Of course people still buy magazine subscriptions. An obvious indicator is all of the magazines out there today that still offer subscriptions. One thing you should note about the magazine industry is that they don't make their money on subscriptions, they make them on individual purchases and advertising revenue.
Ever wonder why magazines cost upwards of $7 each in the store yet you can get an annual subscription for just $10? It's because it's a promotion to jumpstart you into reading the magazine. More readers means inflated advertising revenues. Typically, the sale subscription price is only good for the first year. After that, they will raise it astoundingly to something like $80 a year or more for the same subscription. If you remain locked in a pay that inflated price then the company is beginning to make money on your subscription. However, if you nix your subscription after the first year the hope is that you will like the magazine enough to buy a few issues periodically from the store (at $7 a pop), which still nets the company some money. Not to mention you have become part of their audience.
If magazines were losing money, you wouldn't see them still for sale. Most magazine publications are owned by only a handful of media conglomerates (yes, the same holding companies that own your television stations and movie production companies and websites, etc.). These companies know better than to price slash just to "have some kind of income." It's all a marketing ploy.