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Update on Universal Magazines

I was contacted last week by the Circulation Manager for Universal Magazines seeking to find out how they could address the concerns I blogged about here. Here is what I wrote to them on October 30:

Titles from your business present a serious problem for newsagents because of the volume and because of the long on-sale.

While I appreciate your preparedness to work with me on resolving the issue at my newsagencies, I am only interested in a whole of newsagent channel resolution. This is critical. As I mentioned, I work with newsagents through Tower, newsXpress and my blog. To look after myself and not the broader community I serve is not an option.

Below is the document to which I referred in our conversation:

In February 2005 I spoke at a breakfast meeting of publishers in Sydney and presented a suggested list of magazine key performance indicators. In cleaning up last night I found the list and thought I’d publish it here for comment.

  1. Scale out to reflect title performance in that outlet with proposed supply to be no more than 25% above recent sell through rates except in exceptional circumstances where the additional product is expected to sell due to cover feature or special promotion. With higher scale out to be accepted for an additional fee paid to the newsagent.
  2. Offering of a carrying fee for titles which do not meet minimum performance criteria so that the newsagent is paid to carry the title. The carrying fee to cover labour, real-estate and any other fixed costs.
  3. Introduction of a penalty payment to newsagents for any issue with a sell through of less than 50% on an escalating scale based on a falling sell through.
  4. Newsagent to be able to easily and electronically alter order quantities (i.e. without having to call a call centre and wait on line for too long) and with no maximum number of titles to be adjusted each week or month.
  5. Newsagent changed supply figures not to be altered without reference to newsagent unless such change absolutely supported by sales data.
  6. No cut of supply below current recorded net sales.
  7. No reissue within six months of last issue of a title.
  8. Delayed billing of at least 30 days for any new title.
  9. Delayed billing to last month of on sale for titles being help in-store for more than 30 days.
  10. Returns to be credited within 48 hours of provision of electronic returns data or 7 days of provision of physical returns form.
  11. Returns to be called no later than the date of the next issue of the same title going on sale.

Magazine KPIs are mainly needed for titles outside the top 200. Inside the top 200 the supply model is, overall, good – although sometimes I would like to be able to get extra stock more easily. The real problem is the titles which generate around 20% of our revenue. These titles are cash flow negative. The KPIs I suggest above, if adopted, would make them at least cashflow neutral. The cash saved would help us have more resources to reinvest in our businesses.

I provided this to the ANF for their work on magazine performance KPIs at the time.

I am yet to receive a response from Universal Magazines. I have been looking at the numbers for the Universal titles – there is no doubt that I would miss some of their product. However, overall, I would be considerably financially better off given their long on-sale periods and their gross oversupply of some titles.

If they do not understand the financial damage they are wrecking on newsagents then they do not deserve space on our shelves.

I do not want to be taking this public whack at Universal Magazines.  There are far more positive things happening in my newsagency and the channel more generally.  However, since I have access to data from many newsagencies, I can see the extent of channel wide abuse by Universal and this is what prods me to pursue them here.  I owe it to newsagents to use that knowledge to fight for fairer terms from Universal.

They may not come back to me because of this second whack – some publishers are sensitive like that.  If I do take steps to remove their product from my shelves and if enough other newsagents do as well they will sit and talk about changing their approach.

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  1. Michael

    I have the audacity of hope that they reply to you Mark. I’ve noticed that I carry less and less of Universal Magazines on my shelves do to what you have highlighted above.

    I detest someone having my money in their pocket earning them interest with the silly excuse of it being a “niche” magazine.

    I really hope Universal Magazines get back to you with some answers to your questions.

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  2. Doug

    Mark please keep fighting Universal. I lose money on them.

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  3. Vaughan

    Doug;
    Its not a matter of fighting Universal; its about newsagents getting behind a tangible idea and forcing the hand of our suppliers.
    Its not solely up to Mark to take this idea on. The Associations should be all over it.
    We have been complaining about the distribution model for years yet fail to do anything about it.
    An idea like Marks will only work if newsagents are prepared to get off their collectives and support it.
    It will be the only way the publishers will stand up and pay attention.
    The publishers know how one sided the distribution model is.
    The distributors know how one sided the distribution model is.
    The Associations know how one side the distribution model is.
    Newsagents know how one sided the distribution model is, and yet as professional business owners we continue to accept it??
    How about the Associations get behing this idea and raise it as a discussion topic at the upcoming VANA meeting on Tuesday?

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  4. Mark

    Vaughan Associations have raised this and failed. One reason they fail is because they do not have mechanisms of compliance and because they rely on these suppliers to fund awards and conferences. They have shown themselves to be weak when it comes to this stuff.

    The Tower community of 1,500 newsagents is, from what I understand, bigger than any other single community of newsagents in Australia.

    There has been a flurry of activity since I posted my second piece on Universal, not from the company itself by by others representing it. They are understandably upset. But they also think they are good for newsagents.

    I want this problem solved, not just for me but for all. I am not affected as badly as many others I have seen. Universal needs to decide whether it will engage and resolve this.

    Newsagents need to decide if they want to make the magazine department profitable. If we do then we need to start somewhere. My assessment is that Universal is a good starting point.

    Mark

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  5. Michael

    Vaughan/Mark, What do we do first? Get the associations working or tackle it ourselves?

    I just want it all to be fair and not have to send back a box of magazines that had no chance in hell of selling – I pay to freight it back full and lose out of it.

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  6. Michael

    Another thing I noticed about Universal Magazines in my store is that with NDD and G&G the returns are always full.

    So when we can’t sell them, we send them back full, paying for freight. Then they put them in those bonus magazine packs and when they don’t sell they have to be freighted back full again.

    So we’re paying freight twice and not making any profit out of it. We’re being loyal to them by providing our real estate for them to sell their magazines and when they don’t sell we’re losing. I think they need to rethink the margin they’re paying us.

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  7. Janice Williams

    I am writing in regards to your blog comments on Universal Magazines.

    You have chosen to single-out Universal for an attack, you have published false statements, you have published ill-informed statements and have behaved in a manner that is extremely irresponsible.

    Re: Singling Out Universal For An Attack

    You have chosen to specifically attack Universal Magazines.

    Aside from the fact it is wrong to single out one publisher for an industry-wide issue, your act fails to recognize that Universal has worked hard to do the right thing by newsagents for over a decade.

    If this is the thanks that publishers like us get for increasing magazine frequencies, increasing efficiencies and building up the system then there is little hope for an industry solution while you are involved.

    Here are some other things you might wish to consider before you target Universal:

    1) Our supply efficiencies are well within industry averages. Both of our distributors (NDD and Network) have written to you to confirm this, but you have not put their comments on your blog.

    2) 78% of our production volume is bimonthly or monthly.

    3) 98% of our titles are within the Top 200 list.

    4) Many of our titles are the top of their respective categories:
    – Australian Road Rider is Australia’s No 1 road bike magazine by audit.
    – WellBeing is Australia’s leading natural health publication, and the only natural health publication surveyed by the Roy Morgan Readership Poll.
    – TrailRider is the No 1 audited trail bike magazine.
    – Backyard & Garden Design Ideas is Australia’s leading garden design magazine by audit
    – Kitchens & Bathrooms is Australia’s leading kitchens & Bathrooms magazine by audit.

    5) We have increased the frequencies of our titles in the last decade because we knew that this would be the way to support the newsagency system on which we depend. When increasing the frequency of a magazine the publisher makes a huge investment and hence losses for the first one to two and a half years thereafter. We would not be doing this if we did not believe our future rested in the newsagency system.
    – Dirt Action moved from bimonthly to monthly in 2004
    – Homespun moved from bimonthly to monthly in 2005
    – Scrapbook Creations moved from bimonthly to monthly in 2006
    – WellBeing moved from quarterly to bimonthly in 2006
    – Australian Road Rider moved from quarterly to bimonthly in 2007
    – Backyard & Garden Design Ideas moved from quarterly to monthly in 2007
    – Luxury Home Design moved from quarterly to bimonthly in 2007
    – Renovate & Extend moved from quarterly to bimonthly in 2008
    – TrailRider moved from quarterly to bimonthly in 2006
    – Quilters Companion moved from quarterly to bimonthly in 2006
    – Australian Beading moved from quarterly to bimonthly in 2007

    6) Despite the fact that our supply efficiencies are already ahead of market standard we are the most pro-active publisher in pursuing efficiency. Unlike other publishers we do high-quality magazines on expensive paper stocks. These cost on average $3 to print, (some up to $5), therefore every copy we fail to sell is an expensive waste. Every year we set higher efficiency goals and work to achieve them.

    7) We have invested over $1million in the last 12 months alone on added-value items such as CD’s and DVD’s to stimulate sales growth in the newsagency system.

    8) We are constantly generating new and exciting product to feed in to the system. 25% of the before-cost (ie: retail) revenues for these activities go direct to the newsagent. If it were not for the innovation that companies like us have undertaken the newsagency system would not have growth.

    9) Our circulations are 92% newsagency-exclusive. The mass publishers pump magazines in to over 15,000 look-alike outlets, but niche publishers like us provide the newsagency-exclusive products make a newsagency look like a newsagency.

    10) We have contributed financial sponsorship of the ANF, NANA and QNF for over a decade. We do this because we know that we must support the industry associations in order to find solutions to industry-wide problems.

    Your targeting of Universal Magazines is not only illogical but clearly unfair.

    There are numerous publishers who are far less newsstand-friendly than Universal, and have not yet even started to increase frequencies or deal with efficiency issues. We can only surmise that you may be working for one of our competitors or have some other motive for attacking us that is not made transparent on your blog.

    Re: False Statements

    As a responsible business with over 120 staff we can not accept anyone making up stories about how we conduct business, therefore we shall take legal action if required to correct injurious falsehoods.

    Our solicitor has written to you on your false statements.

    Re: Ill-Informed Statements

    Many of the things you have said are just ill-informed. This email serves to bring clarity.

    1) You imply that it is the publisher who designs the allocation process. We simply do not have the resources or market information to design an allocation plan, therefore we rely upon our distributors to do this according to their own mathematical models. As publishers we have the right to check allocations periodically and do so with one agenda in mind – increasing efficiency. We can always do better, and that is exactly what we have done each year – set goals and aimed for better.

    2) You imply that newsagents can’t check their allocations and peg standing orders. If a newsagent does this then neither the publisher or distributor can change it. If you have a problem with how the allocation system allocates to your store then you can contact the distributor and make changes, so we question why you chose to attack Universal on your blog instead.

    3) You wrongly attribute non-Universal titles to Universal! We can’t be held responsible for titles we do not publish.

    Re: Irresponsible Conduct

    Your conduct is irresponsible for the following reasons:

    • It is illegal to make falsehoods

    • You write as if you are an industry representative, but you are not elected, and do not appear to be contributing to any of the industry processes.

    • You do not reveal your motives.

    • It is one thing to say a publisher must cut allocation, but quite another to say “newsagents mush destroy this publisher”!

    The right way to approach an industry-wide problem, is with an industry-wide solution. This is why we continue to support newsagent bodies like ANF, NANA and QNF. We are also on the board of Publishers Australia, who have written to the ANF on two occasions seeking involvement in the ANF Joint Industry Group Committee.

    We fully support initiatives from the ANF Joint Industry Group Committee, and have on more than one occasion expressed our desire to participate. While we share the newsagents frustration with the lack of progress of this Committee, the solution does have to be worked out at industry level so we must support it when it resumes with a new ANF CEO. We are a genuine partner to the newsagents, our business depends on the newsagents, and we will continue to support the ANF to achieve our mutual goals.

    We have concerns about overall oversupply, and the large volume of micro or imported titles, but as we are not guilty of either, our contribution (if the Joint Industry Group grants us the opportunity to make it) would be to develop a framework that prevents these practices.

    Despite the fact we have several market-leading titles, we are not big enough to be a “major player” when setting the agenda for industry groups, so to a large extent, we, like the newsagents we support, have to wait for the big companies to weigh-in on an industry issue.

    We have written the above to clarify our position, but this blog trail must end here, as the proper way to resolve industry issues is through industry bodies.

    Yours Sincerely,

    Janice Williams
    _________________________________________
    Janice Williams | Associate Publisher
    Universal Magazines Pty Ltd
    Unit 5, 6 – 8 Byfield Street | North Ryde NSW 2113
    Ph: 02 9805 0399 | Fax: 02 9805 0714
    Web: http://www.universalmagazines.com.au

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  8. Mark

    Janice,

    I make no claim to represent anyone other than me individually at this blog.

    My post on Universal do not contain false statements.

    Yes, the posts to which refer are about Universal Magazines. A review of my posts over the last for years here will show that I write about a range of suppliers and products and on other topics too.

    Industry associations have been working on magazine supply issues for decades with little success for newsagents. The ANF track record is appalling in this area.

    In this place, I am a newsagent first and foremost. I am fortunate to also work with more than 1,500 newsagents through Tower Systems. This is a large newsagent community by any measure. When I write here, however, I try and write about issues which affect all newsagents, warts and all. I’ll leave the nice lunches and glad handing to others. I care about real outcomes for newsagents and that they are treated with respect. My personal view is that Universal Magazines does not treat newsagents with respect.

    You are spin in your use of statistics. For example, 78% of your production. I don’t care about production, I care about titles. Any title with an on-sale of more than 30 days is a long shelf life title.

    What is the Top 200 of which you mention. Top 200 in revenue, sales, efficiency for newsagents?

    What you spend on paper stock is your business. What I care about is the financial efficiency of your titles to my business. They are inefficient. While I may miss some titles from your portfolio, I will, overall, benefit significantly.

    My mum always told me when I talked about others in defending my action that she only cared about me in the discussion. You should do the same. Get out and study the cash flow of your titles for newsagents and stop point to others to defend your position.

    In your comment you acknowledge that “it” is an industry wide issue. By “It” I assume you mean the core of my concerns – over supply, long shelf life and thick (inefficient to display) product. Thank you for acknowledging the issue. Newsagents provide your company with real-estate and labour for free. We have little control over the supply model or the terms which you set. You take our cash and effectively charge us for your use of our space.

    As I told Kristin Paxman of your company almost three weeks ago, I am happy to carry Universal titles as long as the supply model respects my business and is financially viable. Today, it is not. I would expect mroe newsagents to want to cut some or all of your titles.

    Mark Fletcher
    Mobile 0418 321 338
    Email mark@towersystems.com.au

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  9. Bario

    Janice,

    In response, I have only this to say in relation just to my shop sales only with regards to the above mentioned titles.

    They are all not great sellers in my shop. If I am lucky probably only a couple each for Luxury Home Design and Renovate and Extend/ Backyard & Garden Design.
    None at all for scrapbk creations, homespun,dirt action, etc.
    Recently we were allocated 4/5 times our normal qty for Luxury Home Design after 1 issue where perhaps we might have sold out our allocation. This is way too much over and beyond the allocation formula for anticipating the next sales.
    We just want fairness and an equitable formula for allocation and the ability to request reasonable quantities to stock in our shop.
    Currently, even though you can amend online/customer service, after a couple of times adhering to our request, the allocations seem to have a life of their own and become skewered again.
    So the problem to address is in the distribution model and to look at the issue honestly from all angles.
    The fact that this issue is in this blog serves a purpose in that newsagents are frustrated in their concerns not being heard.
    You commented that the solution needs to be industry based, yes that would be best, but as you well know, that option has their own demons to deal with currently. Hence we are going down this path. If no one else is helping you then you got to help yourself.

    I rest my case.

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  10. Ian

    Universal magazines – In your “ill informed comments # 2” that newsagents can change allocation and neither the publisher or distributor can change it is false. We have changed a number of the magazines that you have mentioned ( and others from different publishers as well ) and after a while with the same number of sales or no sales at all they start to creep back up!!! You also say that you check allocations periodically. Do you get an overall allocation and return which would hide inefficencies or do you get individual store allocations so that you can check on inefficencies in the supply which effecting your business as well as ours??

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  11. Michael

    Janice, thank you for your post.

    What Mark is saying is happening in all the newsagents I know in my area. You are welcome to come to my shop and visit the surrounding newsagents to see what Mark is talking about.

    It’s great to hear your side of the story.

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  12. Michael

    Oh and Janice can you tell me why everything has to be returned full?

    I just opened up a “bonus magazine pack” and found the bonus magazine was returned from Wheeler’s Hill in Victoria some months ago and then sent to me in Queensland! – A gross waste of fossil fuel.

    What I’ve received haven’t sold over the last three months, I don’t want to waste expensive fossil fuels on them anymore, these magazine’s carbon footprint is too big.

    This is another issue I would like to bring up that I haven’t seen happen with other publishers.

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  13. Michael

    It’s ok, I just read on your site about how Universal is green by recycling the magazines. Why do redistribute them then? I have a recycling bin here as does everyone else.

    Can we make a difference to the environment by saving pollution, freight cost for better things?

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  14. Mark

    I want to be a magazine specialist but I want this on equitable terms. Terms which give me more control. Terms which respect my business and my colleagues. That Universal went to the lawyers instead of discussing these issues face to face speaks volumes to me.

    Mark

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  15. Michael

    Mark, I agree.

    I’m still in shock a magazine has been freighted 2000k’s, possibly twice.

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  16. Helen

    Newsagents that dont want to stock mags and papers,sounds like time to sellup boys.
    The model that is in place now was in place when you all bought your businesses and you all went in with open eyes,and still purchased,why critisise what you found good enough to purchase in the first place
    It reminds me of tenants who sign leases in shopping centres or strong retail precincts knowing full well the commitment for rent and then complain 12 months later that their rents are so high…its such a hypocritical model you are trying to base your arguements on..

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  17. Bario

    This is not a shock to me at all, I have already seen this happening for years….. shop labels on bonus mags packed in the plastic
    bags from all over Aust.

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  18. Bario

    Helen,
    hope it doesn’t mean there’s no room for improvement after going in with eyes wide open.

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  19. Helen

    A newsagent not selling (or wanting to sell)magazines and or papers is a bit more than a bit of a tweak to the model, dont you think?

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  20. Michael

    Bario, the shock was it’s been trucked 2000k’s. I don’t think that it’s “green”. I’ll have a tough criteria in the future with the bonus mag deals – from all distributers/publishers.

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  21. George

    Helen, I think all newsagents want to sell papers and magazines, but only if they are profitable. Making money is why we bought a business and there is no harm in becoming better at making more money.

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  22. Derek

    Hi Helen

    Thanks for your view, it is not at all about not wanting to sell Magazines or Newspapers, without going through it all again its about not using Newsagents as a Warehouse or in other words oversupplying Newsagents with non attractive slow selling longshelve life magazines which you have to pay for before they are sold, then send all the unsolds back which you also have to pay for, leaving your wallet empty all the time.

    Its also about the lack of respect that Newsagents receive because in my opinion you have at least a few associations pulling in different directions, building power bases and not being transparent. Its about trying to get proper representation without being comprimised Nationally.

    It is good that you seem happy and some of the wider issues do not worry you or have an impact on you however their are some people that, should I say some family Newsagents that this is having an affect on, it is not just the three Musketeers that think this way.

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  23. Helen

    Its all about newsagents having choice in what we stock and the quanty we stock in our business. The same choice we have when we buy gifts, cards, stationary etc. Obviously if you sell out, you increase your order, same as Newsapapers.
    Why is it so hard???
    After all its my cashflow that is impacted if I get it wrong!!!

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  24. Peter

    Janice Williams your comments show how out of touch you are with the real world. Talk to any newsagent you do not suck up to with a lunch or sponsorship or some other freebie and they will tell you your terms hurt their business.

    I am following mark and getting rid of of all my universal products.

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  25. Michael

    I was out today and saw a few newsagents. One where the owner wasn’t present, was severely over supplied.

    There were niche magazines that were two feet high stacked. There was no way that they were going to sell through. There were around six stacks like this. Cash out of newsagent’s pocket earning interest for someone else : $800-$1200.

    Newsagents have to use their common knowledge and send back stuff like this early and maintain what you can sell. It’s only right.

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  26. inside

    Newsagents need to ask why the ANF and other associations are ineffective about magazine supply. It is because they are part of the problem. The ANF Board had a nice visit a few weeks ago with NDD. Very cosy. A few laughs. Some nice hospitality. Being social and being liked is more important it would seem than fixing the problem.

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  27. Michael

    The way I see it is that one of us is going to crash soon. Will it be the ANF? NDD? or a lot of Newsagents that are crippled by there actions?

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  28. Brad

    The way I see it is the dinosaurs of the past are still running this industry the same way they always have. It was sheer folly years ago to give suppliers what they wanted out of fear that they would distribute into national retailors. Well they did anyway.
    Now it seems that the same dinosuars are seeing their personal agendas challanged when newsagents attack the distributors. NDD is a poorly run company. Shipping costs alone must be driving them broke. The publishers that supply them are suffering because one or the other is not willing to report correctly on sales numbers.
    All I want within this area of my business to be able to sell as much as I can and not have thousands of dollars outstanding in credits or tens of thousands of dollar sitting on the shelf.
    Brad

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  29. Luke La

    Helen,

    What if you came into this business with the perfect painted picture (made beautifully by the sellers and industry associations) and not knowing about these problems? I have been in the industry for a short time but have seen many families come and go because they can not financially withstand the onslaught of non-performing titles and the unconscionable conduct from distributors.

    So now that you know which areas in your business are making a loss – Do you keep quiet and let it continue? Or do you seek alternatives for better outcomes?

    “Why is it so hard?” It’s because suppliers do not respect your right to be a business owner – but more to the point as Janice Williams has indicated – they have “the reports” to prove that you are selling so many. What you actually sell does not matter.

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  30. SHAUN s

    Luke La ,you are spot on with what you are saying we purchased the business with out knowing anything about how we would be getting treated by these magazine distributors .We are very happy with our sales at our newsagency everything is up compared to last year but it is the magazines that are letting us down, yes the sales are up but over the last 6 months our bills from these 3 distributors are way more than our actual sales so there for we are going backwards.8 weeks ago i contacted all 3 suppliers to cut back my stock and which they said they will by a couple a grand a month ,as of today the only thing that has changed is that i am getting supplied worse than i ever have ,it is like they are getting one more big bill in each and it is pissing me off that much that i am now going over board on my returns to try and bring the next bill down and the problem with this is i am sending back stuff that could possibly sell at some stage of its shelf life .And to Janice Williams i have previously sent your company a letter informing you of how bad ndd are with over supply i gave examples of what sells and what does not ,i sent the letter to your company ,NDD,and also our mates over at the ANF and i did not get one reply from it .
    thanks shaun

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  31. Bario

    Has anyone received any titles from South Africa in the last couple of months or so?
    They are supplied by Gordon&Gotch.
    Did anyone have any success with them?

    I kept mine on the shelf for a few weeks together with the corresponding ones from UK/US but did not sell any. so I have decided to early return them.

    For the past 6 mths, I have diligently returned titles which are not yet recalled but have current issues on sale and also titles which are over-supplied.
    I reckoned I have shaved at least 4-5k from my monthly magazine bills.
    I still have to refine some areas in my range of titles and be more ruthless.
    Given the sort of financial climate we are in today, we cannot afford to be lax in our cash-flow strategy.

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  32. Louisa

    Once again I see newsagents being hammered by publishers and distributors. Everyone wants their money and not a thought for the important link in the chain that sells their product. To the newsagents – send back immediately all the little niche mags that don’t sell well in your area and all the long shelf life ones within 2 weeks of getting them. If buyers want one they can always contact the publisher and buy it there. Why should you be inconvenienced at their expense. Let them be the ones to store spare mags of each issue in their real estate and maybe then they might listen. To the publishers I say you should start looking at the returns and figures that your distributor pays you on. Use your eyes and cull the numbers. I guess some of you just don’t want to admit your magazine stinks and is not selling and you need to reduce your print run. To the distributors I say get someone on the job that understands how to cull the numbers so there is a 70% plus sell rate for the newsagents. Then get that someone to earn their money and contact the publishers to reduce their print run. This will solve everything. A win win situation if publishers and distributors look at the selling areas of their products and work with the newsagents instead of against them. Otherwise, you may end up with nowhere to sell your product!

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  33. James Lovatt

    While I agree with most things that Louisa says, some important fact is being overlooked here. Magazines are costly items to print and distribute. Why would any publisher in their right minds want to send out too many? I mean, just ask yourselves!

    I fully understand that they are a short-term financial headache for agents — but if you don’t sell them, you do get your money back, eventually. Publishers will never get that money back. Inefficiencies in the industry cost me millions each year. So unless you have proof that publishers are insisting on oversupplying, perhaps that’s not where the finger should be pointing.

    As to the idea of sending back anything with a shelf-life of more than two weeks, that’s not a great idea for most publishers who produce monthly titles. Maybe you should be looking at culling the vast majority of your titles that do not perform — and I’ll guarantee that almost without exception, they’ll come from overseas.

    These are difficult times. As Australians, we should support each other to get through them. I’m sure you are aware that Lovatts is a 100 percent dinky-di company.

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  34. SHAUN s

    James ,our contact point is with the suppliers and it is them the suppliers that tell us that it is the publisher that decides on the the numbers .i have constantly called NDD and Network and that has been there reply that they have no say in what we get ,so the blame just gets pushed around .I don’t really care who is to blame but just want the problem fixed .The way i understand it is that someone along the line is makeing a lot of money on the over supply because someone at the end of the day has our money for months on end before we get anything back .I personally would not have a clue on the figures but surly there would have to be a hell of a lot of money sitting in bank accounts collecting interest while there are dead magazines sitting on our shelves doing bugger all ..

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  35. Brad

    James,
    I have a fair amount of respect for your brand and as such I make sure that it has a good showing. However I have sales data that supports a trend by NDD where as the sales are flat or slight decline but supply is pushed up. I agree it must be costing you millions in resting your brand with poor distribution. O/S titles are a burden that most of us can’t keep as it stands but if the distributor fails to look, listen and act then where can we go.
    1 publishers comment basically said to me ‘we are right and you newsagents are wrong’. I understand my mag department as I am sure most who read here. There are some new into the industry that need time but they are the most at risk from distributors who feel it is a free hit.

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  36. Brett

    I agree that Publishers would prefer to only print the number of magazines that would sell. I also would like to stock only those that sell. So who is the third party? We all know.

    Perhaps we, through the NANAs and QNFs of this world, should meet with the publishers direct. Lets chat about the future and swap data and see if we can’t agree on the model we all need.

    Would that make sense?

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  37. Mark

    James,

    With respect you miss the point. The financial cost is not short term because the cost is replaced with cost from the next issue. The only long shelf life titles which are okay are those with a good sell through. In my experience many Lovatts titles fit that criteria.

    To get the return refund to which you refer we have to pay to send the magazines back. This can cost us fifty cents a copy. So in addition to taking our cash and demanding our labour and real-estate, non performing titles have a return cost which hurts newsagents.

    There is efficiency to consider. Louisa’s company sends products which are spatially inefficient as well as having a long shelf life.

    Please don’t play the violin and say hey team lets all support each other. Newsagents are at the bottom of the food chain in magazine distribution. We cannot survive with the current model.

    I appreciate you engaging on this but please don’t defend Universal – they are is a different league to your company.

    mark

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  38. Ian

    The next issue of Your property Investment from Network has just downloaded and we have an increase in supply from 4 to 8. The sales over the last 6 months have been 1, 0, 0, 0, 2 & 2. We send them our sales data as required, so where is the justification to increase the supply by so much. If they looked at last years figures for Sept. to Jan we were returning 100% of this title so they can’t say that it is because of an increase of our sales over the holiday period. We will do an early return on them but guess who gets to keep our money for a month or so!!

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  39. Michael

    Ian, that’s where I reckon we should get an immediate credit into our bank accounts or we should get interest paid at the end of it. I’m surrmising here, but that could be the justification – interest earned on our cash????

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  40. James Lovatt

    It’s funny, but when I was posting my first response, the thought went through my head that as a publisher, I might be thought to be defending another publisher. We publishers all stick together.

    Then I thought: No, the industry must realise that I’ve spent at least half of my 30 years in the industry begging agents not to put up with inefficiencies in the supply chain. Apparently not.

    I’m not trying to defend any publisher here, and I’m not trying to attack them. I’m simply pointing out that either there are a lot of mad publishers out there who don’t mind wasting a fortune every week (and that might be partly true), or else the problem lies elsewhere.

    And Mark, granted you and other agents have to stump up ONCE for this inefficiency in supply, but let’s not forget that any publisher with an oversupply problem is stumping up fresh cash every week or every month! There is no reason for newsagents to pay for this inefficiency and anyone who has heard me speak at an industry do knows I’m like a broken record on this subject.

    There have been countless summits on this issue and all they have resulted in is enough hot air to melt polar icecaps. Please keep up the good work with this blog — it’s one of the best chances we have of openly discussing this and other industry issues.

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  41. Mark

    James,

    Newsagents know that gross oversupply exists. Just as well know that uneconomically long shelf lives exist. We see this every day in our stores. It does not matter what a publisher would do, it is what they do do which hurts.

    We need a fair supply model which respects our retail network. Titles with a greater than 30 day shelf life needs to be carefully assessed. If they have a high space cost (i.e. are thick) and a low sell through (i.e. less than 60%) then this is the starting point for what has to be killed.

    Every publisher has a stake in this. The channel is sick and unless serious immediate action is taken retail outlets will be lost.

    I agree there have been too make meetings and conferences. This is why I have taken action on Universal. If that fails then I will resort to Plan B. For the sake of my newsagencies I need to take a stand now so I can be a magazine specialist tomorrow.

    Mark

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  42. Brett

    James, it is well known that distributors do oversupply. The model they use, a fee per copy distributed, reinforces it. They have the knowledge and data to resolve the oversupply but why would they when they earn big $ with the current model. Furthermore they earn interest on the hundreds of millions of newsagent money they hold until it is either paid to newsagents as returns credits or publisher as sales months later. The wastage is enormous. It is in the distributor’s interest to maximise supply that in turn maxmises their fee and interest revenue.

    As I publisher you may find interesting an article written by Rayma Creswell in the Insight section of Subscription (Aust Post subs mgmt magazine) Nov 08 issue.

    The amount of wastage generated by the outdated model is huge. Add to that the cost of transporting unsold copies. Based on 2004 MPA figures, at a conservative sales efficiency of 80%, retailers paid $188 million up front for magazines that did not sell.

    There are models that can help you allocate efficiently and reduce wastage costs. Do you need help?

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  43. Vaughan

    James;

    Thank you for taking the time to contribute from a publishers perspective. I am sure most newsagents respect your views.

    I am with Mark on the unusual stance he has taken against Universal, and in time other publishers. It was only a matter of time.

    I am also about to cancel my suppies from Universal and am closely looking at other publishers.
    As was mentioned in this posting also; the overseas titles are of major concern to my business and most others, this would be a perfect starting point for newsagents wanting to reduce the cash flow burden.

    The concern from my perspective is every time i cancel a tiltle, especially non performing overseas crap, 3 or 4 new overseas titles appear. Its almost like the distributors have a supply matrix based on the number of copies to my businesses, keeping their distribution revenue in tact.

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  44. Derek

    Just a quickie James. I cancelled my NDD account just before you transferred your distribution from Network. I have to live with that decision now, my shop misses your publications however my business has stabilised because of what I did.

    In hindsight what Mark and others are doing would of been the way to go. At the time NDD could not control the handbrake that they put on for me, their system put me back on by itself. That was the information given to me when I spoke to my State Account Manager.

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  45. Terry Thelwell

    Brett

    As the Circulation Director of Lovatts I find it hard to disagree with many of your comments. One valid point you raise is that publishers don’t get paid for copies sold until months after the off sale date. Therefore this negates the incorrect comments that are often made that “publishers are getting rich from newsagents by oversupplying”. As James said ” we dislike to oversupply agents as much as you do”. You offered us help in reducing waste and increasing efficiency. 10 years ago in an effort to reduce waste we set up our own inhouse data bank. We now have the supply/sales/efficiency rate for every outlet in Australia. This has enabled us to have more control of our distribution. We are constantly striving to improve our efficiency levels. As you offered to help us, I in turn offer to help you and all newsagents, if anyone feels they are being oversupplied with any Lovatts titles.
    Please contact me on terryt@lovatts.com.au and I’ll personally address your problems

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  46. Mark

    Terry,

    Lovatts has a track record for managing supply because most of your revenue is from cover price. Other publishers make the bulk of revenue from advertising. These are the publishers who are most inefficient with us.

    Publishers need to understand that cost of oversupply and the risk for the health of the channel as a result.

    Mark

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  47. Vaughan

    Sounds like we should be dealing direct with Lovatts and increasing our margin.

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  48. Brett

    Terry,

    It is the distributor the holds onto the money. It is in their interest to maximise supply that in turn maximises their fee and interest revenue. Their PCD model is not aligned with the strategic and operational needs of their publisher clients.

    Congratulations on being proactive with your allocation systems. It is only through publishers being closer to newsagents that these supply chain problems can be resolved.

    I have a wealth of knowledge in circulation and allocations analyses and systems design, and offer help to any publisher who wants to increase efficiency and reduce wastage. brett@bizard.biz

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  49. David R

    Untill we have it where we pay for what we sell , will anyone make money I have been a newsagent for 30years never seen it so bad for over supply. Oct, i had more supply then i sold .These people can if they wished could over supply enough to send you down. ACCC should be looking at this. Some Distributors stops you from cuting or stopping some stock , is it not covered under third line forceing

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  50. Louisa

    James Lovatt, you are correct in saying that a publisher in their right mind would not send out too many magazines or print an excess amount. As a publisher you would know that printing costs are cheaper per copy for every extra thousand printed. What if the problem was increased by the fact that printing a bulk amount in excess of 10,000 is not that much more than a smaller amount of say 5,000. What happens to that excess?

    The suggestion of culling titles that do not perform is exactly what the newsagents are trying to do. The distributor won’t listen, and when they do, they fill the gap with similar titles that have already proved not to be selling. Every good newsagent knows what sells best in their agency and would like nothing better than to be able to sell more of the titles suited demographically to their customer.

    If the distributor WAS doing their job properly they would be monitoring the allocations and adjusting them where necessary. They are paid to do so, surely it is part of their contract with the publisher. If they have sent the title to every newsagent they service and the numbers are consistently down, THEY have to take charge. It is up to the distributor to contact the publisher to decrease their print run.

    Should the publisher fail to do so, the distributor should have the excess sent to the publisher at his or her expense and its then up to them to sell that excess amount. Why should the newsagency be storing non selling magazines when they don’t want to and at THEIR expense? Space is a valuable commodity for any retailer.

    IF the publisher is closely watching their figures and acting on the results they would be contacting the distributor and changing the allocations and the newsagent would not be having this problem at all. They would also be considering a reduction in printing.

    Unfortunately a newsagent does not have the time to ring hundreds of different publishers (including those overseas) and cancelling their product. Yes, publishers like you would be glad to hear from them and act on the information but honestly, how many others are like you and monitoring closely their sales and the best areas to be sold from? If they were, there would be a marked reduction in titles taking up valuable selling space.

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  51. Brett

    Louisa,

    The normal process is for the distributor to advise their publisher client how many copies to print for the next magazine issue based on their extensive sale database. This should be part of the circulation plan that the distributor creates for their publisher client. Unusual that it seems, many publishers don’t have core competencies in circulation and rely on their distributor – for how the circulation will be managed including the number to be circulated.

    There are key differences in publishers; some are aligned with or own the distributor, therefore the distributor serves to provide them with economies of scale.

    The distributor is doing their job properly in their view and that is to maximise their revenue and profitability. The problem is that it creates inefficiency and wastage in the supply chain.

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  52. Mark

    All newsagents want is fairness. The current magazine distribution model, developed back when we were protected by an ACCC authorisation, is inappropriate for today. It shackles us with unfair costs and inefficiencies. Unless publishers and distributors urgently act, more newsagents will quit publisher lines like I have requested with Universal or entire distribution lines like several have with NDD.

    Publishers and distributors will find that what I would call a new market model would see some newsagents significantly increase magazine sales. They need to decide if this is desirable.

    Mark

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