Demon negotiation isn't quite the same in 1 as in 2, you don't often see that nice four option "Join Money Mag Item" screen as a result. Most of the time you'll end up with the demons assuming you want them to join up, and requesting stuff... even if they're dark aligned in which case they'll just take whatever they can sucker you into giving them and then leave.
There's quite a few dark demons that drop tons of mag late in the game, but early on I found I was better off leveling in the virtual trainers (seems to give more exp than regular fights even though it lacks the makka/mag/item drops) and investing in good guns. You get access to some good machine guns and status inflicting ammo as early as the Factory, and even better stuff after you rescue the heroine and start working through the underworld. Once you have a couple of golden guns and some nerve bullets/randi shots you should be able to auto battle through just about every random encounter, without depending on your demons. Then you just save up the mag for boss fights.
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