LeKiosk Books Another $7.1M For Its Online Store, As It Strives To Become The ‘Spotify Of Magazines’

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Tablets, with their larger touchscreens that are less cumbersome than laptops, lend themselves naturally to long-form content consumption, and that is spawning a new breed of services to fit the bill. One of those is Paris-based LeKiosk, a digital periodical “stall” that has now closed a Series B round of funding totalling $7.1 million to grow its business across Europe.

The funding comes from CM-CIC, the investment arm of Credit Mutuel and investor in Deezer and Spartoo; and FSN PME CDC Enterprises, a French government investment fund. Prior to this, LeKiosk had raised $3.8 million in a Series A round from private investors and French investment funds Sigma Gestion and Promelys.

LeKiosk says that it wants to become the Spotify of the magazine world — by that, it means the go-to place to read streams of magazines from a wide variety of publishers, with its business model based around luring people to the platform around monthly subscription fees (but no freemium options; more on that below). It has seen some good traction in that effort: In its home market of France, it was the highest-grossing iPad app in the country in 2011.

Unlike Apple’s NewsStand, which offers magazine and newspaper apps, LeKiosk focuses on what are essentially digital facsimiles of physical magazines, something that may mean less interactivity in the magazines themselves, but on the other hand gives LeKiosk a chance to attach an actual pricetag to each piece of content (it’s usually the same as the newsstand price).

No freemium models here: “When we sell print content more people understand why they should pay,” says Michael Phillippe, co-founder of LeKiosk. Magazines come from leading publishers like Conde Nast, Dennis and the BBC. Also unlike the NewsStand, LeKiosk works across all major platforms, from iOS and Android and desktop, and is currently developing a Windows 8 app as well.

Phillippe says that so far the service has seen a surge of interest: in the first year of launch LeKiosk was downloaded 500,000 times, accounting for 1 in every 3 iPads in France. More recently, that download frenzy has slowed, with the total number of downloads today at 700,000, as the service has expanded to the UK and Italy.

Nevertheless, the conversion rates of free downloads to paid purchases has been strong: Of those downloads, some 100,000 have paid for magazines a la carte, and 30,000 have taken out “subscriptions, which give users access to 10 magazines per month in exchange for €10 or £10. The charges are made through Apple’s in-app purchasing service, which means Apple gets a 30 percent cut.

The company is growing fast in terms of revenues: This year it should reach total sales of €6 million, compared to €1.4 million in 2011, according to Les Echos, and it expects to be profitable by 2014.

While the French store has around 600 titles in it today, England and Italy each have around 100 titles.

Phillippe says that the new funding will be used to help to beef up those latter two catalogs further, as well as eye up the rest of Europe. The U.S. is not on the agenda yet, although you can still download LeKiosk’s iPad and iPhone apps there, with European titles on them.

Part of LeKiosk’s European expansion will involve developing relationships with publishers to get all must-have content onto the app, and also working in new services to the app itself, boosting interactivity among users around sharing magazine stories and magazines themselves. This would be crucial for content that might otherwise be perceived as “flat” when compared to more dynamic magazine apps.

But he also argues that the pared-down, digital versions of the magazines on LeKiosk is also part of the company’s strategy: “We are trying to build a simple user experience,” he says, using a dynamic 3D newsstand that “provides a consistent look and pricing structure for all the magazines within it.”

Going forward, if anything, it looks like LeKiosk wants to try out even more premium services rather than any advances to freemium. In France, the company is experimenting with adding comics into the mix at the start of 2013. It plans to offer them under a separate pricing structure, charging €10 for four comics.