The sick magazine distribution system in Australia

How many hair magazines in a newsagency is too many? Six? Eight? Eleven? I’ve been in several newsagencies this week and each has eight or more different hair titles on their shelves and one with eleven. Only two of the titles come close to paying their own way. Newsagents are losing money on the rest. I’d suggest that average consumer interest in hair would be satisfied by a maximum of six titles and probably four. Newsagent could cut their range in half and start to make money out of the hair segment. This is where the problems with the magazine supply model kick in – getting supply of a title cut is difficult for newsagents even if they are losing money every month. If a distributor decides to cut a title and not carry it at all, another distributor is likely to pick up the title and push it out to newsagents – continuing the cash-flow problem.

Newsagents are overloaded with underperforming titles. The segments where this is most evident are: hair, cars, weddings, computers, computer games, science, crafts and music. It is in these segments that the return on investment is the lowest and newsagents are almost powerless to correct the situation.

The problem is so serious that the ACCC ought to look at the supply model. Newsagents are the only businesses not being compensated for their time and resources in the event of a title not selling.

I have talked here before about Cosmos magazine. That title is a good example of the problems with the magazine supply model. Here it is ten months into the life of the title and most newsagents are still losing money. Many have hundreds of dollars invested in the future of the title. These are small business operators unable to pay themselves an adequate wage yet the magazine ‘system’ forces them to invest capital in a magazine launch like Cosmos.

The system is sick and newsagents are running out of cash.