The new Google magazine I blogged about a few days ago is from a company with a connection to Derwent Howard, the magazine publisher which collapsed in November 2009 owing a ton of money including, according to The Australian at the time and covered at this blog, around $780,000 to Network Services. A Deed of Company Arrangement was entered into with creditors – providing them with five cents in the dollar.
The link is James (Jim) Flynn. He was a Director of Derwent Howard at the time of the collapse. He is the Director of Media Factory Pty Ltd, the publisher of the Google magazine.
Why would Network Services do business with someone who was a Director of a company which collapsed owing them such a considerable sum?
What does this matter to newsagents? If you look carefully at the Google magazine you will see why. With respect to the journalists who have invested time in creating or Australianising content, this is not a great publication. It looks like they have purchased content from a content factory (such places do exist), attracted some ads and shipped the title out to newsagents to hope for the best.
Jim Flynn is also behind Citrus Media, a publisher of photographic and technology one shots with long shelf lives.
The magazine distribution model is the key element here. Newsagents have been sent stock with no say in receiving a new title or the volume. Many newsagents will carry the titles for the full three months. Depending on the arrangement between network services and media factory, these newsagents could unlock a chunk of cash for media factory.
We received the title last week. We will pay for the stock by February 20. Returns go in the first week of April with the credit not showing on our statement until May. That is three months of cash provided to media factory (depending on their arrangement with Network Services) at no cost to them.
We received 15 copies in one of my stores. If I do what the publisher and distributor want, I would be paying $168.19 by February 20. While not a challenging loan to provide, multiply that by a few thousand newsagents and you can see that as a channel we could be sending several hundred thousand dollars, interest free, to Media Factory. Nice (interest free) cash flow with which they can build their business or do other things.
Of course, my numbers do not account for revenue from sales of the title and it is entirely possible that we will sell copies. I don’t expect any more than one or two copies sold but I could be wrong. My figures also do not account for labour, real estate and theft.
Is the Media Factory / Citrus Media model one where they pump out low cost content knowing that the newsagency magazine distribution model will provide them with cash flow regardless of sales? I don’t have the answer for that. After reading the Google magazine I have my suspicions but I cannot be sure.
Newsagents rely on magazine distributors to manage access to the channel. Whether we like it or not, they are the gatekeepers. Having read the Google magazine I think it is time they reviewed how they discharge their role. Of course I am kidding, they serve their shareholders ahead of newsagents.
How on earth can Network be OWED by the publisher? It doesn’t make sense. Network send the mags to newsagents, make newsagents pay for mags, and then give the publishers their money at the end of the sales period. The only way I can think of it is that Network somehow paid these guys hundreds of thousands in advance based on some dodgy sales data? Which network are responsible for?
Distributors are very good at taking money from newsagents. They are also very good at not giving it to publishers for a considerable period.
I am flummoxed as to how this can happen. Jim must be an en excellent salesman and done a deal with the distributor that was completely out of the ordinary…..
No wonder it’s called Citrus Media. The whole show went sour. LOL
So if I read this, the $780,000 is newsagent money? That’s how it reads. And now we are being used by these people again. Why Network?
Mark well done on getting this story out. A few of us smaller publishers are asking the same questions you ask. Like, why is Network doing business with these people again?
Newsagents are a real asset in this country and sending them crap, IMHO, takes space away from more reputable product.
You guys need to get smarter at controlling your network.
They are also printing with the same printer that was a huge creditor in the collapse of Derwent Howard.
I have been told that the only reason they are doing business with them again is to try and earn some of the losses back.
Thanks Mag. I agree with your opinion. I am surprised that newsagents who have had a chance to look through this ‘magazine’ have not commented.
No comment here, it was self evident the moment it was blogged. It actually falls into the category of dumb magazine, those who need to know about Google know where to go to get it and its not from a magazine
Good reeporting here Mark. This title has now been removed from my sehlves. Wasn’t selling anyway. No answer on why Network decided to distribute?
I read this magazine when having lunch today. Froth and bubble. Looks like a money grab.
Well done in raising this issue Mark. There are publishers who employ journalists and editors to write quality original content and then there are people who buy in cheap content and make it look original.
Newsagents who care about product quality would not want to carry this Google magazine, it has been created purely for money and not to satisfy genuine interest.
Thanks Publisher. your mob ought to educate newsagents and consumers about fresh and relevant content – so people can spot filler this this title is.
After no interest I have returned this title today. There are too many remands on space to leave it there not performing.
For another piece of junk, have a look at “Australia’s Most Popular DVDs – 501 Movie Favourites” released on Friday. The content reads like the splurge on the back of a DVD, with no genuine critiques, no mention of extras, no mention of transfer quality, has a seemingly random selection of movies with few classics, and in short is next to useless for anyone who enjoys watching decent DVDs.