Content seems to atomize well in apps (Flipboard, Zite etc) but whenever it gets put into a singular "magazine" format it fails. Why?
You address the bundling problem: Magazine editors, like TV networks and record producers, think we value their packaging. Sorry, we don't.
The bigger issue for magazines is that they - like papers - insist on seeing themselves as product. They believe their value is intrinsic to that product (thus, people should pay for it). I've long argued that if magazines saw themselves instead as communities of interest and information, they'd have been far better positioned for the net. If they had seen it as their mission to connect people, they'd have been in a better position strategically in terms of "audience" engagement and in terms of generating data that would make their advertising propositions more effective, targeted, and valuable.