No!. It is not time to kill off Universal Magazines. It is, however, time to develop a magazine supply model which is fair to independent publishers such as Universal Magazines, Australian newsagents and consumers.
I published a blog post here under this headline on October 29, 2008 in frustration about my inability to control the supply of product from Universal Magazines. After years of getting nowhere with suppliers on achieving an equitable supply arrangement for many I felt I had to strike out and bring the supply model issue to a head. That morning, Universal was on my mind because of what I saw in my shop.
In the months since the initial blog post, Universal executives have dug deep into the magazine supply model to understand why I and other newsagents who commenter to the post were so angry. The result of their investigation and reflection is improvements to processes and around the supply of their titles which did not exist last year.
From my own face to face discussions with the folks at Universal I also understand more about their goals. Interestingly, we agree on many discussion points. It is the magazine supply model between their business and my newsagency (and newsagencies around Australia) which is the barrier to an idyllic relationship.
magazine distributors lept to the defence of Universal quickly in October last year. The reality is, the blog post was more about them and decisions they make and not so much about Universal – it is breathtaking that they did not out their role in the problems at the time.
Hopefully, over the next few months, progress will be made on the model so that independent publishers and Australian newsagents can achieve a more mutually beneficial and rewarding relationship.
February 10, 2009.
For transparency, here is what I wrote back then:
Universal Magazines is the most financially inefficient publisher in Australia in my view, based on data I have seen. Oversupply and long shelf lives mean that their titles are more often cash-flow negative for small business newsagents than not. No amount of representation appears to be able to resolve the situation. The only option is to take the step to ban all titles from Universal Magazines.
This would mean that we no longer carry: Backyard Design Ideas, Build Home – Victoria, Build Home – NSW/QLD, Contemporary Home Design, Kitchens & Bathrooms Quarterly, Luxury Home Design, Melbourne Living, Outdoor Design & Living, Poolside, Poolside Showcase, Renovate & Extend, Sydney Living, Westcoast Living, Bargain Shopper Sydney 2008, Bargain Shopper Melbourne 2008, Choosing a School for your Child, Dogs Life, Life etc, Wellbeing, Sydney Eats with Cheap Eats, Complete Wedding, Crusty Demons, Dirt Action, Australian Road Rider, Trailrider, Australian Country Collections, Australian Beading, Homespun, Quilters Companion, Scrapbook Creations, and Outdoor Design Source.
While this may appear to be a drastic step, the reality is that overall we would be better off. In one newsagency, the P&L would benefit by over $1,000 by killing off all titles from Universal Magazines.
While this may seem like an unusual step for a magazine specialist to take, I see no choice given that I am not permitted to adequately control supply quantity and trading terms and given
Newsagents represent a tremedous asset to publishers. The sooner we manage ourselves as if this is true the better.
If, say, 500 newsagents decided to kill off Universal titles, I am sure that the company would take notice. Sure they may look for other retail outlets. They may also engage in useful negotiations with newsagents about fairer trading terms including payment for non performance of their titles.
So, I don’t want to kill off Universal Magazines. What I want is a magazine supply model which is fair to my business, supplies what will sell and on terms which are equitable.
I’m finding this type of thing more and more, like the Bathurst 2008 program which is set for return in January.
The race has been run and won now and no one will buy it. At $10 a copy there’s cash I could have in my pocket. But it’s in there bank account making interest for them in a three month term deposit I suppose?
Whilst it may seem drastic, the publishers have got no-one to blame but themselves. Publishers refusal to negotiate better terms for newsagents has driven this idea. Also, the Associations refusal to draw a fair dinkum line in the sand has driven this idea.
We continue to talk about oversupply and better trading trading terms year after year and yet nothing is done about it.
An email received from Network Services today is a prime example of who controls our businesses;
“Please be advised publishers have the final say over allocations, therefore we can only request your allocation change”
This was received after a simple request to change the allocation after a clear oversupply issue.
Newsagents need to be prepared to stand up and be counted, having our associations standing beside us would be even better, but i doubt they are prepared to.
As you say, if 500 newsagents are to do the same thing, maybe we might start getting somewhere.
I am convinced that this is deliberately done to sustain circulation figures so when i enquire about advertising they quote great circulation figures.
The reality is that they don’t disclose the returns, if they did nobody would advertise with them because tracking advertising success is still an elusive art.
Forgot to mention…
To put things into perspective about what Mark is saying, read Seth Godins blog called “The Dip”.
http://sethgodin.typepad.com/the_dip/
Essentially, knowing when to quit and keep the things that stick can be the deciding factor between success and failure.
Marco
Universal ought to quote advertisers exact sales figures – they certainly have them. With a failure rate of, on average, 50%, they are not only sucking up newsagent cash but they are also killing plenty of trees.
Mark
Interestingly, and perhaps more than coincidentally, every one of those titles you mention (that we receive) sits in the dog category – and I don’t mean the ones you take for a walk or play fetch with.
Part of that would be demographic/geographic which then pushes the problem to the distributor. I may be off target here but I reckon a fair percentage of these titles might be distributed by NDD – say no more – they push more crap into the newsagency network than the southern outfall does into Bass Strait.
Point is, nothing will happen until every newsagent rejects this printed offal every time it hits our door step. We certainly can’t rely on “our” association to go to bat for us – they’d be too busy cutting a deal on $2 reading glasses!!!!!!!
I had a naive idea to this situation before.
The publisher of these titles should give greater margin to newsagents so that newsagents can distribute these titles into speciality shops (as subagents). For example, Complete Wedding to wedding related shops, Dogs Life to pet shops. Create a special focus range into these subagents.
The extra margin can use to:
1. Help newsagents with better tools to manage the local distribution. such as mobile retailers, nice magazine racks to subagents.
2. Help newsagents share the profit with these speciality shops. current 25% is not enough to be shared by newsagnets and subagents.
3. Help newsagents manage the risk as these subagents may bankrupt, or lost the consignment stock.
Newagents can save some space if these underformance magazines move to related subagents, and enjoy better cash flow.
The speciality shop can enhance their offer with speciality magazines.
The publishers can enjoy better sell through rates.
This idea is naive because it is difficult for publisher to give more margins. It is difficult for newsagents to fund for the fixtures to subagents. The profit (12.5%) may not worth the effects of newsagents, and the space of subagents.
Furthermore, it is high risk to put consignment stock to subagents. For example, I had a idea to put a range of art magazines into a local art galery. Fortunely, for some reason, the plan never be carried out. A couple month later, it closed its door.
Although it is naive, I still hope one day, publishers and newagents can work out a practical model over it.
Cheers,
Sunny
” .. the P&L would benefit by over $1,000 ..”
Forgive me, but I don’t understand? There was a mention about the wedding magazine having a sold rate of less than 30%. So copies of the magazine you’re suggesting banning ARE being sold and revenue is being generated. That means you’re putting an actual cost on the shelf space being occupied by these titles? I’m really keen to know what that cost it.
Also, I’d be really interested to know the average commission newsagents for each magazine sold in Australia. Here in Thailand the commission the publisher pays is anything between 37.5% and 50% of the cover price.
I’m moving to Thailand!
25% on magazines in Oz!
I’m with you Vaughan! Then again, maybe we could go and bring back their national body!
Andrew, we get 25%. If you receive 30 copies and sell 10 over six months and the cover price is $9.95, you have made $24.87. With real estate and labour costing $5.00 a month you are losing money. Mark
Mark, thanks for that info. Now I can understand more about the industry and the problems you’ve mentioned about these particular magazines.
Frankly speaking, the whole distribution process here (in Thailand) is an absolute nightmare from a publishers perspective. It often takes four or five months to get accurate sales figures for a particular edition (I’m responsible for a monthly business title).
Someone told me to read this and I am glad I did. I knew some of the titles you list were bad but I did not put them together as related. It is easy to see a pattern on how these people are abusing newsagents. I dont know if I am game to cancel all universal titles. I know I should but it is a risk because I have seen magazine companies be vindictive against mates of mine when they have taken a stand.
Why not complian to the ACCC?
I have stopped buying these magazines, better information and value from ones from usa, delivered to the door ( I subscribe)
i was recently told by NDD that I could not early return airfreight magazines. The a/f magazines I have been delivered do not sell in this demographic so I have been commercially blackmailed by this company. I have also refused to place this magazines on the shelf. The publisher has now suffered as well. I was told to go online and cancel these magazines but lo and behold the édit’button is not highlighted so I cannot activate the editing system. I can only wish that the ACCC has some passing interest in this outrageous activity of this appalling company.
When I early return parcels of magazines at the depot, the NDD pallette is overflowing which is clear anecdotal evidence that I am not alone in my frustration with dealing with NDD.
Why deal with them at all? It never occurred to us when they kissed us off, just how much of a millstone around our necks they were.
There’s great satisfaction in taking some control and making good decisions.
Seems to me that it’s a matter of time before more of their titles end up with other distributors/publishers, like the form guides did recently, anyway.
Let them deal solely with the supermarkets and 711s. They deserve each other. Then let’s see how good they are when these customers screw them too.
BTW, after twice writing to IPMG and NDD re the way we were dropped by NDD back in March, we still have had no acknowledgment.
Oh, and has anyone checked out IPMG’s website with regards to NDD lately?
http://www.ipmgprinting.com.au/ndd.html
Dunno about you, but I got poked in the eye by a giant nose growing out of the screen, with regards to on-site state reps, merchandising yada yada.