Call me a cynic but I am suspicious of the leaking of an internal News Limited memo about cost cutting. The report by Crikey yesterday includes this:
Hence this memo (leaked to Crikey) to News Limited bosses from chief financial officer Stephen Rue, announcing group-wide, cost-reduction targets of 15-20% over the next three years, due to “the last few months of trading [and] trends over the last three years”.
I am cynical because newsagents are waiting for News Limited to announce their plans for the future of newspaper home delivery. The cost cutting will play a role inn their future plans. It has to – not only for financial reasons but also for operational reasons taking into account the internal News limited forecasts of where their revenue will come from for news related mastheads … print versus digital.
Newsagents with distribution businesses should not be surprised about cost cutting. They have been living this for years and have had opportunity to plan for it. That said, many have not.
See what I wrote on June 28 about a News Limited decision on newspaper home delivery fees.
The publishers will not find a cheaper way to deliver newspapers. The system is not viable as it is. They need to ween themselves of inflated circulation figures where each home delivered paper is counted as 4, school delivered papers are counted as 10. Distribution to retail outlets is the only way forward – but again the margins currently offered do not warrant space in many shopping centres. They need to rebuild the business model – just as newsagents are doing. Newsagency brands will need to negotiate deals on their members behalf just as woolworths do. Newsagents have better compliance than woolworths with publisher promotions.
newspapers should be free for newsagent to sell.
Thats right ERIC, then you can sell them at half price. Cheaper for cash
In Melbourne papers like the Herald Sun tend to be free everywhere else but the newsagency. What all publishers – magazine and newspapers; have failed to recognise is that their primary sales channel needs to be strong and attractive to customers as a way to continue the interest and excitement in the channel. Supermarkets do not recreate the experience of a destination retailer like Newsagencies or MagNation. These outlets drive sales and enthusiasm for published (paper or electronic) product which can lead to subscriptions or online sales and traffic. How successful will published product be without the free sampling and marketing service that Newsagents effectively offer Publishers? It’s time the publishers woke up and started thinking about how they can support the industry to leverage greater interest in their products long term.
It has been said before, but it never fails to piss me off that NewsLimited can offer a customer a $7.95, 7 day home delivery deal, yet they would rather go to war than set up a fair delivery fee for distribution newsagents.
I do believe my own cost cutting will involve dumping the delivery run.
Steven $7.95 for 7 day subscriptions is at the upper end – we had customers on $4.95. John Fairfax offer up to 70% discounts on weekend subscriptions. Set your business up to dump the run. You will never look back, the stress goes and the enthusiasm returns. One final note – you may well find that the cost cutting of dumping the delivery run becomes an epiphany for your bottom line.
It all has me wondering who else would like our awning space for free advertising.
I figure that three sides of a shopfront, plus wall signage on two sides is worth a shitload more than a lousy ten percent commission as a subby.