How Subscription Billing Can Put A New Spin On An Old Product

1. How Subscription Billing can put an new spin on an old product © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential. 1

2. How Subscription Billing can put an new spin on an old product Young adults and their parents will remember trips to the doctor's office as a child. The waiting rooms were often filled with bright, colorful toys like building blocks and bead roller coasters. Scattered among these knickknacks, one could always find the popular children's magazine Highlights. Now, the magazine is shifting from its printed roots, heading into the modern era with daily mobile content provided on a subscription billing model. Putting old ideas on a new platform According to The Washington Post, the magazine didn't want to rush and just make a mobile version of its magazine. Although Highlights' sales had steadily declined over the past few years, it wanted to take its time to develop the perfect product. "As the technology around tablets and mobile devices took off, we didn't rush to be the first there," Kent Johnson, Highlights' CEO, told The Washington Post. "We wanted to marinate a little bit on the capabilities and think about what would be right.“ 2 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

3. "Highlights knows its previous success resulted from its ability to keep children entertained." Highlights knows its previous success resulted from its ability to keep children entertained. However, it also knew it had to compete with smartphones, gaming consoles and Netflix. It also realized that, despite how often children use such services, many parents are concerned about how much time their children spend staring at screens. Therefore, instead of simply transitioning its magazine to a mobile format, Highlights created a new publication called Highlights Every Day. As the name indicates, the app's content will change each day, but it will always consist of a blend of videos, articles and the puzzles children came to love. It will also mix old and new, combining prior articles with new formats, videos and games. Parents who don't want their kids staring at screens all day don't have to worry. The traditional print Highlights magazine will remain as is, and the app will provide high- quality, informative and engaging content. "The quality matters, what that screen time does to kids is not just measured in the clicks and the hours; it's what happens in their brains," Johnson told The Washington Post. 3 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

4. Bringing new value According to TechCrunch, although Highlights is aimed at children between six and 12, its impact is bigger than adult publications like Rolling Stone and Vanity Fair. The company has printed over 1 billion magazines full of puzzles and interesting articles. Highlights has had games on Apple's App Store since 2010, but this is the company's first attempt at a full-featured app. Highlights Every Day will launch over the next year and consist of free, paid and subscription-based activities. According to The Washington Post, the subscription will cost $7.99 a month after a free trial period, making it slightly more expensive than the traditional magazine. However, the interactive content and video along with daily new offers raises the value of the product enough to meet this higher price. "Highlights knows its previous success resulted from its ability to keep children entertained." Other magazines should take note. Publishers have spent years claiming the industry is dying and that methods to digitize aren't profitable enough to sustain their businesses. Magazines and newspapers are downsizing, and former employees struggle to find new jobs. Highlights' new app, however, injects new life and fresh content into an old system. The company knows its audience – it understands that children and parents love its articles and games, and would like to see more of them. 4 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

5. However, Highlights also understands that today's fast-paced world requires constant fresh updates and a business model that supports never-ending access. That's why the company is providing new content each day using a subscription billing solution. What's more, the app allows users initial access without committing to anything long- term. Few people will commit to a subscription without the chance to explore the service beforehand. In fact, not providing a free offer reduces customer acquisition rates, leading to low revenue overall. The free content and trial period gives parents and children a chance to explore the app for themselves and for Highlights Every Day to prove its worth. In a world full of new competition, Highlights magazine hopes this move will let it stand out against the other distractions children face today. The company's plan to expand its subscription-based service to digital platforms allows a beloved classic to remain new and relevant. 5 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

6. About the Author: Bryta Schulz Bryta joined Vindicia in 2013 and serves as Senior Vice President of Marketing. She is responsible for building brand awareness, creating go-to-market strategy and promotion, and driving growth. With over a decade of executive level marketing, product management and PR experience, Bryta has led marketing teams in enterprise technology and SaaS companies. Her experience includes heading product marketing at GoGrid, PGP, RSA and Symantec and business development and product management positions at Xcert, Thales, and Persistence Software. Bryta holds a MA in Translation from the Johannes Gutenberg University Mainz and an MBA from the University of Reutlingen. Visit our Blog for more information. 6 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

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