By reducing the income newsagents make from Alpha magazine, News Ltd places further financial stress on Australia’s family owned small business newsagencies. Newsagencies are mixed businesses – no one part of a newsagency can stand-alone. Newsagents rely on the profits from some departments to cover loss making home deliveries and to cover the falling profit, in real terms, from News Ltd newspapers.
The decision to cut margin on Alpha by 40% and to take home delivery sales of the title away from newsagents and shift this to Australia Post is being taken by newsagents as an indicator from within News Ltd of how the company views newsagents and an indicator of a closer relationship between News and Australia Post.
For all the talk in the pages of News Ltd newspapers about everyday people, News Ltd walks to a different beat.
I’d like the opportunity to debate their decision in a public forum. They have to face up to the stress they are causing for newsagents and their families.
Simply refuse delivery by the transport company – they in turn will pressure NDD to stop supply! I won’t be buying ALPHA anymore – Regular Newsagent Customer. (RNC)
Whilst the previous comments have some merrit, I doubt very much that Australia Post will provide the same level of open access News Ltd has recieved in the past from Newsagents. Perhaps newsagents business decisions of the future will see less of News Ltd titles in their stores as the wheel rolls full circle. Unfortunately for larger compaines they have senior management on short term incentives, that do not stay the course to see long term failures…perhaps that is why the wolrd has the problems it has today…
Nelson,
I think there is a considerable difference between the decisions we make in our individual businesses and the decisions made by a corporation against a whole channel.
I accept that News Ltd must do what is right for their shareholders. Small business owners tend to take a broader view than just profit.
Nelson,
This bloody-minded decision by News Ltd bears no comparison to a newsagent making a decision to shift supplier other than both are “commercial” decisions driven by need (in the case of the newsagent) or greed (in the case of News Ltd.).
Look at the history of Alpha – on launch, it was News who lauded and encouraged the participation and involvement of Newsagents with attractive commissions that went some way to compensating us for the use of prime space to promote what at best for most has been a mediocre performer. To sell the farm from underneath us with absolutely no consultation, with highly suspicious timing of the announcement to do so, is a calculated, cynical and contemptible way to deal with people who have in general supported News Ltd in an admirable fashion. It is more than likely that this move was part of News Ltd’s original thinking on Alpha given the disdain for the newsagency channel that they generally demonstrate.
Comparing it to one of your examples e.g. shift from purchasing through GNS to another supplier because you can better margins is hardly valid given that one is an orchestrated attack on your and my livelihood and designed to further weaken the channel whilst the other is an everyday commercial decision that every retailer/manufacturer/end-user has to make in a common-sense way.
To take your argument to conclusion would mean that every newsagent would or should be locked in to purchasing decisions made in the correct spirit for the right reasons at the time but perhaps no longer suitable for the viability or success of the business.
To talk about our own businesses moving stuff around to maximise profits, as a comparison to multinational behaviour towards its agents is kind of gross, IMHO.
What we’re talking about is big bullies pushing around the little kids. As old as time, and ok while it’s kept quiet, and while the little kids keep letting it happen.
It’s bad enough that these behemoth companies treat each other this way, like what’s been happening with other suppliers – News isn’t alone here.
Take Cadbury-Schweppes. as a drop in the bucket. Cadbury, the huge multinational that it is, severs ties with Schweppes. However, it still expects to ride on Schweppes’s back via storage of it chocolate products, in Schweppes’s fridge units, in warmer climes. Cadbury will not provide retailers with large or small units, but expect retailers to still use existing units, provided and maintained by Schweppes. I’m still awaiting a response from Cadbury as to why they won’t provide refrigeration in their own right, but are perfectly happy for Schweppes to continue to provide it for them. The rep didn’t want to know, so she handed over her boss’s mobile number. And he hasn’t got back to us yet. Schweppes should really be taking all the small chocolate fridges back. I suspect these things were overlooked in ‘negotiations’.
Poor Schweppes – Red Bull weren’t kind either. And Schweppes have been probably the easiest and most accessible drinks brand to deal with up to now, as big drink brands go, that is.
And I’m still amazed that the news media firms have been allowed to hang on to the attitude of a right to such control of OUR businesses these days.
Nelson has put up a view which in more normal business decisions he could be on the right track.
It is Jim’s second paragraph that has summed it up for me! Newsagents made Alpha, Newsagents made ALPHA a top circulation sports magazine, it gave Alpha prime real estate in Newsagencies and in return the commission was good, however without any consultation News Limited takes direct supply and home delivery away from Newsagents as well as giving the 7 Elevens etc direct supply and contracts a distribution company and a government service to supply ALPHA home customers.
Their are numerous smaller Newsagencies that cannot afford to be a member of NDD the Magazine Distributor because they oversupply and distribute a lot of crap magazines therefore many smaller Newsagencies do not receive their magazines.
I certainly am not going to become a subagent to be able to receive ALPHA. The decision by publishers who have a contract with NDD should know that people are closing accounts and getting asked to close their accounts and circulation of their magazines are suffering and will continue to suffer.
I can see an opportunity for Network with the resources they have to consider a BETA magazine similar to ALPHA, their circulation would be much higher and I hope they do with a permanent incentive commission of 40% for prime real estate.
Nelson, do you think I am outraged?
Derek
Nelson
You should be able to tell according to your first post, however lets not bicker now.
Although I agree to disagree with some of your insights I am glad you are dissapointed with the treatment shown to ALPHA sellers by News Limited.
Derek
Nelson
Network really dissapointed me when they did that and I dont think enough noise was made. I remember the post here and Network was no different to what News Limited is doing with ALPHA. EMAP used supberb marketing for ZOO to get it to No.1. They supported Newsagents and in return we did likewise.
What I cannot understand in this industry is how a Publisher / Distributor can change the goal posts when it suits them especially after Newsagents ensured prime space for these titles and then treat them like a door mat.
I still believe their is a openning for Network, possibly merge the Picture & People and bring out something like ALPHA. You are right you would be nieve to think Network would give 40%, but I would hope in future new magazine launches would have to go through the Federation and get the commission structure on paper. It should be “legislated” in our industry!
The amount of money Newsagents have invested in their own business’s makes it very hard for many to rock the boat, Distributors know this and treat Newsagents accordingly. Most people know some answers to go forward and if they were able to make a Federation by bringing all States together in 1901, the Job for our Associations / Federation should be a walk in the park. The question I ask is unity in the best interests of the Australian Newsagent channel?
Derek you are right – as a channel we are too scared to rock the boat. We own the asset publishers want and disggributors need – the retail channel. It is about time we started to act as if we do own this. What our ‘leaders’ have done until now on this is a joke.
Mark- It always leads back to Leadership.
The Leaderships we have now disagree with critisism, I believe they don’t want to rock the boat either. They should order all Newsagents for example to not put ALPHA on the shelves until the proper consultation and negotiation has taken place.
As I read somewhere no Associations were aware of News Limited intentions for ALPHA. In other words Associations are not relevant in the eyes in this case News Ltd.
ALPHA should be the test case because their will be other ALPHA’s.
Spot on Derek.
I for one am not afraid to display them on the bottom shelf in the back room in the future.
I don’t care if I lose a sale, it’s the principal of the whole thing. I don’t have a run but now newsagents that do, lose out which annoys me.