on how long the subscriber reads a certain paper or magazine. About the same way how a record company gets paid from Spotify based on how many times a song has been streamed.

“But through us, the publisher can also get information regarding their readers in a totally different way. With print, you have no idea who is actually reading, but you have data here. When the publisher is to meet advertisers they can actually see how many have viewed their ad, and who has noticed it”, he says.

“On top of that, a magazine lives with us forever. In the printed world, a magazine is sold during a limited timeframe only”

But it is a tough business. Competitors Readly recently announced that the company is downsizing the number of employees and are struggling to raise further financing for their venture. Readly has forecasted a loss of $13.8 million in 2015.

This, however, isn’t discouraging Marcus Tilgmann.

“To begin with, we have a completely different price structure. All of our products are built in India and since the salaries are lower we can have three times as many coders working in shifts. Why we can adopt changes swifter. And we have a broader selection for the consumer. We offer magazines from countries such as England, USA, South Africa and Australia today”, he says.

But can the setbacks not serve as evidence that the market is not requesting this service?

“I do not see it that way. We think that the present companies way of marketing themselves and deliver the service has not been sufficient, because the service is good. Readly has a good service. I really do not know where their problems lie, it is hard for me to say”, he says.

“In some cases the end user wants to read the magazine on their pad, in some cases they want a magazine. Print will never disappear completely. It’s like e-commerce. Just because stores are available on internet, physical stores will not vanish. But the market is maturing and advertisement revenue is plummeting. Here is where you need to find other alternatives”

Since a few years back, Magzter has an office in Helsinki. The launch itself will, however, be delayed. The Nordic branch is currently completely focused on Sweden.

“Sweden is two years ahead of Finland as far as purchase of digital products goes. It is like night and day. I don’t know why, but there are probably several reasons for it. Netflix and music providers have only now exploded in growth, in Finland” Marcus Tilgmann says. Who is from Finland himself.

“We are always behind, even in fashion. It takes 45 minutes to fly over there but it takes a year and half for a trend to catch on and be carried over”.

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