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The customized magazine concept hits paydirt

For Mygazines, the key to success has been moving from a business model that put the Toronto digital publishing startup at odds with publishers to helping them better understand their audiences and target their content.

The company was born in 2007 when co-founder Darren Budd was browsing through a magazine rack. Why, he wondered, should he buy an entire magazine to read one article? What if he could buy one article from this magazine, one from that one, and create his own customized magazine?

He took the idea to an acquaintance, Yoav Schwartz, and the two hatched the idea for Mygazines. The original concept was a sort of YouTube of digital publishing, where anyone could upload an article, it would be formatted into an electronic document, and readers could pick what they wanted.

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Mygazines drew more than a million users in its first month, but some people uploaded copyrighted content without permission, and publishers weren't pleased. "There was definitely a misuse of the technology," admits Mr. Schwartz, now Mygazines' chief executive (Mr. Budd remains a shareholder).

Mygazines could have stuck to its original concept and drawn the wrath of the magazine industry, or just abandoned the idea, but its founders instead chose the middle ground. Controls were tightened, effectively stopping anyone but the owners of content from uploading it. They kept the idea of a digital newsstand where users could pick and choose content - now renamed Mstand - but shifted Mygazines' focus to providing an electronic publishing platform for publishers.

Magazine publishers can create electronic editions of their publications, readable from the browser of a personal computer or mobile device. But Mygazines isn't limited to magazines. Mr. Schwartz says there is also a sizable market in catalogues, corporate brochures and other publications - just about anything that would traditionally have been printed.

Mygazines' customers include St. Joseph Content, a unit of the large Toronto printing and publishing firm St. Joseph Communications, York University, and Calgary-based RedPoint Media Group Inc.

There are other players in the electronic publishing field, including such companies as Zinio LLC and LibreDigital Inc. What sets Mygazines apart depends largely on the fact that the Toronto company chose the software-as-a-service model, meaning it runs its software on its own servers and delivers services to its customers via the Internet.

That means there is no client software to download to a personal computer or mobile device before you can read an electronic publication through Mygazines. Whether a reader is using a desktop computer or an iPhone, Mygazines works through the Web browser software. And it detects what sort of device is at the other end and formats material accordingly.

"We serve up a very specific format for each of those devices," Mr. Schwartz says.

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That saves customers from developing apps for multiple mobile devices at costs that start at around $10,000 per app, says Randy Frisch, chief marketing officer. It's also easy for publishers to promote their publications by sending out simple Web links - linking to an app is virtually impossible, Mr. Frisch notes.

"I think the mobile version is probably one of the biggest draws for us," says Rhett Soveran, who works at RedPoint Media as Web editor for up!, WestJet's in-flight magazine.

"You can browse the magazine on your iPhone or iPad or whatever," Mr. Soveran says.

Mygazines also offers publishers insight into what readers are looking at. The software can track how long readers look at individual pages and what parts of a publication they zoom in on. That can tell a magazine publisher whether readers are looking at ads, which articles they read and whether they finish the articles or abandon them halfway through. A catalogue publisher could see which items are attracting the most attention.

Mr. Soveran says some of these capabilities set Mygazines apart from its digital publishing competitors, though he adds that some online apps, such as Google's analytic tools, can do more.

Another key to the company's success has been pricing strategy. At first, Mr. Frisch says, Mygazines approached pricing the same way most of its competitors did: Customers paid by the page or by the document. There were discounts for larger volumes.

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That complicated things, Mr. Frisch says, because prospective clients were trying to get multiple departments together to get higher volumes and hence the best rates.

So Mygazines took a different approach - charging by the month. A basic package for publishers, including five publications and a total of 750,000 page views, is $299 monthly. For corporate clients that produce more documents, a starter package of 50 publications with a million page views costs $1,000.

The prices work out to less than Mygazines was charging before, Mr. Frisch says, but the simpler pricing plan accelerates the sales cycle. "The one word that people kept saying was that it was a no-brainer item to look at," he says. Further, this model encourages customers to use the service more.

There have been challenges. "Starting a business in 2008 ... was not an easy task," Mr. Schwartz says. Mygazines started with angel investment from friends and family, then did a first round of seed financing early in 2008 to launch the initial commercial product, with another round of financing early this year.

Explaining digital publishing to people used to traditional printing was tricky, too. Part of the answer lay in hiring "digital-publishing believers," Mr. Schwartz says. Using webinar technology such as Cisco Systems Inc.'s WebEx for visual demonstrations has helped as well. "Once they pay attention for the first 10 minutes," Mr. Frisch says, "that half-hour meeting that they've set aside quite often turns into an hour-and-a-half meeting because they start asking more and more questions."

Today the company has 12 full-time employees and a handful of part-time developers, all in Toronto. More than half its business is in Canada, but Mr. Schwartz says there are also quite a few customers in the United States and the company is doing business as far afield as Australia and New Zealand.

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