Melbourne Living sells for $6.95. My cut is $1.73 for each copy I sell. I received 17 copies this week and require four pockets to display this stock at a cost of $12.00 per month. I have to pay for the 17 copies in four weeks. I am supposed to carry the title until February when I return unsold stock with a credit due to be given on my March 2007 statement.
I’ll be lucky to sell 5 copies. If I do what I am told I forecast that carrying Melbourne Living will cost me at least $50.00. NDD, the magazine distributor involved would have enough data from my business to determine a fairer scale out. Universal Magazines, the publishers, would also have sufficient data to know the cash-flow impact of their new title on unsuspecting newsagent.
The five month on sale period is a decision of the publisher and distributor. It is appalling behavior on their part expecting newsagents to fund their new title while it tries to find a market. Newsagents are unlikely to complain because this happens every week – smaller publishers and compliant magazine distributors conspiring to rip cash out of newsagencies who cannot afford it.
What should have happened with Melbourne Living? This and any title to be on my shelf for more than 30 days ought not be billed until within 30 days of coming off the shelf. This makes the publisher responsible for their print run and not me.
I can understand your frustration Mark, but there are a couple of points you should bear in mind.
1. Your newsagency provides variety, and the fact that you stock a magazine that doesn’t sell many copies is your point of difference. You complain about Woolworths, but it seems to me that you want your business model to more closely resemble the Woolworths business model. Your variety is your key differentiator.
2. This magazine is a launch apparently. This makes it very hard for the publisher to get the quantities correct straight up. It also raises a much bigger issue, and one that I feel is the crux of your oversupply problem. That is that the advertising industry is fed so many lies by the publishers that they expect a very large print run on a launch title. Once the title stabilises it is in you interest (and that of the publishers) that this oversupply issue is addressed because it affects both parties business models.
3. Advertisers are reluctant to give a new title much of a go, and as a consequence it is often an all or nothing move from the publishers at launch to scale out more copies and hope that they sell. Whether or not this title is given the marketing support or not at launch is the key question. I suspect not, because universal do not have a reputation for spending a lot of money.
4. The distributors charge the publishers to don’t forget. In fact, on one launch I did, I tried very hard to get the distributor to offer a larger commission for the title at launch. They were not very keen on this, and I had to sign a two year distribution agreement that makes our business model very tough. Distributors encourage maximising supply because they generally get paid a fee per copy distributed by the publisher.
5. Victoria is a strange market. I don’t understand why, but almost every publisher I know finds that Victoria sells about 30% less copies on a per capita basis of any title that they produce. Maybe it’s the system in Victoria, or the number of newsagencies or the attitude of Victorian consumers. I would love to know which one it is!
Just my opinion, and I love reading your blog, but sometimes your anger towards small publishers frustrates me. After all, we need the support of newsagencies, and with the media about to become even more concentrated, the new players will be need to find cost savings to justify their purchase prices. Where’s that going to come form? It’s going to come from screwing you. Advertisers will then bemoan the lack of choice in publishers that they have to deal with, and the small publishers will be moved further and further towards the fringe. It is a vicious circle, and one that we all must be careful of falling in to.
Carroboblin Thanks for your comments.
Newsagents cannot afford to fund the launch of magazine titles. Take Cosmos which launched over a year ago. For almost a year the title was cash-flow negative. I’d estimate that newsagents invested close to $1 million in the launch of the title by paying for stock which ultimately did not sell. In return for this investment we received nothing.
Out of the stakeholders – newsagents, distributors and publishers, newsagents are those least likely able to afford such a cash-flow hit.
I appreciate the challenges small publishers face in launching product. This is not my problem. If you have a great idea for a title, find capital in the traditional places rather than expecting newsagents to become your banker. The current situation makes us the banker and we can no longer afford it.
I appreciate this sounds harsh. Such is life. Why not buy a newsagency and live the cash-flow battle for yourself and you will ask, within a few months, how can you survive.
On your point about variety, sue it is a differentiator in terms of what is on the shelf. It is not a differentiator in sales. Most of our sales and growth comes from the top selling titles.
We need a magazine czar in this country who decides is a new title is allowed to be launched because I for one am not prepared to fund them any more.
Hi Carroboblin,
May I also add to Mark’s comments that with cash flow as it is, and with the distributers keen to stop supply for non payment of Newsagent’s accounts with little or no grace, more often than not caused by what Mark has stated, there are times when your magazine won’t even see the light of day in many newsagents. This also has to be a problem to small publishers who need maximum sales of their product for survival. We are in this together.