The newspaper home delivery model in Australia is in crisis as more newsagents hand back home delivery runs to the publishers. Crisis is not my word, it is what some publisher insiders call it along with many newsagents.
While publishers are responding by increasing internal services for managing these handed back home delivery rounds in-house, there appears to be inaction on addressing the cause.
Many small to mid-size independent newsagents are walking from hundreds of thousands of dollars of goodwill paid when they purchased the runs. It says something about the home delivery model whey they are prepared to write off this investment rather than continue to lose money. To an outsider, this could be seen as a takeover without paying for the assets.
Publishers could stop the mass exit of home delivery by offering newsagents an equitable relationship. While this will cost significantly more than newsagents are paid today, it will cost less than the publishers providing the service in-house.
Offering fair compensation to newsagents for home delivery service would provide a basis for increasing subscriptions and through this increasing circulation. It all comes down to the will of the publishers and whether they want the current system to remain.
From numbers I have seen, home delivery fees need to double.
Back when I had home delivery in my newsagency I know customers would pay a higher fee – they are happy for the convenience of the service. Home delivery newsagents I have spoken with recently tell me the same thing. I wish that publishers had the guts to test this.
The financial challenge for newsagents of home delivery is not new. Newsagent associations and publishers know that. There have been various studies, the most comprehensive by Fairfax working with the ANF and KPMG in 2004. The net result of the various studies, workshops and meetings on the topic is that more newsagents than ever are walking away from newspaper home delivery.
The whole model no longer works, deliveries to the us are getting later, costs are rising, the paper companies are getting more demanding, and we are making less money.
Years ago we used to get the papers by 3am and finish deliveries by 6am but this got harder and later as the papers were delivered late or not all in one go, we were having to wait for the SMH or tele to arrive and this costs money and made deliveries dangerous as our drivers tried to get it all done on time.
As tech got better newspapers got worse, what is going on, no we are lucky to see the papers before 6am yet alone deliver them before 6am, so we got out as many other have, deliveries are old media struggling to keep up as people are turning to instant news for their news. Time we need to change, but we cannot rely on the publishers for help as they are the problem.
I wonder what Jennifer Round has to say about this after all her hassels. HWT continue push subscriptions in our area, and say it helps build our delivery run, but in the last 12 months they have picked up 8 subscriptions, and veryone of those was a current customer. They have only managed to steal a customer from us, then get us to deliver it at a lesser total profit. Our paper delivery to us can be any time between 5.45am to 7.15, Very hard for us to work around those times. Things have improved of late, but as Luke said, they are the problem.
Isnt it time you put a condition yourselves of delivery being on time by the trucks or dont bother delivering them, you have to put the problem back to the publisher, If all of you took a collective approach and made the publishers responsible for the delivery times.
I know this sounds over the top but when do you decide that giving up all you investment in these things is not worth fighting them as a collective.
In the end they need you!
they cannot continue in this “head in the sand mode” forever and you cannot continue to drop sizeable chunks of capital.
So why not band together before you give it back and have a go at them.
If their contracts are worth nothing what have you to lose?
They I suspect have a lot more.
Andrew, you do not seem to understand the contracts that were forced on newsagents by the publishers, there is no options for us to not deliver. Customers who do not get their papers blame the newsagent not fairfax or nationwide and it is our shops that get a bad name around the local communities when we deliver poor service. Customers do not care that the truck was late they want the paper on the front path when they wake up and if is not then it is the newsagent to blame.
The publishers hide behind the delivery drivers and the delivery drivers blame the publishers but in the end we are the ones that the customers think are providing a bad service. As for the loss of capital, it depends on what you base your figures on either tangible sustainable figures or as the current system of territories go a year by year renewal process.
Good luck to all delivery newsagents bu the way my shop is now I can see myself as a newsagency in the future, I know where I am headed. When we were delivering that was not the case.
Im not going to lie and say taking on the neighbouring terriorty and paper run hasnt been hard work. Im not even going to say its been a barrell of laughs at times. I will say its been challanging, hectic, and at times damn right frustrating.
The general public whom aren’t concern for what ever reason be it a late delivery, broken down truck, road closures all they are concerned about is there paper weither its purchased from a newsagency or sub agent or if its home delivered.
The publishes whom are forever increasing our work load with little reward. The forever subscription hamming we seem to get every few months. The arrogrance of management whom think up all those wonderful jump though hoops demains.
Do changes need to be made. Yes. Do I think its going to happen any time soon. No. The current structure is not user friendly it is driving many newsagencys away from home deliveries and I dont blame them. However if this isnt clear effort evidence for the publishers and alike that things need to change. I dont know what would be.
Jennifer newspaper publishers are strange organisations. Parts are rooted in history whilt other parts are pushing new business models. Our problem is that our channel is part of what is rooted in history. Change will happen if newsagents proactively lobby with factual data and walk away if deadlines are not met.
If you are a full newsagent with a territory and decide to give your area away and throw it in and become a subagent for papers,[and have no area anymore],do any other newsagent suppliers eg.GG,NET,NDD,worry about you not having an area?And can they change you back to a subagent like the papers?
Dean, The magazine distributors are fine with the move as long as you continue to be focused on selling magazines in your retail store.
Mark is right about the fee needing to double;
we charge up to 50 cents a newspaper for local publications and magazine deliveries and the community are happy to accept it.
We have to make money from other publications if the archaic approach by mainstream publishers continues.
We are stuck in the middle of demanding customers and equally as demanding publishers, yet we are the ones providing the service with no apparent say in the matter. I say before Newsagencies throw in the towel we band together and demand better rates.
What does interest me though Vaughan is how you charge an additional 50cents for deliveries, when I’m sure you have customers that are subscribers and would have already paid there subscription in full.
We approached the HWT and AGE some months ago and they pretty much said we cannot charge subscribers any additional fees and even if we tried the customer didn’t necessarily have to pay them because they are already paid up with the publisher?
I think what Vaughan meant was he charges 50c fee for delivery of a local paper which is not covered by any contract. Most country towns have a local publication. You are right about Fairfax and News publications, we are not allowed to charge any more than the prescribed delivery fee.
Thanks mark,Also when you say alot of agents are giving back their areas,do you mean they are selling them off to other newsagents or just walking away from them?Can i ask mark did you sell your areas off or just walk away from it?And how do you get supply of your papers?Do all your shops have no area now?Do you regret doing this?are all your shops classed as subagents for papers?any input would be of help dean
dean we sold the run in September 2007. This was after a year of trying to buy up nearby runs to build a more viable operation. We are supplied newspapers by the business we sold to. It’s a good relationship.
I don’t regret the move as it focused our mind on being a retailer. Newsagents are pulled in many directions and reducing this can drive better business people.
Thanks mark,did you worry about your delivery customers being lost and going to shop at their delivery agent who you sold the run to?or has this happened have you noticed?And does that mean when you sold your area you lost your subagents to papers and magazines?thanks dean
Dean, He does not have a shop so the circumstances are different. We are also a payment point and the trafffic to our shop to pay the account has not changed.
With the run we sold home deliveries as well as sub agents. We retained direect accounts for magazines.
Thanks regards dean
Chris;
We only charge the 50 cent delivery fee for papers and mags that do not have a one sided contract; i.e HWT & FAIRFAX!
If explained andgiven plenty of notice; the customers don’t mind. Ultimately, it’s them who make the decision to stay or go.
Vaughan
i am thinking about charging a $2.00 a month statment fee if you dont get a statment you dont get charged how best to implament that Vaughan
andy
Clearly we have to decide as an industry whether we want the government to subsidise us ie. guarantee a fee for home delivery of newspapers, or let free market forces dominate. The media seem afraid to let go of the subsidy – but it may be lost anyway as newspapers lose their influence in the span of media. Are newsagents afraid to lose the subsidy ? – each individual must decide on behalf of his own business. If the subsidy is not enough, well, this may affect your personal view of the matter.
Andy I am about to start emailing statements – have you tried this yet? – I could save max $250 postage a month and labour and paper – it all helps. I do have a late fee, and a number of customers happily wear it ( another argument for increased delivery fee as I see it! ) month after month! They won’t pay ahead, but they will only pay once every three months and wear the late account fee ! go figure !
Andy,
Your major supply contracts with News Ltd and Fairfax don’t allow you to charge a statement fee.
What about an Account Keeping Fee? I’ve heard some people using that, but maybe only for book-up accounts where no home delivery applies ( I have quite a few of these).
Heather,
Both Nationwide and Fairfax expressly deny home distribution agents the right to change additional fees for home delivery, both directly and indirectly.
Non-delivery accounts are not covered by the contracts, so one can charge what they wish provided no other agreements prevent this.
However charging fees on non-delivery accounts will discourage people from booking things up in-store. Would that not discourage people from coming into your store?
I’m all for a $2.00 account keeping fee; I know of some that already do it successfully.
Jaryd,
Fairfax & HWT cannot stop you from charging an account keeping fee, their product is not the only one on the majority of Statements. (although they like to think they are).
Implimentation, advise the month prior, add the fee. For those customers that wish to complain, remove it from their account and move on. I think you will find that you will have little complaint.
I feel that the Publishers should let delivery agents set their own delivery fees. We all know what our local market would stand. We find customers mostly think that our weekly fee is a daily fee and do not raise eyebrows. I know this idea will horrify many, but we are not going to put ourselves out of business are we ? (we have got too many others working that one LOL) And the Publishers might find an unexpected new marketing arm for home delivery. To cover costs and make a profit on home delivery would refresh the model. God, I have to stop drinking this hooch…..
What the publishers should do and what they do is never the same. When thier business is losing money they simple increase the cover price but when newsagents are struggling they say that we cannot increase our prices.
The sooner fairfax goes belly up the better, it may sound a warning to the rest that they cannot exploit their own delivery channel and still survive
Andy, we charge an account fee $1.50/m to mail out, no problem with customers when you tell them you are giving them credit, we also charge a surcharge fee if we get instructions to drive up driveways drop in a box etc. Once you educate the customer about your ways they quite often become good customers. just like training a pet when you think about it.
I regularly visit this site and sometimes leave a comment. I’ve joined this stream late and have chosen to leave my name off in case this site is viewed by News Ltd and Fairfax staff. Mark can obviously see my e-mail and will know who I am.
I have charged 20c per paper per day since mid 2008. I simply wrote to all my customers when petrol was $1.70 litre and told them the delivery fee was going up. I have over 500 customers and got ONE phone call to question the rise! I didn’t lose a customer.
Customers realise it’s still excellent value at 20 cents on top of the cover price. I can’t see how News Ltd and Fairfax would ever find out?
Anon (on this one)
what price do they make you charge i am in a rural area so there for i think i can charge what i like well i have never checked and no one has said otherwise
Vaughan,
Fairfax and Nationwide can stop you from charging an account keeping fee on any account where you deliver their product. it is very cleary stated in the Territorial Distribution Agreement.
Having a system where some customers are charged a fee and some are not (depending on if they receive a Fairfax or Nationwide publication) is a little too complex to manage effectively, especially when there are so many changes to deliveries on a daily basis.
Anon, good idea if you can get away with it, I’m not sure but News et al would probably consider it a breach of contract. Can’t work for me because 95% of our home delivery customers are on subscription which means we are stuck with whatever the publishers decide to charge. Some of our customer are getting a 7 day home delivered paper for the grand sum of $2.70 per week.
Maybe in order to break the situation newsagents need to charge equitable fees themsleves and let a court decide should a publisher challenge it. I am not advocating this, just asking the question. I suspect plenty of newsagents would tip in to support a newsagent pursued for charging a fair fee based on the cost of the service.
I raised this issue last week when talking with an advisor to a government minister. He had no idea of the cost basis newspapers were delivered. He commented, like many others before him, newsagents are protected aren’t they?
Mark,
I can not think of any strong grounds on which this could be brought before a court. Maybe misuse of market power – but the fact that the contracts were negotiated by an industry body is likely to quash this line of reasoning. From my perspective it would be a clear breach of contract.
Now the cost of a postage stamp for an ordinary letter is 55c, one delivery only, lightweight.
If newspapers were delivered by Australia Post, I wonder how much they would charge?
Jarryd, I am not advocating this but if a newsagent was breached and ultimately lost their business for charging a fair fee to deliver newspapers maybe it would present an opportunity for adjuducation in an independent forum.
Currently the publishers act as cop, prosecutor and judge.
Mark
as i understand it most of our contracts are due for renewal next june that would be the perfect time to address these delivery problems dont you think? even if i was breached who would tae on a delivery run?
Andy, The contract renewal has been rolling for some years. Newsagents who were around in 1999 would not want the same team negotiating for them this time.
Thank god we do our (very small) run ourselves, and don’t have to employ anyone to do it. Having said that, we still resent the fact that we’re virtually doing it out of the good of our hearts, because that’s just the way it is.
I do wish that publisher reps would ‘rep’, even from time to time, to answer questions in relation to the massive millstone called home delivery.
It would also be good to be able to give it all back. I wonder if it’s even worth (getting one’s hopes up via) doing the sums, taking into account a halved commission (assuming the bigger agents on either side of us would even want to expand their territories!), against the unremunerated hours worked, extra sleep (yay!), unremunerated hours spent on accounts/recordkeeping/debt collection, the fact that 99% of our delivery customers are not our customers outside that role, fuel costs, the grief of late/incorrect deliveries, very demanding customers and the associated grief, the cost of weatherproofing materials, and the insult of the pittance we do get paid for all that crap.
Dare we dream?
And is there anyone on this forum who has actually given their territories back? Can we hear from them to see how it’s gone?
Y&G,
Gave mine back 12 months ago. We threw a lot of papers too, 4000 on a Sunday. No more late nights, no more angry phone calls at 6 AM, no more vehicle repairs, no more fuel bills, two less salaries, I get the front of my shop back to use as I see fit, no more, no more no more.
I’m happy with the decision, it may not be for everyone but its fine by me. I’m happy to take a phone call on this if Mark is happy to pass on my details.
Brett
why would you not sell your delivery run? we have about 800 deliveries on sunday how do you deliver 4000 with only 2 salaries? is it ok for me to ring?
cheers andy
Andy,
Happy to take a call.
Brett, thanks for the offer. I think the more conversations and information available about these issues is very important. As has been said – not too many of us are going to lament the passing of deliveries. However the way the system is going about it all is not on.
Just how are they going to do it anyway? Junk-mail style with private operators working out of garages??
Publishers operate runs in-house. They tend to hire ex newsagents to do this for them. They have known for two years that home delivery is in crisis yet they have done nothing to address this.