Crazy Tamils Throw Money Off Rockefeller Plaza in NYC

Never let it be said that reckless Tamil entrepreneurs miss an opportunity to squander money on cockamamie business ventures.

Whether it’s I, SpiceJet, Lingaa, Kochadaiyaan or some other Mannangatti scheme, you can be sure many a zany Tamil entrepreneur with more moolah than gray matter is flushing millions down the toilet in pursuit of bizarre pipe dreams.

Now come along two venture capital backed Tamil businessmen Girish Ramdas and Vijayakumar Radhakrishnan whose fledgling electronic newsstand Magzter harbors fantasizes of becoming the Netflix of magazine subscriptions.

With its U.S. headquarters at Rockefeller Plaza in NYC, Magzter has launched a $10-per-month subscription service offering 2,000 magazines that can be read on multiple devices including smartphones, tablets and PCs (Windows 8 only). A lite version provides five magazines for five bucks a month.

Wannabe Netflix

Now who doesn’t want to be a Netflix.

After all, Netflix is a phenomenal success story in the content business with nearly 51 million subscribers (over 95% American) happily forking out $8 a month to rent movies and TV shows on DVD or via streaming.

In recent years, millions of young Americans have unyoked themselves from the utter junk that cable TV has turned into and clambered on to Netflix for their daily entertainment fix.

A wise choice, if you ask me (given the non-stop drivel on Fox News, CNN, MSNBC, ABC et al).

But Netflix and Spotify (for music) are the rare exceptions of content subscription successes not the common rule.

Several businesses (notably Blockbuster) followed the Netflix model but few could replicate its success. Most me-toos services kissed the dust after burning through millions of dollars, or hobble along with limited subscribers. The few survivors focus on niche segments (Fandor, for example, on indie and old movies).

Indians, ever the great copycats, were not far in aping Netflix.

A bunch of Indian movie services in the U.S. like Mela, Hindiflix, and MyPicks.us too borrowed the Netflix model and launched subscription services with stars in their eyes but none escaped the cruel fate of a quick death.

E-Books & Mags – Little Value

When most movie and music content subscription services with the exception of Netflix and Spotify have failed to make it in the U.S., I don’t see any hope for the less appealing genre of e-book or e-magazine subscription services.

Have any of you checked the prices of used books on the net?

Now there lies a depressing tale.

Used books from even quality authors have plummeted to pennies on eBay, Amazon and on the “For-Sale” shelves of local libraries.

As for magazines, it’s fair to say nobody gives a fig for the majority of them any more.

Newsweek was famously sold for a buck (yes, as in O N EĀ  D O L L A R). Bloomberg purchased BusinessWeek for a song. Washington Post found a white knight in Amazon.com founder and CEO Jeff Bezos who paid a pittance to buy the Indian Express of America.

With rare exceptions like the New Yorker or New York Review of Books that thrive on subscriptions from a diminishing discerning audience, the magazine industry is in a death spiral for two reasons. In an era of ubiquitous free content, consumers are unwilling to dole out money for news and analyses and, second, online advertising is not the financial rainbow that publishers dreamed it to be.

As the content deluge swamps consumers online via a million news sites, tech blogs and self-publishing on Amazon, surveys are showing Americans are reading less and less.

Truth be said, a lot of nibbling (headline surfing and quick scanning) is what’s happening in the magazine segment. Perhaps, the cornucopia of online content has saddled the American populace with collective ADD (Attention Deficit Disorder).

The majority of Americans don’t read even a single book in a year.

During my frequent visits to local county libraries in the U.S., I see few people near the magazines section. A lot of U.S. libraries allow readers to borrow magazines and I don’t see many people doing that either (the magazines I check like New Yorker, New York Review of Books, Foreign Affairs, MacWorld etc. are often in pristine, virgin condition and cast a beseeching pick-me-up look in my direction).

Americans prefer the passive entertainment of movies, TV shows and music. Reading demands an active engagement that few people are willing to invest in these days of high anxiety triggered by widespread economic uncertainty.

Reading magazines or books is just not the same kind of content consumption as watching a movie on Netflix or listening to music on Spotify while simultaneously snapchatting with your cousin in Perambur, instagramming your latest pictures to Nimisha in Artesia, laughing over KingBach’s latest Vine video or sexting your boyfriend in Edison.

Compounding the problem confronting magazine and book publishers, a gazillion blogs have contributed to enormous readership fragmentation.

Bottom line, I don’t see digital magazine or book subscription services (Scribd, Kindle Unlimited and Oyster) ever turning into a huge business like Netflix or Spotify with millions of paying customers.

Magzter also competes with Next Issue, a publishers-launched joint venture that debuted two years back. Not surprisingly, some prize content like New Yorker don’t appear on Magzter but available on Next Issue if you’re willing to pay $15 a month.

Tis’ true that Netflix’ success has proved that Americans are willing to open their wallets to watch engaging shows like House of Cards on their TV screens, computers and tablets.

But precious few will do so for magazines and books.

As the lyrics of the old Bob Dylan song goes, For the times they are a-changin’.

Sadly the likes of Magzter and Next Issue don’t seem to recognize that.

Count me among the unsurprised if both Magzter and Next Issue turn out to be complete washouts losing millions before they shutter.

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