Actually, it did make sense--the magazine market is suffering a severe downturn. In its last full year for which circulation figures were publicly released (January 2006 and January 2007 issues), Dragon lost about 15% to 20% of its circulation, and that was four years ago now. I suspect that even if the magazines weren't losing money, WotC saw the writing on the wall and got on when they could.
Here's at least one problem with that: WotC didn't simply stop producing a physical magazine in favor of digital; they actually ended a licensing agreement with Paizo to produce the magazines.
I don't know the details of that license in particular, but that kind if a agreement basically works one of two ways. Either WotC was just paying Paizo to print the magazine, which is unlikely unless Paizo had bargained for other rights that wouldn't be covered by a simple agreement to print, or Paizo had paid WotC for a more typical license in which they'd produce the magazines and keep whatever profits they made.
And if it's the latter, that means WotC decided to go into digital self-publishing while ending an agreement that meant they got paid whether the magazines were profitable or not.
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