In Queensland alone, more than 50 newsagents have abandoned their distribution runs and in some parts of Brisbane people can no longer get a newspaper delivered to their homes.The sustainability of newspaper distribution is one of the core issues we need to deal with and will be at the heart of the broader review of the overall system.
No-one can guarantee the future of any business, and it would be misleading if we were to attempt to do so. We don’t yet know what changes will be needed as a result of our review of the system.
The way consumers access and consume media is rapidly changing, along with shopping habits. These changing consumer demands are forcing us to review the way we conduct our entire business from how news is produced, the design and content of our newspapers to where and how readers access them.
We are also aware that while some newsagents continue to be successful, in too many parts of Australia, the current system of newspaper distribution is inefficient and not working as well as it should for newsagents, publishers or consumers. It’s getting more difficult for us to get our papers delivered to our readers.
The 2010 Agreements mark the first stage of a full review … to address the challenges facing the newspaper industry.
Our review will look at what’s necessary for the long-term sustainability of newspaper distribution. Working together may give us the best outcome but, regardless of the review’s outcome, we all need to accept change and adapt.
These quotes are selected from material sent with the newspaper distribution and retail contracts received by more than 2,000 newsagents from News Limited around two weeks ago.
Newsagents have another four weeks in which to make a decision as to whether to accept the new contracts.
I have read contracts sent to newsagents in various states. I have talked with many newsagents about the contracts. I have also been fortunate enough to have a discussion with senior management at News about the contracts.
I am not sure what I would do if I received one of these contracts. Having sold my distribution business three years ago and converted my shop to a sub agent relationship for newspapers, I do not have a direct contractual relationship with News Limited.
While the contracts have come as a shock to many newsagents, they should not be a shock to newsagent leadership or longer term newsagents. From the release of the current contracts ten years ago, newsagents were on notice that new contracts would come. We have also been on notice for years that the newspaper distribution model is under scrutiny. There have been countless studies, reviews, workshops and discussions – all driven by publishers, none, to my knowledge, driven by newsagent representatives.. The change, flagged in these new contracts, is that News has committed to making a decision within two years and that the signs in the contract paperwork are not encouraging.
New newsagents, those who entered the channel in the last three years, are disadvantaged by the new contracts. They have paid a multiple of net earnings which will take longer than the two years to recover. They bought into what was probably pitched as a stable, protected even, business. Now, they find that they have a business with two years, maybe longer, but only two years in which to bank.
The new contracts mean that goodwill paid for a newsagency will fall – probably immediately if a purchaser undertakes thorough due diligence.
Any newsagent with bank funding also faces an impact. Once the banks assess the contracts their lending terms and ratios for newsagents are bound to change since the existing sort of open ended contract provided the banks with a measure of security against which they would lend. I’d expect to see the debt to equity ratio to be reduced and loans for newsagencies harder to achieve.
When the contracts first hit, my initial hope was that no newsagent would sign them and that this act would bring News to the negotiating table. The reality is that News is not ready to negotiate a longer than two year contract because they don’t know what the newspaper distribution model looks like for them in two years. Some newsagents are saying that News knows and that they don’t have the guts to move against newsagents right now. Only time will tell if they are right. I suspect that News, corporately, does not know what the model will be – hence the two year period and the clarity in the contract documentation about what they will do over the next two years to assess the best model for their business.
I applaud News for putting in writing that in too many parts of Australia, the current system of newspaper distribution is inefficient and not working as well as it should for newsagents, publishers or consumers.
The problems for newsagents with the current newspaper distribution model are:
- Newsagents cannot set the price for their services. Newspaper home delivery is a premium service. My sense is that consumers understand this and would be prepared to pay appropriately. Newspaper publishers, not just News Limited, have refused to give newsagents permission to charge a fee which is more closely aligned with the costs of providing the service.
- Newsagents cannot control margin on the products they deliver.
- Newspaper cover prices have not kept up with the CPI.
- Newsagents are, in some states, forced to share in the financial cost of deep discounting.
- OH&S issues with newspaper size sometimes and the number of papers to be delivered by a driver to break even.
As I have written here and elsewhere over the last five years, newsagents ought to lobby government for an independent review of the distribution of newspapers and magazines. This was deregulated by the Howard Government in 1999 and it would be appropriate for a review of this policy to be undertaken – the ten year anniversary would be a good opportunity. Such a review ought to look at the costs of each step and what the impact has been over the years on each step. Only an independent study will provide evidence necessary for a balanced discussion on the future of newspaper distribution.
The real issue is what the future of newspapers looks like. Know that and you will have the start of a plan for distribution newsagents.
I doubt that anyone, consumers, economists, share analysis, newspaper publishers or newsagents expects newspaper distribution to grow considerably. We are at best in a flat market and at worst in a declining market. The consideration of the future of newspaper distribution needs to be considered in the context of a pragmatic assessment of the medium and the environmental and economic costs associated with it.
The two years offered by News is two years. This is why, after much thought, I would probably sign the contract, get my two years and work hard to reengineer the business to considerably reduce reliance on newspaper related revenue in the two years. Now is not the time to try and negotiate considerably different terms. That time was in 1999 when the ANF leadership negotiating on behalf of all newsagents, failed them.
The way I see it, the two years gives me something and to many newsagents this will be better than nothing. Although, I acknowledge, that for some newsagents nothing is better than a negative something.
Yes, these are complex issues. My opinion is merely that. I don’t know if I am right. Newsagents will not know if they are right. For many, this will be a tough four weeks navigating to a resolution.
Thank you for such comprehensive coverage of the contracts and the issues with them. Like you, I have been wondering what to do about this. I could easily go either way. I had not considered it as a two year opportunity to rebalance the business. I like the challenge implied in this approach. Thanks for putting it out there for us to consider.
Mark
Despite you not being a distribution agent what do you think the future distribution model may look like?
Quite different to the current model Craig. We have considerable overheads in tiny businesses and this has an operational cost for publishers and a financial cost for newsagents.
While I am no economist, my sense is that a distribution newsagency needs street level penetration of at least 30% to justify turning in and a total customer base of at least 3,500 to begin to work financially.
But I am not answering your question. I think publishers will move to have more control themselves. This means they or a large wholesaler acting on their behalf engages newspaper carriers.
I have nothing to base this on.
Newsagencies with retail and distribution components fight between the two arms of the business. One part of the business suffers as a result.
I am in the process of selling my retail business – it is a small part of my total business, and regardless of what happens if I were to stay in retail I would want a much larger retail business.
This effectively will mean that I am a distribution only newsagent.
I would be looking to use the proceeds of the sale of the retail business to buy up more territories and expand my business, however I am now concerned about what will happen.
I think I need to decide whether to sell the distribution business also and move to a retail only model, or take a risk and try to buy some territories on the cheap while there is uncertainty.
Unfortunately, only the HWT overlords know what the answer is, and us minions have to risk many millions if not billions of dollars that is tied up in distibution networks around the country trying to decide what to do.
Just my 2 cents worth…….I discontinued my Distribution Agreement on 25th October and have only been blessed with increased Retail sales. It appears that my previously-delivered-to-customers actually do come into the shop now and purchase their paper and do purchase other items as well!
Although our turnover has decreased, our bottom line has increased as we were running at a loss with the Distribution Agreement.
We are also not waiting 60 days for account payments. Ultimately this “flattens” our income/expense troughs.
Take into account reduced labour for returns, deliveries, wrapping, packing, loading, admin, paperwork, stationery, phone calls, fuel, maintenance, registration, and insurance. Not to mention the reduced stress and increased hours of leisure!
We also open an hour later, consequently our early morning walkers go to another Newsagency, however we have noticed that our traffic per hour has increased and has been compressed to more customers per hour from 6-7am.
Just a thought, people!
Bangers,
I think you need to declare whether you are a Country Newsagent or a Capital City one.
One solution does not fit all and whilst you may have solved your problem it amy not be the remedy for another.
Graeme,
You are quite correct. I am in a small regional location and it is just my personal experience. Obviously location and many other factors need to be considered when contemplating their options regarding their Territorial Agreement.
My situation is very different to yours Bangers. I have a large territory in outer suburban Melbourne, which derives 80% of my profit (prior to selling my retail business).
To me, the retail component of my business is what is holding me back.
I bought 2 territories last year. To me, they have helped improve my business and cashflow. To the newsagents that I bought them from, the sale of the territory has helped them improve their retail business.
Every business is different, and what is right for your business may be wrong for mine.
Mark, this blog is read by many on the newspaper publishing side despite that they would deny thiss to your face. Your reach is far greater than you might think.
What you wrote this morning was circulated around News today. The mood was one of he makes some reasonable points.
Keep up bring focus to the issues you raise. No one else is getting the newsagent position to decision makers like this blog.
Bangers, Dean and Graeme, yes, every situation is different. The key is to thoughtfully assess what is right for your business and to make decisions accordingly.
Too many newsagents will drift along and let decisions be made for them.
Over the next four weeks there is an opportunity to step out of the business and take a serious look at the future. This is good, bad time of the year, but good nevertheless.
Publisher,
I believe you to be anybody other than a publisher.
I certainly find it hard to if not impossible to believe that “New”s mood was one that ‘he makes some reasonable points”
Puting this into perpective, News have have dialogue with ALL Associations for considerable time over this “take or leave it contract” Mark has not revealed any “new” points in fact there are many points that have NOT been discussed here on the is site.
I beieve this site is too much of an open forum for such a discussion.
The parameters of discussion are far too narrow to do any good.
There is millions of dollars of investment being discussed not as an industry on a properly conducted forum, however discussed from each ones personal perspective.
I have already received numerous calls re this “what if” saga form really distressed peole. Buyers and sellers alike.
One question poses?
DOES ANYONE OF YOU KNOW WHAT IS GOING TO HAPOPEN IN TWO /THREE YERAS (YES 3 YEARS FOR SOME CONTRACTS SIGNED YESTERDAY WILL NOT EXPIRE UNTIL 3 YEARS TIME?)
NONE of us do, so at the mioment this discussion is causing hubble,bubble lot’s of trouble.
I would suggest thatand INDUSTRY paper be put together as a pathway to the future. This paper is to be developed with the publishers by BOTH Association with an end agreement as a solution, BEFORE the contracts are signed.
Bear in mind that NSW has had hysteria lately over the “sale” of the lotteries and after more talks with both Associations NANA succeeded in getting a five year non competetive term. When all calmed down issues were/are being addressed and I believe that very reasonable outcomes will be achieved.
As for going to the Governemnt seeking more regulation – forget it – unless one can identify grounds for such consideration. Pharmarcists have grounds -they dispense subsidised medicine, a political bomb, unfortunately one we don’y have.
We have a commercial problem, economically and product wise. Both issues need to be addressed in a most appropriate forum.
Graeme, the time for an industry paper was over the last three or four years. That new contracts were coming was no surprise. There has been plenty of time for newsagents to organise their thoughts.
Instead, many in the channel have ignored the imminent change because it suited them. The most at risk are the new newsagents who bought without knowing that there is likely to be change to what they were buying.
I have written about this here many times as it concerns me more about those entering our channel than those exiting. They are our future.
Maybe the reason why this blog is individual points of view Graham, is that newsagents are independent operators and that we have no national body to speak for the entire industry. NANA, ANF have all failed us in the past so these sins are not easily forgotten, News contracts are one on one contracts, the the weight of news against mum and dad newsagents with no input from associations, so every business has to do whats best for themselves because at the end of the day it is up to the individual stores who stay open and who move on.
Bangers stated at the start of his comment that it was his view, so maybe you should respect that, if you feel that this blog is too much of an open forum then do not contribute, your opinions are no more or less valid then any other person who contributes here. Dean seems to be in the situation that he may benefit from the contracts and good luck to him, but again this opinion is just as valid as anyone elses including those of publisher.
Mark,
Your assumptions are incorrect. New newsagents are interviewed respectively by each publisher, where there is a contract, and the publishers explains the contract and its renewal. At the moment, as of today, “new” entrants are getting 3 year contracts from Jan 1 they will be the “new” contract starting Feb 1 2010.
As for the new being our future (stuff the existing newsagent) what sort of narrow thinking is this? You can’t have one without the other. For every seller there needs to be a buyer..
Mark sometimes it is hard to fathom where you are coming from. Is the future for all newsagents newsXpress? is this the call, no Goodwill just marketing a new iamage under one banner. It makes onbe wonder if the agenda isn’t a bit pointed eh?
On distribution v retail:
They are two completely different types of businesses requiring different processes, skills, etc, and should be treated as such. There are pros and cons to each – but the main fallacy is to treat the home delivery customer as a lost opportunity. My advice to newsagents would be to embrace both PROPERLY and give it a crack. When you have exhausted all opportunities and are not making money, then enter into discussion with your supplier to resolve. I can’t take anyone seriously who have never proper done a subscription drive to grow the territory, or don’t even apply some technology to do proper route planning but rely on someone’s intuition and habits to run the business.
On publisher vs newsagent
It is smart commercial thinking to build a partnership. If there isn’t that relationship, then ‘retailer’ is as much to blame as ‘supplier’. You can’t blame a publisher for trying to negotiate a contract – that is the nature of the ‘agency’ relationship. Equally publishers don’t blame anyone who chooses not to
On the future of newspapers
News has a future. Period. What the product will look like is entirely different. Mark you have pointed readers to Jeff Jarvis’s blog previously and I recommend everyone following the debate there too. The changing nature of newspaper distribution and the evolution of the physical product concerns and impacts the publisher as much as the retailer – and there is no blame to be apportioned. Forces outside the current industry structure will ultimately determine how things evolve.
On retail
The retail metric for newspapers are absolutely fantastic. Zero investment and 25% return PER DAY – is as good as anything I have ever come across in business. (GMROII). The low monetary value of the newspaper purchase in the shop is not a problem – it is an opportunity. You have a customer in front of you with the wallet open and hardly spending anything – and the usual response is… (thanks, cya later???).
im still not signing a contract as a deliverer of papers through a newsagent ? would you ?they want to add weekends and public holidays ? its not on? surely the publishers understand how rural papers have been delivered for 50 years or more wont change ? well I wont change
if you can? can anyone tell me how much is charged to the customer for a paper delivery in suburbia ? and rural ? I bet the publishers dont know either whats the average or norm if you will ?
It’s in your contract which on delivery of weekend papers is no different in this contract offered than the one you are currently operating under. You need to compare what you have signed with what you are offered it may help you in your decision making.
Graeme, There is a difference between the discussion to which you refer and dissclosure as to the full implications.
My post here and 99.9% of what I write on this blog has nothing to do with newsXpress.
My interest is the future of the channel in what ever form it evolves. This means being respectful of the entry cost.
David, it depeneds on the state and the location. In SA for example, a newsagent can deliver to thyree homes in the same street and get three different amounts.
Graeme, you seem to want to address this issue in an ‘appropriate forum’ away from the public eye. Haven’t you noticed that News Ltd doesn’t want to talk – to any of the assosications or to anyone for the last 10 years?
On one hand they say the newspaper business will continue. On the other they pour millions of dollars in campaigning for an online pressence – while the ‘agent’ does see a single cent increase for the last 10 years.
I am a suburban newsagent delivering to 350 customers.
Your suggestion that each newsagent should ‘talk’ to News LTD in a closed door is quite funny to me. While you and others can ‘talk’ privately amongst yourselves regarding the future, newsagents like myself need to make a decision about their future.
My view is News LTD will treat their agents not as agents, but as lap dogs – as they have in the past and will continue to do so in the future. No courier company will accept News LTD’s terms of offer, why should newsagents? Why should I?
Mark has pointed out that newsagents should adapt to the times – much the same as publishers have adapted to the times. So why are you still suggesting that the inequitable contracts offered to news ‘agents’ should not be discussed openly but rather, in my view, to take it on the chin because I am an agent?
im not under a contract i am a mail contractor delivering for a news agent ?
has always been a gentlemans agrement
in victoria gippsland and remember we have 3 local papers as well as the big boys
i also understand the agent being held ransom buy publishers and thinking he must sign .and then the deliverers saying they wont go contract. but im sure the agent wont deliver what i wont ? ecconomicly he would go bust ?
Graeme, believe what you want ill-informed as it is.
Some in News are happy with open debate and that a forum such as this exists for this to occur.
Mark has outlined the complexities of this issue for newsagents and for News.
Associations presented a wide variety of ideas over the last couple of years but no co-ordinated view and certainly no new plan. I am not criticising them for that – they are a product of their membership after all.
The new contract makes News’ intentions clear on reviewing the model. Newsagents would be well advised to do the same as Mark suggests. My personal view is that the more independent they become the stronger they become. Today, they are not acting as independent business people – despite plenty of signed contraacts coming in.
Luke,
I have not stated as you said or understand that I stated one should talk to News behind a closed door.
Reread what I said and it certainly was not that however now that you mention it 1 to 1 contrancts do allow for that to happen if you want to.
It is apparent tal all that News want to keep their options open. It is apparent that News, and Fairfax for that matte, need to develop their online revenues. It is also obvious that News will improve their print media operations.
Now, to the point whether the cover price or delivery or distribution will be the same is under question. They state that themselves. Conjecture, speculation ans ctrystal ball gazing as well as predictions are exaclty what I am stating should NOT be made in statement like facts. It is doing your Goodwill no good.
Last year there was to be a World Depression-of soup kitchen proportions this year the stck market is booming and we are the lucky Country.
Yes, it’s wise to adapt, evovle, well you have to. We in this industry (and others) are always evolving That is what people do Once we had 2 afternoon paper 5 editions of each, We never had lotto 37 years ago.
No Sat afternoon or Thurs night or Sunday trading.. Life goes on.
Howver it is a bit different discussing conjecture and predicting “the new contracts mean that Goodwill paid for a newsagency will fall – probably immediately, if a purchaser undertakes a throough due diligence”
This contract has very little to do with “Goodwill” rather than what does happen.
Banks lend against the contract for added security, that is additional security to what you may already have. It is called leveraging. When it is not available any more to do so then they won’t lend on the newsagency component. They won’t call up loans unless you are in default and why would securitisation cause less income.
It is that sort of comment that frightens peolpe I believe it to more practical to discuss openly at a newsagents meeting (I am only too happy to organise one)and discuss these fears away with knowledge and practical application of minimising newsagents risk.
I trust I have cleared the deck so to speak.
Goodwill is an enormous part of our industry and I believe that the encumbent newsagent is entitled to get his/her superannuation payment when they sell, The new newsagent is well aware as I have stated here before, of the contracts and the content.
Mark,
I do not agree. However, I will leave it to others to decide the content of your answer to me. I think it is inaccurate that you can claim that 99.9% has nothing to do with newsXpress. Boy! really it doesn’t matter if it did it’s your opinion why seperate it from newsXprees one minute then extol the virtues of the same in another blog 99.9%
Let’s move on.
geeez heaps of views, but after reading them all im still none the wiser. my contracts does not come up til sept 2010, hopefully by then i might have worked it out. i for one dont charge what im supposed to, im the only newsagent in town and if news wants to jump on me id like to see someone else provide the level of service that i do for the what i charge. one size does not fit all, rural newsagents must be treated differently than metro, i dont have the concentration of populationto ever make it viable, my run is 25klm and i throw about 30 papers. i just dont plan to sighn when the time comes until mr news comes down and looks at my run and business, they cant stop supply because there is no one else that can do it.
great discussion here by all.
i hope that the publishers are reading this.
i see the ANF is now selling copy paper. i hope they sell some directly to the publishers to print these contracts onto. then we can distrust the ANF with even more conviction.
i have a newsagency (distribution and retail) in a semi-rural/village area, i think my situation is quite unique. i dont have contract negotiations this year, but obviously am very interested in the current situation.
thanks for listening
peter
i cant belive the have such control over the whole monopoly ?
The most important thing is Newsagents lost the control of one part of their main business. They couldn’t control the price of newspaper, they couldn’t control the delivery fees, they couldn’t control the delivery time. (Sometimes the trucks are too late)When you’re losing the control of the game, your team could be endangered. Guus Hidink always emphasis control on the football field, now I could only see the fate of the newsagents are controled by other people. The government should intervene and put a rescue package to the newsagents industry the same as they did to the car industry during the financial crisis.
If we don’t lobby the government and the government didn’t help the newsagents industry, I could predict in 3 to 5 years time, a lot of newsagents could be struggling and couldn’t survive.
A good and lively discussion. Thank you all. I am reading my contracts this weekend. Not sure which way I will go at this point. I am in the suburban area with a good size run and a good retail business.
To Graeme Day – i am not a newsxpress business or a user of Mark’s Tower software. I think you are judging his writings unfairly. What he has written about the contracts here reads as balanced commentary to me. At least it is not the shrill of some.
Graeme, you infer an agenda where there is none. Look elsewhere for your conspiracies.
Mark,
I am not looking for a conspiracy however there are a number of statements that don’t ring right.
Statements about Gooswill and the price paid (overpaid)for newsagencies by you and the formula used have frequently been brought up. Linking those statements with a comment by you that the News contracts could reduce Goodwill further is not too long a bow, I don’t think.
The 99.9% remark is made by you and I refuted it. Others can form their own opinion.
This is NOT a get Mark forum for me I am simply standing for newsagents, their Goodwill and fair commentary.
For example “Publisher” whoever he/she might be doesn’t stack up. The last paragraph is just plain nonsense. If these peole want to hide under another name like anon or so, how can you believe what they say?
It is very difficult for one to believe that they believe that the strength for newsagents is to become more independent when
a. they already have one to one contracts and no negotiation base.
and
b.How can they contribute to a new model when the decision is Australia wide on behalf of News and individuals do not have an understanding of a picture outside of their own experience?
News are issuing a stndard contract, of which I have not critised in essence except for comments re Goodwill loss etc as a fete acccompli when that comment is conjecture and does damage to the industry overall as there is no grounds for the remark. I believe the reverse of the comment that the incoming newsagent is more disadvantaged than the incumbent. One has a contract changed during the game. The other gets to know the new rule bfore the game starts.
I don’t see a problem with my arguement and would have thought there must be another reason for the contrary.
If that is not the case then surely as I said we agree to disagree.
Whatever Graeme. You are looking for a conspiracy where there is none. I opened a topic for considered debate and you have sought to hijack it. That’s your right, this is a public forum where comments are unmoderated.
My view is that the News contracts will reduce goodwill becasue the sunset contained in them is more certain than in previous contracts.
Loss of goodwill is not a bad thing except for recent entrants.
The best payday for newsagents is in day to day trade and not when one gets to sell the business.
The argument is not disputed re earnings as you go. There is no reason why one can’t get both higher earnings higher Goodwill. Your view still doesn’t add up. By the way I have no need to hijack anyones else’s blog. Taking up space with a viewpoint is hijacking?
So be it. Where’s the gain?
Graeme, Higher goodwill is a function of real higher net earnings. Our channel does not have a track record for using genuine net earnings as the basis for a goodwill calculation.
But this is all off track from the discussion of the News Lts contracts.
Mark,
You are totally wrong our channel DOES have a track record of using net earnings as the basis for a goodwill calculation. It is called price earnings ratio. Most newsagents undrstand this so do buyers so do bankers so does everyone in business it is a multiplier of net profit EBITDA.in this industray 2. times to 3 times P.E.
Either your not communicating properly or I am totally misunderstanding something that I have beeen involved with for 40 years.
I really don’t believe you are arguing my difference so we must be misunderstanding each other.
If you hadn’t made reference to Goodwill in view of the NEWS LTD contracts we would not be having this differenece or conversation.
I bought my newsagents one year ago and paid a multiple of nearly 4. The multiple base was not from the P&L but from figures which it was hard to verify. The broker did not help because he wanted his commission. I paid too much for what the newsagency really makes but that is my mistake. But it is also a mistake of a system which advantages the seller. Next time I will be smarter.
Now I have the News contracts. I will sign because like Mark says I see it as two years of being certain and to change the directions of my business. I am not happy but will sign. I think they know this is what newsagents will do.
I love it when the adults argue
Jeez, anon – you wouldn’t be a certain circulation manager, would you?
LMAO
Debate is not argument. I am learning a lot from reading this. I have to make a decision like many others. I get more from here than the ANF.
Mark Loss of goodwill is not a good thing ,it is in some cases peoples super their all .You are out to get the best price you can get .All this talk of googwill being to high sends the wrong message to Banks and buyers ,i for one can not see why you would be thinking like this. some time back we had no contracts at all and the ones today are not worth the paper they are writen on ,6 months notice and they do what they want any way e.g Network went every where with direct accounts I have been told the A N Z wants a news contract ,lotto would be much better i would have though .The banks will get over this ,it is the times we are in ,all small bussiness would be in the same boat.Their is going to newspapers for some time and do they have a cheaper way of getting out their ,no ,why would they change it .Talk of goodwill being to high is not good
Mark et el.
Goodwill is definately the reason why I am in the Newsagency business. Over time I try to increase my price earnings ratio amongst other areas of my business so that when I do retire I have the superannuation to live by in retirement.
I tell you this – when I do eventually sell I will be seeking top dollar for my business because its the right and proper thing to do, I know the worth and benefit the business has been to me over time.
You have your good times and bad times but we are all in business I would hope to gain the maximum return on our investment.
I am sure deep in your heart if you sold your shop tomorrow Mark you would want top dollar for it and at the same time reflect the impact of the proposed News Contract will have on that end dollar amount.
Mark,
You right, the newsageny industry has a poor track record in terms of goodwill calculation. Newsagencies are overpriced.
What we have is an industry with a very large percentage of small-business owners that view their business as the retirement fund – a large payout at the end of their working life.
Unfortunatly what this has lead to is an industry full of small business owners that lack both business, and more specifically, retailing skills. This in turn has left the industry with inneficant, run-down businesses that in their existing state are not all that profitable.
What this then leads to is new entrants paying too much for businesses that they will have to spend even more money on turning around. Ive seen some newsagencies where the asking price would match the additional capital needed to turn the business around.
Correct me if I am wrong, but I think you mean that loss of goodwill is not a bad thing for the future success of ‘the industry’.
Proactive, you’re entitled to ask what you want for your business. When I had my newsagency on the market I was not chasing “top dollar”. I am a sub agent for newspapers so the effect on the contract on me is less than for others.
Jarryd,
Yes, loss of goodwill is not a bad thing. It focuses our minds on today’s task rather than looking at our business as a super nest egg.
Jarred As long the money is not being removed from you pocket, is it O.K.
What if you are paid over value for your busness not going to take it ,you will be asking less for your shop
DR,
If someone offers more for a business than it worth, then provided that they have all the information necessary I don’t know anyone that would turn it down. However a perception can be created in the marketplace that newsagencies are worth more than they really are when the vast majority are overpriced.
I would envisage that if the value of goodwill was reduced in the newsagency industry then we would see a lot more newsagents forced into becoming better retailers and subsequently increase their day-to-day profitability.
Jarryd What perception ,i would like to buy but i do not have the money it must be over priced ,it is called wanting some thing for nothing.If the idea of getting a better price when you sell is not enough to improve your newsagency nothing will do it, it is called work and reward.I paid to much ,if you use an account who knows this industry you should be right and you think it is over priced dont buy it
Warning: lengthy… Been pondering this a bit LOL
David is correct. Despite often completely different agendas and standpoints (naturally) here, very few fora present opportunities for questions and discussion of really big (or really small!) issues, such as the upcoming contract renewals. It’s easy to get swept up in hysteria concerning our very livelihoods, particularly given the contempt for our bread and butter so clearly demonstrated by mega-corporations for so long to date. I for one am grateful that we can help each other with ideas, points of view, information, and support.
So far on this topic, one gathers that those engaging in both distribution and retail, generally, would rather not continue with the present disparity and unequal playing field for another two years. The factors influencing decisions whether or not to, however, are as varied and diverse as we businesses pondering our futures. As has been said already, some intend to sign, because in their particular situations, there is a dearth of alternatives. Others are more than ready to cut the apron strings. Diff’rent strokes for diff’rent folks.
Personally, as a relative newbie, having learned just how long the effects of inflexible and unfair delivery arrangements have been well and consciously known to certain large media companies, I don’t hold out much hope of a lot to be changing within those ‘proposed’ two years in terms of making things fairer. Except maybe, just maybe, there could be a completely different model in place, having been developed in the meantime, where agents may not have such an integral role in delivery at all. Let’s face it – someone will still have to do it. But I can’t see the two years being up, and an equitable deal having been offered to retail/distribution newsagents. They’ve already had plenty of time to come up with an alternative or solution prior to this round of contracts.
If addressing the issue was even half-mast on the minds of those who have all this power over our core business, meaningful changes would have already begun to have been phased in – right now, rather than being told ‘give us a couple more years’. Seems to me, while the status quo continues to suit them, very little will change, even in two year’s time.
Perhaps many of us will see an opportunity to redefine our businesses in terms of core work and benefits within this time – i.e. planning and taking control of our own livelihoods.
After having it pointed out by a News Ltd manager that we “only throw, what, 10?” (a very uncalled-for personal dig, among other little gems, during a convo re something totally irrelevant) of a certain publication, it is clear to me where we stand. At least we have the luxury of biding our time, for now, and will be deciding whether or not we really need to cop that kind of crap for having an opinion. At least they know who we are. Would be nice to see them contribute, rather than read stuff and then get all hairy-chested on the blower. Would they ring up a larger, shopping-centre-based agency? I doubt it. If the likes of News Ltd. gave a toss about ‘the channel’, a more open and collaborative approach would be considered within it, yes? Unfortunately, no. Their agenda is to expand their ‘channel’ further, by including supermarkets and government enterprises, at the expense of their agents. Hey, they can do as they please, but at the end of the day, we can, too.
On the topic of goodwill, it turns out we paid way too much for this business. But it’s now worth a lot more, thanks to the graft that went into rebuilding it. However, on the newsagency basis alone, banks were not interested. As far as they were all concerned (during a credit squeeze last year), a distribution territory meant squat. Even a big one. Now, if we were buying an LPO, we could have had as much money as we wanted. Go figure. As a corner shop, it’s worth good money. As a stand-alone newsagency? Sadly, stuff-all. I can’t help but think this state of affairs could be reversed, if there was a different relationship and fairer practices in place.
OMG its the War and Peace contributor again
anon should change name to “tosser”
have you started that anger management course yet Maxy boy
Your wit knows no boundaries anon.
Y&G, Thanks for a well considered contribution to the discussion.
News is already experimenting, in South Australia. They manage several runs. They also and driving the roll out of flat wrap – delivering product wrapped and ready for home delivery. They also have a slightly different newspaper for home deloivery versus over the counter.
As a propective newsagency purchaser who has been “lurking” here for some time the goodwill versus sustainable earnings ratio and how these new contracts will affect these values are an interesting one. Personally having looked at several agencies so far I would have to say that many appear over valued and propped up by inordinantly large addbacks. I’m also quite stunned at what some agencys present as a reasonable owners earnings and expect these figures to look attractive to prospective purchasers.
More on topic, I’m wondering what current agents think these new contracts will actually mean to their bottom line or in what direction they will be looking to take their businesses ?
Paul,
At the risk of bringing on the wrath of others here, I abhor addbacks as they present a false view. Buy just about any other business (other than tiny retail businesses) and you will not see them.
The new contracts will not affect the current bottom line as they maintain the status quo.
That said, I hope that the ne contracts lead to a better botttom line as newsagents get smarter, chase margin and chase new traffic. This is the opportunity we have!
how do we break the chain with newsagency valuations, i am looking at buying a second shop after having my current one for 3 years. i know they are overpriced, but to push for a fairer valuation is a double edged sword, i might get the additional shop cheaper, but at the same time lower the value of my existing business.
its like musical chairs,at some point the music will stop and somebody will be left standing, hope its not me.
on the contract saga, i havnt had a fairfax contract for 3 years, got misplaced with the mountain of paperwork when i took over the newsagency, they threatened a couple of times, but i think they pulled a map out and looked where i was and knew nobody else would do what i do for the price, and have gone very quiet,i will do the same with news corp, they can threaten all they like, if they want their product in town, i am their best option, and i think they will quickly work that out, and i already set my own delivery fee, so sue me!!!
its my business, and my customers, its my decision. its time we all grew some balls and stopped whinging how useless the ANF is and make our own business decisions. news corp arent stupid, they know where the best place for there product is, bur hey if we are too lazy to buck the system, dont go crying to mum over it. i say just dont sign, my business is much more than frigging newspapers, the way i see it the new contract only keeps us on the line, and news corp can change it whenever they like, so how is it in our interest to have a contract, who here has a contract for statioenry, cards, books etc, not me let news corp deal the same way, why do i need a contract to sell a paper, i know no body else will set up a run to delever, i wish they would lol its a 2 way street, if i am valuable to news, they will supply me, if news is of value to my business, i will choose to sell their product, end of story, contract?, dont need on sorry
Rick Good for you a newsagent with balls ,did not think i would ever see it Have been in the industry for 15 years, i have seen prices go up and down, have seen newsagents sell for 7 times net,now the prices are down a bit.It will turn around .What you have done with your contract is the way to go ,not worth the paper they are writen on all for then no money for us.The only thig i see that will efect the price is all the non core products now being sold ,may be differnt price for non core goods
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This why the chains win and why newsagents will continue to let market share erode. Country newsagents are OK as they have little to no competition and people in towns mostly support the community. Trading terms are skewed in favour of major companies as newsagents are easily defeated and are cash cows for suppliers. Marketing groups no matter their name are of little help as the need to feed their own bellies on what little is offered to them by suppliers. The stationery supply model cannot compete and is old just as magazines, cards, newspapers and even greeting cards supply models and are all receeding. The more IGA, Foodworks, Coles and Woolworths that open and they will continue to open as well as the continued expansion of convenience stores and P and C outlets, there is not much left for the outdated newsagent. Good will is gone and so is banking confidence in the industry. So many newsagents are going broke or can’t be sold and good will diminishing, who would get into this industry? Don’t worry about establishing any governance or associations to fight on your behalf as they have no teeth with lack of unification. The people who get involved to represent you are virtually stoned to death because they lead an ununifiable bunch who just fight amongst one another. Suppliers know that newsagents are weak and can offer anything they want, even to the groups which by comparison to chain stores is chicken feed both in terms of rebates, free fixturing, up to 120 days to pay invoices, the list goes on. Wholesalers are all but obsolete in chain stores, they deal directly with the manufacturer which takes out wholesaling margins in excess of 20%. Other supply chain savings and trading term advantages give them a massive head start which newsagents can’t compete with. Lotto is being sold more and more on line which is the preferred method as it is much cheaper even than giving an 8% margin, technology used in newsagencies is poorly networked and old hat compared to what chains have and data transmission to suppliers is virtually non existent. Customer service levels in most newsagents are worse than chain stores as they do not even come out from behind the counter, so customers only come in to get a single item not multiples. rent is far too expensive and for shopping center newsagents they make nothing. Newsagents sell nothing that you cannot buy anywhere else and whilst you envy pharmacists, there market is protected and supported by suppliers, newsagents are the exact opposite. Whilst there will be newsagents in years to come there numbers will be substantially reduced and mainly confined to country locations.
John,
This blog does not have a competitor on the newsagency space.
You submitted this comment on November 22 at 10:37PM, hours after it was published elsewhere.
Comments here are not moderated. The first comment by anyone has to be approved to verify their details.
John, who are you? Yours comments about newsagency industry is so pessimistic and broke my heart. This blog is for newsagents to help each other and achieve a positive future. Please don’t spread these harmful things.
Gosh John, Had me worried for a moment, thought I left the beema parked out the front of the shop again.
While channel will continue to evolve and probably shrink, the core of our businesses is strong and can be leveraged by proactive newsagents. The new contracts focus our minds on the future and this must be a good thing.
I have looked long and hard at the contracts and have decided to not return them. I would prefer to keep my retail contract but I have ot been given this option. Sub agent commission on retail newspapers is better than being locked into my loss making home delivery and sub agent business.
We are in a suburban newsagency but with a small territory and little prospects of selling this to another newsagent. Our runs currently lose $150 a week but if I add in our won time and other costs it comes up to $400 a week. We are better off keeping this for ourselves and as Mark says investing this in other parts of our business.
I am worried about what News will do when they realise we are not continuing. This keeps me awake at night because of some comments that have been made. They can be bullys sometimes.
After 68 comments, you’ve summed up what we all should do Helen.
If it’s working for you resign, if it’s not don’t. We’re here to run profitable businesses and with some of these unfair contracts we can’t.
Fifty Newsagents in Queensland can’t be wrong, let alone the rest in the nation. It’s obviously time for the big guys to change the terms of the contracts so Newsagents aren’t making a loss when delivering, selling, chasing up payments etc, their product.
John…
We are bleeding into News Ltd’s hands if you think that by not returning our Contracts will see change in the future our way.
What is needed is a stronger ANF that truly represents Newsagents.
Quite frankly this situation should not have occured given that true and fair negotiation evolved when all this commenced some months ago.
Our ANF are weak and should hang their heads in shame at the loss of so much and so many Newsagents in Queensland handing back their delivery rounds.
I’ve joined this discussion late but would like to share my home delivery experience … I owned a medium sized newsagency ina regional NSW centre. I had a large run of 160kms a day (about 500 papers Mon-Fri and 700 on weekend). In 2006 I decided to put my price up to )15c per paper, per day. I simply sent a letter with all account one month explaining that petrol and wage costs had increased. I got ZERO comments from customers. In 2008 I sent a similar letter advising customers that the price had risen to 20c per paper, per day. I got ONE phone call and lost about 5 customers who said they’d prefer to walk to the shop and save the money. DO IT TODAY. Write the letter and send with your November accounts. Put your prices up. I did not send to subscriber customers who may have contacted News and Fairfax. Your customers do not know that we have contracts restricting the price and most of them couldn’t care less anyway. I charged 20c per article, per day for the last 18 months I was in my shop and no-one from News or Fairfax was any the wiser. I told the new owner and he continues the practice today.
helen has the right approach in her comments (68). the huge benefit is that she is able to see what the delivery run is costing her business presently. she can see that she doesnt need deliveries.
we cannot wait for the anf or anyone else to run these negotiations. we just look after ourselves like helen is doing.
when my contract comes up, i will do the figures, if it doesnt work…. then i will let it go. easy.
good luck to all those who need it
peter
Peter
whilst I share empathy with helen’s position surely it would be better for a united industry working for all rather than have each individual suffering and losing goodwill value ( as small as it may be) on giving up a round.
That way we are working as one.
Footnote: I note that VANA despite their properganda have not supported us with “professional feeling” at all.
Where are our associations when it matters ?
the position i am in is that i pay someone to wake up early in the morning to do the job for me ,they enjoy doing it as he is an ex baker so early morning work suits him ,While i make no money from the delivery fees because it all goes to his wage and car expenses i still make the money from the papers and other products that these customers buy when they come in the shop and then there are the subagents that i get to supply ,i now have 9 (thanks to bangers i took over all his subagents recently when he handed his run back /)For me these are the iceing on the cake .I do not charge what i am supposed to this is the reason why i want to keep delivering ,it just goes to show that if they let us do what we want when it come to delivery fees it all works
Proactive, A unified industry begins with strong, transparent and co-operative leadership. Our channel has not had that in ten years. Newsagents are on their own on the News contract. Reading the comments here my sense is that it is being navigated with due care and consideration.
Mark
never a truer word spoken. The Industry associations have their heads in the sand. What we need is leadership and an aggressive association that will stand up when it counts.
Just a pity about all the rhetoric that both VANA and the ANF came out with prior to the Contract release. I recall memos telling us about secret meetings with Catherine Woodside and the changes that will evolve. All secret stuff with no body.
Really weak leadership when it counts.
former newsagent why would they complain it should be more than 20 cents anyway way to cheap a stamp costs 55 cents ?it used to be a set thing that if a stamp cost 20 cents a mechanic charged $20 dollars when a stamp went up each time wages kept up? now you find a mechanic that charges $ 55 more like$88 per hour thanks maybee more depending on car type. so how can a paper be so cheap to deliver i know the feeling of people who do the delivering and there accountants is how many people can get there car out for say $1.00 its a fair price make the user pay dont under sell yourselves .you cant argue the doctors charge or the dentists can you ? let them get the post office to deliver it the next day or two it will cost more and be old news. they have a choice pay or do it them selves . who can honestly show a profit in the delivery side of things i know in the bush you cant?
All this rhetoric is not going to change the fact that News Ltd have a
new “model” to use in the distribution of their product and for the next 3 years newsagents are still being “used” (I use that work deliberately). When the migration of customers is concluded here in SA it will mean that distribution rounds will be worth zilch because tonce the Advertiser has the agents customer base (which he is acquiring compulsorily) there will be nothing left for the newsagent to sell and he will be reduced to being a courier delivering the morning papers for as little as possible.
This is what is happening in SA and I firmly believe it is the way that News Ltd mean to go forward into the future and into the other states.
Our newsagents have barely raised an eyebrow here and it saddens me that they feel that there is noone to represent them at this time.
We have been like lambs being lead to the slaughter and I have said it before and I say it again News Ltd are taking back the farm NOT buying back the farm.
Former Newsagent (and June) we are in country NSW and 95 % of our home delivery customers are already on subscription anyway. It would be rare for a customer not to know that they can get the paper home delivered for – in some cases – a very small percentage of the cover price of the paper. If we decided to charge 20c per paper we could only charge it to 2 or 3 customers anyway.
June,
The ” subscription” home delivered to customer has been owned by the publisher of that masthead ever since de regulation. Technically in S.A. the publisher has always “owned” the delivered to customer. It’s just that S.A. is playing catch up in that direct accounts are now being forwarded and marketing by the publisher is more aggressive. Yes, there is areal threat thatin some many years the publisher can do the home delivery without compensation to the agent. It’s in the contract which is a principal and Agent contract. The publisher is the Principal and we
are virtually a sub contractor. Has been the same for yonks.
Graeme, SA has traditionally had 70% a/c paying customers (surely belonging to the agent who bills them and handles all their administration and 30% have been subscribers. To take back the 70% is like folding up the business of the incumbent and I believe it is “unconscionable conduct”. Unfortunately our agreements (I always thought that meant that both parties agreed) are such that we cannot
do anything about this situation. It has been presented to round only agents as a fait accompli and take it or leave it.
I think that the argument about who owns the subscription customer was lost in 1999 and thaat not enough newsagents have an appetite for revisiting this. As for accounts won through the hard work of newsagents, I say the newsagent owns these regardless of what the contract says. Butt this point is moot because the new contract is all newsagents can respond to.
Thanks Mark,
That is exactly what I am pointing out. There is no point fighting that one, however there are other matters to raise and fight for.
“The newsagent owns these”regardless of what the contract says- a big statement above the law, more emotional than factual I am afraid!
the publishers need to get this sorted .NOW . i deliver for a newsagent that has not paid me for my deliverys for 13 weeks i bet he has not told the customers he cant accept payment till the publisher contracts sort out. he has been paid but wont pay me for the delivers if this goes on any longer. i will publicly name and shame the newsagent localy in the print media . the print media is his bread and butter and also his customers ? the delivery is a sideline i can live without but i will not tolirate being used and lied to
sorry i should proof read first what i ment to say was print media is his bread and butter and all his customers will read it.
Ownership of the customer is what this discussion is or should be about because, if, WE own the customer then we should be allowed to dictate account fees and delivery fees.
Why is it so that a customer can come into my shop today, open an account at my Newsagency, have the rival paper and a News Ltd product home delivered as well stationery and magazines and yet News Ltd are the only supplier who stand to claim it is their customer by default ?
If we own the customer then our Goodwill is protected somewhat from situations like what News Ltd is pushing us through at present. I am just disappointed that the blind eagles in State and National Associations have not or cannot see that protection of our Industry begins with ownership of the customer.
What an absurd situation we have here.
When will our Associations stand up and fight for what is protection of our core business ?
David,
Can I suggest that instead of naming and shaming, that you instead inform him that effective tomorrow, you are unable to cintinue delivering for him until he pays his account in full.
I know that if I have a home delivery customer who has not paid there bill for 13 weeks, I would have stopped them a long time ago.
Dean
proactive agent (sad that you are intimidated???? enough for us not to know who you are but you are right about the associations. The mission of all state and federal associations (ANF) was/is to support the newsagent in his
business regarding
the protection of his investment and that has clearly been wantonly ignored by them all.
June my dear woman,
You make it sound as if the Associations did nothing.
Get your facts straight and stop writing shit, along with pro-gutless active, so that people who read this blog are not misinformed.
Your truly
Chris
Reservoir
thanks dean i also think of the people, who i also deliver there mail, aswell as papers and have done for 6 years .and we have a great relationship with .he is a new owner. another deliverer in the same situation has done it for 26 years and when you told the previous agent it was time to be paid it was paid the next day or 2 ,3 at the most ? we have said no pay and we will stop but no diference we want to be easy to get along with ? now he cant understand why we said no to signing a contract ? would you sign with somone who shows no honrability
To Chris of Reservoir and other doubters.
Facts are things that are published showing or demonstrating positive change. In this case, benefits of change as a result of our Associations working for us with regards to our Contracts. I see nothing put on the table in this regard- or have I missed something.
Our Associations have gone quiet since the realease of the News Ltd Contracts which is quite different to the position prior to the issue of the Contracts.
I remember the ANF saying how “we” are speaking with Catherine Woodside and endeavouring to negotiate a strong contract which is considered viable for Newsagents. ( words to that effect)
Now show me what State and National asscoiations have proactively achieved since the realease of the Contracts…? They have gone under the table and ducked the issue. That is why Associations in this context mean nothing. Shame shame shame.
Oh- next time curb your language a tad.
Chris, you don’t have to be abusive. I would happily retract if you can name me one success that the associations (especially the ANF) have gained for the newsagent, in terms of contractual agreements. (Please please don’t use BE or WU as examples of merit where the ANF is concerned.
There are many good people in our industry who have tried to change the views of the associations and the QNF comes to mind (plus the old NASA who are now a branch of the ANF, but, seriously, Chris, newsagents have been let down by the very people we have paid to represent us and there is no use in denying that fact.
I know we have to move on but the mismanagement and lack of talent at the round table has been astounding to say the least.
as of monday the agent will deliver the papers?around 250 klms of rural roadside delivery lets see that turn a profit and the roads are as rough as guts but he said we wont be delivering as he would be in breach if we dont sign so we will be paid up no notice
David i think i am missing something why do you have to sign anything you are a delivery driver for the newsagent arn’t you ,shouldn’
they be the one signing ? i haver people doing an out of town run for me with the mail run they pretty much charge me what ever they like and i forward that on to the customer at the moment it is 70 cents per day never had any complaints as they w7uld have to drive 30 ks to come in and get there paper . this is for the mail run only not my local run
Chris,
Your condascending tone damages you and the newsagency channel.
On the contracts, the ANF did make noise and achieve nothing. This continues a pattern and I suspect that it was this pattern to which June was referring.
proactive newsagent,
Ownership of the customer and the ability of the agent to set their own fees are two seperate things. Owning the customer would have no direct bearing on the legal ability of an agent to charge more than the prescribed fees as set out in contracts.
can we try to get to 100 comments – now that would be fantastic
OK
WOW
Congratulations Shaun S –
YOU’RE THE MAN!!
you just had to stuff it all up could have just left it at 100 ya bozo, now we have to start all over again
Re anon
Everyone should become familiar with the concept of a troll on blog sites, look it up and then follow the sage advice given …do not feed the trolls.
\|||/
(o o)
,—-ooO–(_)——-.
| Please |
| don’t feed the |
| TROLL’s ! |
‘————–Ooo–‘
|__|__|
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ooO Ooo
well, that came out extremely messed up.
original ascii:
http://jni.sdf-eu.org/trolls.html
Brett,
stick it up your contract and enjoy the lightheartedness of the moment you fool
A nice try though Aaron
Plenty of dicscussion. News Ltd have flagged that the world as we know it is changing. We now need newsagents to recommend solutions to the contract matter and to provide views on the optimum distribution model in 3 years with newsagents still at the helm.
Craig L
We can do that but again I ask – Why is it that our associations have promised so much with regards to News Ltd contracts of late and delivered so little ?
and- Why – when it is most needed right now have we not seen more voice and substance from our associations ?
We need a guarantee into the future in the form of a contract that is open and professionally based for both parties. A Contract that rewards performance and encourages a business partnership.
I am tired of the tales and promises that come out of associations that end up nowhere.
Hell I pay my dues each month and surely I am entitled to something.
Craig,
news flagged that in 1999 and at several times between then and a few weeks ago. they flagged it to newsagents and to associations.
The time for newsagents engagement was long before now. As I have blogged here previously, a smart association would have professionally researched and developed a case on the front foot rather than reacting as is happening now.
If newsagents had a solution it owuld have been evident years ago.
I appreciate this sounds harsh and there there will be many excuses. To fix it now will take extraordinary effort and exceptional national leadership. Not politics, but leadership.
Mark the trouble with people within an industry is that we all tend to think the same way. This is a consequene of our training or molding within the industry. As newsagents we are likely to come up with similar solutions based on our own bias. Even the 3 or 4 papers that have been prepared by different players over the years (and i think one was from you) have not really come up with any radically different thoughts. I’d love to see some completely left field ideas that will add to our thought processes moving forward. Contract issues will be hard but operating models may be where the answer lies. Times are tough, but if we slip into negative comment only then we are writing our own obituaries.
Craig L
My comments are similar to Mark but you have not answered the questions instead you skirt around the issue.
we are all individual Newsies but we vote in association heads to deliver in hard times and clearly they have not.
Craig, there is no ‘trouble’ with the industry. There are many ‘troubles’. Some of these can be fixed by proactive, transparent good leadership. We have been bereft of this for more than ten years. Newsagents are voting with their feed and reinventing their businesses themselves.
A smart move by associations on this would have been to study home delivery worldwide five or so years ago and created a new system based on world’s best practice.
It is easy to point the finger at others. Negative comments can be like a cancer. They eat away at your guts until all that is left is an empty miserable shell. Suppliers, Software vendors, Marketing groups, Associations, Newsagents all have their faults. I am not entering a debate about who is the saviour or antichrist of the industry. The grab that i wanted newsagents to respond to is “Provide ideas on the future look of distribution models that newsagents want.” Interesting that no-one has been able or willing to do so. For the record I suspect that we’ll end up in a depot type model with perhaps some different operating rules depending on circumstances. I eargerly await suggested alternatives that still retain newsagents as an active ingredient.
i think the model will depend on location, there is no way anyone can be a distribution business only in country towns, the only way news corp etc can get their paper delivered is thru the local newsagent, maybe there needs to be a different contract for rural towns versus metro. rural towns dont have the population concentration and the runs are generally longer. i dont expect news to bother looking at this tho, nor anyone else for that matter, i will do what i do now and charge what i like, contract or no contract. if news corp find out, i dont believe they can or will do anything about it, just look the otherway, what choice do they have?
If your smart you would sell your run and even consider being a sub. Its simply not worth having a run. Sell now whilst you can get anything for it. Low performing assets should be culled from any business.
Rick,
It has become obvious through welcomed discussion on this site that Countrty Newsagents and City newsagents distribution has many differences especially cost.
The one to one contracts do allow for individual bargaining or at least discussion.
I would suggest that you talk with your Lawyer or NANA (firstly) for they are currently seeking advice from ACCC Lawyer QNF the same. This will perhaps enable you to one on one discuss YOUR individual financial needs to deliver/distribute their products.
I may be wrong but my understanding is that they will listen to each case put forward.What have you to lose?
CraigL
There are many models over 15 years that have been put to the industry. If you send me your email address I will forward what I have to you. My eamil address can be obtained by clicking on Graeme Day at the top of this blog
No one seems to be answering the question.
What are NANA, the QNF and VANA doing now about the News Ltd Contracts ?
With respect I want to hear from them and not might be stuff from thsi blog !
Tell us what you ( the associations) did to protect our wellfare prior to the issuance of the contracts and tell us what “wishes” you won.
Associations need to come out from behind the iron curtain and start delivering.
Craig,
My answer for the future of the newspaper distribution model is that which I put forward in 2005. Newsagent should throw runs together and create 10,000+ customer distribution centres. This means that 75% of newsagents get out of the business.
I think it is too late to do this now.
Its simple, don’t sign if you are not happy. If newsagents keep relenting they will keep taking the hits. Stop being a punching bag, unify and collectively negotiate. Its that simple. Look at Metcash and how they compete, they are organised, they do not allow franchisees to disgrace their brand or they are booted out. Now guess what they are heading into hardware to take on a basket case called mitre 10 to compete with the companies that are taking away your market share. This level of organisation can help independents survive. have a look at http://www.metcash.com.au for a snap shot of how to play with independents and win. Volume wins as does logistics and metcash know how to do it. Newsagents need retailers leading them, not Newsagents as they are stuck in an old antiquated business model. Newsagents have no chance they way they are. For those that complain, get involved rather than complain and to those that are in governance or leadership positions in the industry, get together and work it out or get out and get people in who are prepared to work together and find common ground. Its this disunity in the channel that will always be exploited by any supplier to the industry.
There are newsagents who dismiss the relevance of newspapers (in their own business). These newsagents have diversified and molded their offering to that of their customers needs. Over 50 newsagents in Queensland have walked away from their delivery runs and are concentrating on their retail businesses.
Not all newsagents are able to do this.
Too many newsagents in Australia depend on their home delivery and retail newspaper sales as a prime area of their business.
Newsagents need to write to their member of parliament and to the ACCC and let them know that these contracts are unfair and inequitable. If the newsagent is forced to sign the News Limited contracts as is the newspaper home delivery service is at risk of disappearing.
The News Limited contracts must be questioned by newsagents. Sure there is not much change from the previous contracts but the question should be asked – were the previous contracts good contracts?
Valuable businesses will disappear overnight if News Limited is allowed to reduce cover price/commissions/delivery fees midway through the contract period.
Newsagents should question why they are being asked to enter into a contract which can be altered unilaterally during its term. All information should be laid out on the table so that newsagents can make an informed choice as to whether or not they will sign their contracts.
……..Sign here by December 18th and News Limited will let you know what your cover prices and your delivery fees and commissions will be……… at a later date……………
Who does business this way? Should you allow this to happen? Is the product so good that you are willing to sign a one-sided contract?
• How many retailers would persist in stocking a non-exclusive product, not experiencing sales growth and not strong enough in its own offering [see next point] to sustain a price rise for 8 years?
The Courier Mail’s cover price for Monday to Friday editions has remained the same since 2001. The 25cents newsagents earn per paper sold in 2009 is not anything near the worth of the 25cents per paper earned back in 2001.
• Is News Limited’s confidence in the value of News Limited newspapers declining?
This is the message News Limited send out by continually pushing cheaper subscriptions; looking for readership at any price. This message will be reinforced if News Limited follow the UK footsteps and reduce cover price.
• Does News Limited really need to charge for their newspapers?
• Does a higher circulation figure equal higher advertising dollars?
• In the future will News Limited put a paper on every lawn, on every retail counter, at all public venues and charge nothing – just to claim higher circulation?
When an item has no value it is not valued.
Higher circulation does not mean higher readership.
Qld newsagents have today received advice from Hank Spier with regard to their contracts and have been kept up-to-date with advances made in QNF & NANA’s consultations with the ACCC.
Last Tuesday at the QNF AGM resolutions were passed to amend our constitution to allow the QNF to accept members from interstate. The QNF constantly receive requests from go ahead newsagents languishing in other smaller states who wish to be represented by an Association which has only this industries future at heart.
Ann
I like your style, I read this blog as it is a great source of information to me as I was thinking of entering the industry and starting a new clean group.
You should be aware in my dealings with suppliers recently, corporate express included, they have said that they have negotiated with groups in the industry in the past, but could not come to terms. So I know the ANF is not the only group or governance body who has gone down this road. It does make sense to explore your options to make sure you get the best deals. Good luck with what you are doing, I look forward to meeting you one day if and when I come into the industry.
John,
The ANF should get its association role right before offering commercial services.
The corporate Express deal, if it happens, will be mroe about politics than what is good for newsagents.
Mark I think you are right.
I am led to believe and in my due diligence of your industry that all governance bodies in the industry have some sort of commercial terms or services whether it be through a % of deals done in buying and selling newsagencies, insurance, stationery and the like. I do not know the politics but I understand the fees garnered from members do not cover the costs of the governance bodies so they have to derive income some where else to do what they do, good or bad?
If politics is involved thats not a good thing, other than causing division.
Maybe newsagents should start a new association if its that bad. Its not that hard to do. Have people from outside the industry on it, like most boards of large corporations. I note James Strong (Qantas) who is chairman of Woolworths and Don Argus (NAB) from BHP who had careers in other industries they now lead different companies and bring to their companies so much more than retailing and financial services, rather discipline, excellent forecasting skills and proven business acumen and not compromised by working in that industry they now chair or lead.
John,
The QNF has some commercial activity. But their association house is in order as evidenced through growing membership.
The ANF, on the other hand, does not have its association house in order – hence my comments.
The ANF and VANA in particular have a beef with GNS. They ought to mend this since GNS is owned by newsagents.
Ann
You are a breath of fresh air. Your views are what we need BUT we need associations to start acting for us and speaking out the way you are doing here.
VANA is a dead fish sinking as is the ANF.
They are all talk before the issuance of the Contracts and so quiet after the event. We need inspirational leadership, business to business contracts that reflect the year 2009 and beyond not old hat comments that are glorified by those people in political power within associations who say a lot but do not deliver.
Mark is right unfortunately – Contractual change should have been brought upon us years ago with regards to conceptual business like contracts that reflect financial change in the market place as to the value of the product and its delivery. We need it to be are fair to each party, and not present us with an interim Contract that suits News Ltd needs at the last minute with no where to run just because they have not thought about the future model. Where have our Associations been for the past ten years? Hell we voted them in so that they would work for us in this regard.
Why is it considered fair by News Ltd to control us the way they have to date and into the future with very little income change for over ten years bottom line.
Well done Ann. BUT we need help and advice now.
VANA and the ANF are you listening ????
19 days to go….
yep haun im just a delerer a postie who take the papers too oops took them as of monday the three posties in this area will cease to deliver for them and thats the news agents 3 roadside runs will keep em busy
Contracts signed by newsagents are arriving in good numbers.
are you also pissed David?
thast funny
nana just sent a fax suggesting that you dont sign the contract.about time one of our association are taking a stand.thanks nana
Andy,
My concern is that the reasons for News taking this approach have been obvious for years. Too many newsagents have not been adjusting their businesses accordingly.
I may be wrong but I suspect that the solution lies within ourselves and not regulation.
I believe that whilst there appears to be many questions unanswered as far as the News Ltd Contract is concerned. It is totally irresponsible of NANA to suggest to Newsagents to not sign the document. The end decision lies with the Newsagent not NANA.
The Newsagent is the one who will stand to loose most if News Ltd do not renew the said Contract for a Newsagent who listens to NANA. Then who is to blame ?
Shame Stan Cousins shame.
Proactive.
I have wtched this site and read commentary that the Associations “stand by and do nothing”
NANA sent out a circular (two pages) giving a summary of their paticipation and their views. They state cautiously that to quote ” We suggest in the meantime you refrain from signing until you hear from us again and most importantly fully reasses the financial importance of carrying on with a new contract”
I would have though for those looking for some direction one has been provided. For those that are strong enough in their own opinions, well do what it takes to enforce that opinion.
I cannot read into the two page material any recommendation NOT to sign however a suggestion of NOT yet until NANA finds out more.
Do as you wish, i really can’t bag an Association for communcating with newsagents their views whether one agrees with it or not is another matter
Proactive
Its Newsagents like you,if you are one,thats got us into this mess.Not signing is our strongest bargining tool, show some courage and stand together and fight
I don’t know who the ‘publisher’ on this site is but, my records show that in Queensland: –
• 83% have received their contracts
• 40.9% do not consider their delivery run viable
• 95.5% have not yet signed their contract
• 29.5% will not be signing.
Newsagents have many unanswered questions.
This is the most common:-
“Is it worth my while re-signing my contract without any assurance as to whether or not I will still be able to pay my wages and pay my bills during the term of the contract?”
I could say more but I think above the statistics speak for themselves.
Stan I appreciate your comments and anyone who does not read your letter and consider what it contains is not looking at reality. This is an important turning point. Last time we were given these contracts we all signed, including my husband and myself because we were only given 11 days to make the decision; we were too scared to give up a run that in the end proved to be costing us money.
Queensland Newsagents Federation has asked for an extension on the deadline date and is hopeful that we will be able to meet with Qld Newspapers to discuss the changes that our industry (in Queensland) will face under the new Modern Awards.
Home delivery is a very important component of most retail/delivery newsagents businesses. We need to fix this problem.
Ann Nugent
Well said Ann I hope people take notice that there are Associations looking after their members.
Come 1st Feb 2010 News Ltd will want their product delivered . We must stand firm and not sign until we have a workable agreement. The new contract makes no allowance for the customer who does NOT want their details given to News Lts. This whole section on transfer of customer data is a mess. I realise our future is uncertain but at least for the next 2 years we can have a more equitable contract.
We cannot fix what has happened in the past but we can learn from it . News Ltd have been and remain hard nosed,many newsagents have had enough of being pushed around . I believe the issues with the contracts can be resolved and really at not a great expense to News Ltd. I am sure News Ltd realises what faces them if large numbers of newsagents don’t sign.
On the changing face of the industry, yes there is new technology out there with Kindle ect. and more to come. But the population from 50 up and there are many of us ! still like to read a hard copy of the news.
Some rounds will remain viable in the short to medium term . News Ltd have a lot of work to do.To restructure those suburbs and towns which have unviable rounds . This is all about circulation and they need their product on the customers front lawn every day
Ann, thanks for publishing these numbers. They are compelling.
While hindsight is a wonderful thing, the time for newsagents to band together and fight for an equitable supply agreement is before a supplier puts their position in the form of a new contract.
Newsagents have themselves to blame for an appalling representation track record on these issues. In most states, not all, but most, they are disengaged with representation. This is in part due to years of trench warfare between associations and two or three individuals.
Now more than ever, newsagents need to join a strong body which is transparent in its efforts on behalf of members. Your transparency here, without emotion or personal attack, is most welcome.
My concerns with the contracts are three-fold – the big issue is the future of mass circulation print newspapers, the timing of dealing with the new contracts so late in the game and that newsagents are forced to take both contracts when mny (I suspect) would want only one.
lets face reality..
newsagents have not been leading retailers for several decades, we have been overtaken in the markjetplace by the progressives. The owners that stay loyal to existing publisher models will fail. Retailing & distribution are competing forces. The future is less outlets(profitable) & centeralised depots.
p. s. the answer lies in the desire of newsagents to b exclusive retailers. No lottery products… no home delivery or distribution of product just 100% quality retailing…just like all the companies, that have passed us by.
Robert Allen
This has been stated over and over. Just exactly what Retailing Model do you suggest?
If you don’t want papers don’t want lotto why buy a newsagent???
Robert,
No lottery products? This is a relatively big drawcard for many newsagents. For some, i’d say it is the newsagent equivelant of a supermarket’s bread/milk. Im not aware of any major negatives brought to a business by the sale of lottery products.
Jarryd.
Depends on locality.
We have done our sums on lotteries & because we are a very small newsagency/convenience store it would not be viable to implement & maintain them here. The small demand weighed against increased shop fit/insurance/cash on hand/interest on loan/security upgrade/theft & burglary potential increase….
Each area is different & its strengths should be maximized while all the time looking for new areas to expand in…which we are always looking at.
Graeme Day
The new model: media interactive news room or distribution centre. Any new model is better.
Newsagents of NSW are inefficent, labour intensive and far too numerous in the market place. The everyone is different approach is the sure path to oblivion. All i’m saying is that any newsagent that models themselves as transaction centres (incl. lottery products) will die. The future is a division of functions to a bigger, more professional retailer and fewer publisher centric distribution centres, where economies of scale will bring cost ratios back in favour of the owners.
With respect, It has been acknowledged in that what you are saying will suit perhaps a majority of newsagencys’. They will need to be more professional etc etc etc and the leftovers would go to the wall.
It’s no different that McDonalds taking the hamburger away and redeveloping the Milk Bar from the fifties and sixties into the success of the 70’s 80’s etc. to date. They still sell hamburgers and milk shakes except they cater for families and not bodgies.
The point is, the encumbent Milk Bar owner let it happen and said, “We need to be more professional, put in systems and have a financial structure along with a service code.
History tells us it didn’t happen. They are now extinct except for the one’s that are a museum piece. The Paragon in the Country town.
If some one representing small business Milk Bars thought outside the square they could have introduced Cafe’s years before their time, perhaps franchised them then and given the public a choice earlier in the making.
This is the sort of thinking that I think we need and not just the statement of what is so obviuosly wrong with the current system.
We need to transfer the current traffic flow into the new model once that new model is determined.
A bit of a challenge.
For starters I favour a “Comm U nications” syled Store that covers all age groups in say 300 sq meteres of prime retail space. One could even have Super “Comm”Stores of say 450 plus sq metres. They would stock soft reading materials (magazines)some books (the non download gift type,) Cell phones and ofcourse phone cards, ‘Kindle” devices and subscription selling of mags, news, books, and other forms of “Comm” Computers (only (notebooks) and a library of software.
Over to you to make your own model.
We need to start somewhere and soon.
we are all wasting our time on newspapers & magazines our industry is virtually dead.
we need to branch out into other areas within our retail business to generate higher GP and Nett profit. this again will be dependent on the consumer demographics in each newsagents area.
We have done it back in the early 1990’s by opening a Office & Stationery business. We are doing well even in tough financial crisis times. we had to do a number od restructures on all our businesses and the return is coming through now as a i speak. I no longer really give two hoots about the fading newsagency industry you could see it coming 15 years ago when the deregulation process began. the next industry to be fully deregulated will be the pharamacies.
the only thing you can do with the NEWS limited contracts is to sign, and then run a territory boundary adjustment cutting off deadwood area that is costing money to service. i will be no doubt doing another 50% area cut when they want to takeover the Calstores 24hr site at luddenham in my area effective at the end of this financial year.