The Sunday Telegraph recently lifted its cover price to $2, but Miller told Mediaweek that there are no plans to lift the Daily Telegraph above $1. “We do look at it, but we think about the impact on the audience. With interest rate rises, fuel increases and the cost of other utilities, we wouldn’t want to put that to the reader at the moment. $1 seems to make sense.”
Michael Miller is Managing Director of Nationwide News, the NSW arm of News Limited. He was speaking with James Manning for a feature in Mediaweek last week- page 6.
I would like Michael Miller to plot for newsagents classified and display advertising prices for the entire period that the Daily Telegraph has been priced at $1. This information would be useful for two key reasons:
- It would enable newsagents to see whether News Limited has protected itself with revenue rises while blocking access to revenue rises for newsagents. I suspect that it has.
- It would test Millar’s argument that a cover price rise would not be fair on punters. Punters eventually pay for increased advertising costs. Advertisers pass these on. We could similarly plot the price of everyday items advertised in the pages of the Daily telegraph for the period over which the cover price has been $1.
The publisher argument will be that newsagents can rely on newspaper traffic to drive sales in other parts of the business.
The most recent newsagent shopping basket data indicates that newspapers continue to be sold alone in newsagencies around 70% of the time. That is, 70% of the time people purchase a newspaper in a newsagency, they purchase nothing else. This is facilitated by newspaper publisher mandated displays which stop other products being easily promoted to the newspaper customer.
Further, in the time that the Daily Telegraph has been $1, News has overseen the placement of the product into more retail and other outlets, reducing traffic to newsagents for the title.
I have even heard some publishers say that newspapers help newsagents get higher margin sales.
Newsagencies typically do not sell high margin products except for greeting cards. Lottery products have a margin of around 7%, transport tickets 2%, magazines 25%, confectionery 20%-30%. No, the margin story in a newsagency is not what some suppliers and landlords think.
Over the last eleven years, rent for most newsagents has increased by at least 71%. This assumes the usual annual 5% increase. I know of some newsagents who have had to deal with rent increases of more than 100% over the last eleven years.
Over the last eleven years, labour costs for newsagents have increased around 60%, significantly more for penalty rate situations.
So, newsagent costs have increased, newspaper publishers have extended competition yet newsagent compensation has not changed.
Michael Miller says he would not want to put a cover price rise to readers on the back of higher fuel prices and the cost of other utilities yet he is happy to leave newsagents to deal with these and other higher prices without any mechanism for covering these higher operating costs. Newsagencies are family businesses. These families are financially stretched due to the lack of access to mechanisms with which to commercially respond to higher operating costs.
I’d like to see a debate between newsagents and newspaper publishers on cover price and newsagent compensation. Maybe such a debate would better educate both sides. Hopefully, it would lead to a more equitable situation for newsagents. We need it since newspapers have lost the gloss of ten or fifteen years ago. No longer can publishers argue that they generate valuable traffic.
Great post Mark. You’re spot on with everything you say. Out of all the suppliers we deal with, Nationwide are by far the most arrogant. Like all big corporates, they’re run by suited pen pushers/”yes”-men who would never have balls big enough to venture out of their cosseted, ego driven play pens and into the self-reliant, challenge-rich world of small business. Funny thing is, if they did approach the newsagent channel with a genuine interest to work with us, most of us couldn’t jump aboard quick enough.
I agree with JM, this post hits the spot — Nationwide arrogantly increases its revenue with increases in ad rates, and with increasing number of inserted rubbish for which they charge huge fees.
The newspaper is merely used as a wrapper for these rubbish which their distribution agents have to roll and throw onto lawns at great costs but with no share of the insert fees.
It would be interesting to see Miller also plot revenue from inserts along advertising prices for the period that The Daily Telegrpah has been and is “still only $1”.
Mark,
Your comments raise many long overdue questions. The main one being, why, when the publishers revenue is mainly raised through advertising, have we allowed our commission to be pegged to cover price.
“Circulation is King” when it comes to advertising rates, and all means possible are explored to keep circulation figures high. Low cover price is the most effective.
Most suburban papers are free, with the distribution costs paid for from the advertising revenue, so there is no reason our commision has to be pegged to the cover price.
For News Ltd’s treatment of grassroots newsagents over the years, I no longer believe their propaganda on the daily telegraph. They always boast human rights, freedom, equality, democracy etc. on their newspaper and pretend to be the fighter and voice of the ordinary people. But when it comes to business interest, it shows their true color. They’re ruthless as any other corporate monsters.
Here’s an idea for boofhead Miller, keep the price at $1.00 forever and every time they increase there advertising rates they increase the newsagent commission or delivery fee structure rather than going through the whole windbag approach of doing a study every year to determine whether the distribution model is working or not, I guess it keeps them in a job with a guaranteed bonus. They fail to take the approach that we are all in it together and pray on the fact that most newsagencies are small independent family run businesses. The ACCC being the toothless watch dog that it is should have a real look at how ineffecient big business passes alot of cost and unnecessary burden onto small business.
I don’t think that name calling helps.
so who is at fault here? news ltd for being smart enough to screw us at the negotiating table, or us poor newsagents for allowing it to happen. I bet if the shoe was on the other foot we would not be so concerned about poor news ltd being stuck on the poverty line. would it really make much of a difference to your bottom line if the price was raised to $2 anyway. i think this kind of discussion stops us looking at the bigger picture issues with the channel. newspapers are in terminal decline, so unless they suddenly make the cover price $20 its not ever going to be a mojor factor on my businesses bottom line at the end of the day. either we find a way to get a bigger slice of a ever decreasing pie (ie newspaper sales) which is unlikely, or we move to more profitable lines for our business.
Increasing the price to $2 or doubling the commission will bring a relief to distribution agents, if only for the short to medium terms. This would at least buy some time with which newsagents can look at the bigger picture as suggested by rick.
When a line of business is no longer viable, cut it off — quickly — and move onto other lines that are or are becoming profitable. Consider what happened to home delivery of milk.
I agree ,we are no longer delivering tele,s as we have become subs only . I found it to be a complete waste of time and money,now our time is used in area,s and it has been one of the best things we have done in the last eight years.
Bush supporter in USA and CCP in china. all just about $$$$
Well said Mark. I have been a newsagent for more than twenty five years in NSW, a distribution and retail newsagent. I have been on committees, written submissions and complained to government and publishers about this and similar issues. You distill the issue to the vital core.
Newspaper publishers control all of our business levers. As you have said before, they do make us the working poor.
I hope that more newsagents take notice of what you have written. I hope that newsagent associations take note too, but I ma not holding my breath there.
Having raised thee issue and made the case, what can newsagents do about this. Sitting in the back room of my newsagency this morning I feel helpless.
Keep up the good work. Sometimes it seems like you are the only one fighting for newsagents.
I am in Victoria and while cover prices have risen here, they have not risen in line with CPI. Well said mark.
Newsagents are starting to wake from their slumber and realise that they need to diversify into products with higher margins. What News Ltd and Fairfax dont realise is that if they dont come to the party with higher commissions for Newsagents their product will not survive at a retail and distribution level. We, as business people need to allocate space in our story and our time to products that will make us profit. We have to move on and if the Publishers dont want to join us then we will leave them behind, simple.
My rep told me last year that even though promises are always made, there is no chance that delivery fees will ever be susbtantially increased. Its just not going to happen. The penalty for handing back your run is to become a subagent. In a small country town, who would give their main competitor a free kick?
I don’t disagree with any of the points you make Mark however I feel that the overiding attitude from News is that ultimately the paper is theirs and it is their prerogative to place it where they like. They will always hold the view that Newsagents benefit from them to the point that none of us would ever really want to stop selling them and they know it. So it boils down to a take it or leave it attitude from them. There is no doubt we are assisting them with their transition to digital offerings of the future.
Given the above there is no point in complaining about it in my view and as pointed out by many we should simply be getting on with diversifying our businesses to higher margin products to compensate and improve.
(So, newsagent costs have increased, newspaper publishers have extended competition yet newsagent compensation has not changed.)
How true, in fact Newspaper publishers have helped Newsagents diversify at a faster pace than traditional change.
Every post I have read makes sense, The overhead costs in our businesses today have spiralled with no sign of slowing.
We have to leave the News Limiteds behind while still using their product, the print product will be around for a while and the digital product will not provide any commission unless it is modelled on something like recharge for phones, so the commission would be fundamentally nothing in any case.
News Limited case for keeping its price at a dollar is complete lie, the reasons stated are very true however it sickens me that News Limited can use peoples real financial pain as their reason for keeping the Daily Telegraph at a dollar.
News Limited have their Print to Digital plan and they need it to stay at a dollar to capture the digital market share when it arrives.
Mark, Angelo, Chris and all the other contributors are all right.
News Limited are looking after their business for the future, I suggest we do the same.
News Limited’s refusal to provide newsagents with fair compensation for newspapers is what tipped me over to getting rid of my run and becoming a sub agent for newspapers. It gave me more control. You are right to draw attention to this issue Mark.