It doesn't surprise me in the least that Dragon reaches only 1/15th of the D&D groups out there.
If I wasn't a writer instead of just a player and/or GM, I'd have no reason to subscribe to Dragon (or Dungeon, for that matter), and I'm a play-with-everything, allow-everything, buy-bunches-of-books kind of guy.
Trouble is, I'd rather buy two books I know I want for $19.99 each, rather than get about the same amount of content, much of which I won't want or need, for $40.00 with a Dragon sub.
I let players bring virtually any Dragon crunch into my campaigns they want; heck, I'll even sign the ones I write for! Nonethless... I have a grand total of 0 players with Dragon subs, same for Dungeon, and the only person I know who has a Dragon sub doesn't intend to renew.
Similarly, fantasy novels hit the Amazon bestseller list on a regular basis, but fantasy short fiction mags continue to whither. Part of it is the content in those mags, most of it is that people would rather buy novels they know (from the author's rep or the back cover blurb) they'll want.
As a writer, I subscribe to Dragon, among other magazines, because I want a finger on the pulse of potential markets. But where Dragon is concerned, I look for what the market (the editor and publisher) wants, not what the consumer (players and GMs) wants... because the only consumers I've encountered want nothing from it.
In my opinion, there's no market for "The Magazine of Dungeons & Dragons," and probably never was. The Roger Moore era Dragon, which was essentially "The Magazine of Role-Playing and Fantasy," had a big market (and from what I understand, much bigger circulation), but removing the reviews, the non-D&D crunch and fluff, and especially the entertaining writing in an attempt to make it more 'useful' for D&D players drove it away. I doubt Paizo even has the authority to reverse any of these elements (WotC would presumably pull the license if Paizo didn't obey their style guidelines and focus on D&D), but we'll see.