The ANF has published an email with details of a meeting with News Limited CEO Kim Williams late last week. At this meeting, Williams provided newsagents with greater clarity on the position of the company in relating to handling newspaper distribution in the future.
Here is the text of the ANF Newsflash:
Associations met with News Limited CEO to discuss new model
On 20 April, all Newsagents Associations met with News Limited’s CEO Kim Williams, Jerry Harris, Managing Director of Group Newspapers and Digital Products, and Gary McKay, Group Circulation Business Manager.
It was an opportunity for the Associations representatives to meet with Kim Williams and discuss the current state and future opportunities of the newsagency channel, in light of restructuring taking place at News Limited.
Mr Williams was very positive about the value of the channel and said News Limited needed the newsagency channel to be part of its progression into a print and digital future. He said a new process to produce new sales and distribution arrangements for News Limited newspapers will be rolled out starting in June 2012 for Queensland. News Limited has stated that they will also commence the equivalent process for NSW/ACT and Victoria on a voluntary basis for agents that were prepared to meet the criteria of the new model.
This new model will be finalised at a meeting of News Limited Managers in early May.
Jerry Harris did confirm the following:-
• Leaving the model as we know it today was “not negotiable”. A new model will be implemented
• Customers’ details, including management and billing WILL be migrated from the newsagents system into the News Limited system
• Newsagents on the New Distribution Contract will be paid under a fee for service model not commission based
• Newsagents on a New Retail Contract will be paid on a commission basis to incorporate an incentive scheme, rewarding effort.
• All State Associations will be consulted and called on to assist in the implementation of the new modelThe message from News Limited was very clear that the current territory system for newsagents was out-dated and not cost effective. Larger, more efficient territories is the major objective of this project.
After News Limited’s meeting in early May a formal explanation of this new model, including the new Contracts, will be made by News Limited.
Having informed Kim Williams of the current state of the industry and the need to put back the certainty and security that is sadly missing today, all Associations will be working hard to work with News Limited to achieve mutually win-win outcomes. Kim Williams was very aware of this need and reconfirmed his company’s commitment to achieve this.
The highlighting is mine – drawing attention to what I see as the most important statement in the release.
Bit confusing. So distribution newsagents will be paid a fee for service model as per the current Fairfax arrangement but retail only newsagents will paid on a commission basis?
Also, where multiple territories exist in small country areas who decides who has the distribution taken from one or more agents and given to another to achieve the stated aim of fewer distribution agents across larger territories.
That same arrangement regarding small territories bordering one another rings true in quite a few metripolitan areas too Shayne. I know I have two “territories” on one side of me that are no longer serviced by the respective newsagents and one smaller one by area (no idea on their daily quantities) on the other. I wonder how they work out who gets what or even who wants what ? Everyone , I think, knows that the consolidation of delivery territories needs to be done as it seems few are truely viable as it stands now.
I also found this interesting even though I know its been stated by News Limited before:
Customers’ details, including management and billing WILL be migrated from the newsagents system into the News Limited system.
There could be a bit of a legal minefield there I would have thought in providing the details of customers, who have not provided permission, and had no reason to believe that their details would be passed onto another entity, to News Limited.
Will be very very interesting to see how far News has feathered their own nest as newsagencies expense or whether it really will be a mutually beneficial move forward. Here’s hoping it’s the latter but prepared for it to be the former.
I have the same questions as the 2 posts above.. i want a bottom line answer. will my newsagency be better off? i guess this will come eventually from news.
but as mark has said before, concentrate on other more profitable aspects of the business, whilst keeping an eye on newspaper changes
It is vitally important for News to make their own announcement with the details. I’d certainly welcome commercial terms which reward sales growth in retail newsagencies as it’s something I have sought for more the last six or seven years.
will the service fee reflect the cost of providing the service???. Maybe they should be providing the delivery van and driver for my business as well as taking over the management and billing of home delivery. Just thinking out aloud.
I really thought this post would generate a lot more comments.
I guess its maybe speculative until an official annoucement is made. Some confirmations have been made, the incentive innitiative is positive.
I suspect it will be all or nothing regarding News Limited terms.
I do have a problem though regarding ‘Customers’ details, including management and billing WILL be migrated from the newsagents system into the News Limited system’
News Limited will leverage this information to offer Newsapers subscribers opportunities to subscribe to their magazines and of course online offers. Will this stop customers from frequenting Newsagencys?
If I were a Newspaper subscriber I would not want my details transferred without my consent.
Should we be concerned or do we continue to strive and inovate. Personally I do not think the juggernaut will stop or we cannot stop it and I do see unfourtunately from a personal point of view some small business closures.
I really do hope News Ltd give the Newsagents who delivery Newspaper subscriptions a fair offer, not negative or cost Neutral but a decent incentive to continue.
Every newsagent in Australia must now know that they have NOTHING TO SELL IF
THEY ARE DISTRIBUTION ONLY AGENTS.
This needs to be tested by the ANF in a courtroom.
Ownership of the customer is, IMHO, the newsagent – ownership of the paper is the
publishers.
WHY HASN’T THIS BEEN TESTED?
SA agents were “migrated” a couple of years ago and as far as I can ascertain there are now no sales of distribution agencies. Agents were sold on the benefits of improving cashflow and no accounts etc. etc but the cost is obvious.
There is now nothing for them to sell.
I know of a newsagent who purchased 6 new rolling machines and then found out that his papers were all going to be flatwrapped by the Advertiser and delivered already wrapped.
How do these things occur when good people are purchasing multiple rounds in good faith and the publisher changes his modus operandi with absolutely no thought for his partners in the industry.
Surely the ANF should be across this stuff?
6 machines at approx. $13k each – you do the math. It is abominable but here in SA – once again the vanguard for change – it is a fait accompli
Very good point June regarding the testing of who “owns” the customer. I think that in itself could well be an issue that will indicate whether the various federations are worth their subscription fees or not.
I am interested what income websites such as “ISubscribe” and “Magshop”get from these publishers. Are they too getting there income slashed or are they getting an increase in income at the expense of the newsagency channel?
And what income supermarkets will receive under these new “payment structures”.
Some transperancy on this subject would be beneficial for any discussion or debate on the issues of remuneration for newsagents.
It is frustrating that such questions are not demanded by leaders of our industry.
Certainly, as Mark continuously mentions, newspapers are declining. However, they are the package combined with lotto mags cards and stationery which the Newsagency Channel is built. It is what the consumer expects. The individual agent alters their store according to their own demographic adding lines and allocating space in that store accordingly. But a Newsagency without newspapers…..? Not yet.
Yes it is the future, but Industry leaders need to make decisions that benefit newsagents, and dictate terms to publishers. If The telegraph want their product distributed it will be at $x price. Not the Telepraph saying you will distribute the Telegraph at our price. Both publishers have exit strategies from print media, but they involve abusing the Newsagency Industry to move their costs onto individual store owners.
I would consider Mark an industry leader, and you have some wonderful ideas and suggestions on your blog.
But perhaps if Mark you spent a little less time pushing so hard on magazines (yes another declining category) and considered the real outcomes of the two recent “fee structure” announcements by Fairfax and Nationwide News then you would see how detrimental these decisions are to the Newsagency Industry as a whole. You would also see how your blog can make a difference, RE “the Guide”.
As far as I am concerned my customers have nothing to do with News. I have customers who come in each week and pay their bill. They cannot or do not have a subcription with News as they do not have credit cards or refuse to give News credit card details.
As for subs with News where we collect the money on News behalf, get tough once they are late in payment stop delivery and inform News and let them chase the money. News will soon get sick of chasing money.
Amanda, We don’t have an announcement yet from News. The Fairfax announcement came at a time when the company also said it would print fewer copies and cut unprofitable runs. Indeed, Fairfax is implementing extraordinary structural change and it was with this in mind that I wrote what I wrote about their fee change.
If I thought newsagents could win a better deal on the Fairfax fee change I would have advocated for it. For that to happen newsagents need to be stronger in voicing their opinion and unified nationally in how they approach it.
All that said, I think that what I have write here about the crisis in News Limited around the future of newspaper home delivery has helped get the company to finally make its position known. Once they announce this we can all focus on the largest publisher in the country.
On newspapers more generally, the biggest opportunity we have as a channel is low volume newspapers – special interest and foreign language. We are the go to outlets for these.
On my writing about magazines, at the Newsagency of the Future series, I spend only a fraction of time on magazines.
Publishers will claim the customer is theirs until they skip town and leave you with a debt.
Then the customer and debt is yours to keep too!
Even though the contracts state Ownersip never transfers to the Distributor,as June mentioned, any such debt left by such a customer Must be then the responsibility of the publisher. Well that is the wording of the distribution contracts. The publisher owns title to the paper.
However, I know of a Newsagency who handed back their run, only to be told by both publishers they refuse to pay any such customer debts the agent was left with. Furthermore if the newsagent did not pay those customer debts they would not receive any supplies either directly or as a sub agent site.
So there you have an example of publishers choosing to utilize their market force and threaten an agent into a vulnerable position. Yet as far as I am aware that agent received little to NO help from any industry leaders.
This is a huge concern in relation to the highlited paragraph by Mark.
These are fundamental changes being forced upon newsagents. Consultation by industry leaders with newsagencies is necessary to make any such changes beneficial, and to ensure intimidatory and threatening behaviour by Publishers will not be tolerated.
And so surprising that News Ltd has made this public now (just after the Fairfax change). What a co-incidence!!
It will be interesting to see what News Ltd announces as their delivery fee given that we now have a delivery fee benchmark from Fairfax.
Great I’ve got ANF negotiating on my behalf
with News it seems.
If it’s anything like what they did with nsw lotteries I may as well get it all over with and blast the foot off now.
Fred, I doubt that there will be much of an opportunity for negotiation. My understanding is that News is to announce its position.
Associations are only as strong as their members make them.
I dont think anyone should stress themselves over News Ltd future path. It comes down to a simple business decision for us all when they release their new contracts.
Is it financially beneficial. You are not in business as a Newsagent to do what you and previous newsagents have always done for the last 100 years. You are in business to make money – simple.
If it will cost more than you make don’t do it?
Thats all News Ltd and Fairfax are doing – trying to make more money. If it is at your expense don’t put up with it and hand back your contracts.
As Mark keeps harping on about, don’t waste your energy on these issues, try and channel your energy into areas of your store that can grow and make you money and that are in YOUR control.
Is anybody doing anything about getting groups of newsagents together to merge territories and find economies of scale through collaboration. Surely it must be better to take a pragmatic approach and make your own bandwagon instead of waiting for somebody elses to come along and offer you a ride.
Realist this has been going on in Victoria for years. The pace has picked up in the last 12 months.
Thats all well and good merging territories in metro areas but in a lot of regional areas this is not feasable and does not provide any form of savings for the newsagents or publishers involved. This is where the publishers and the newsagents have to mutually decide if it is worth it continuing at all.
Chris I don’t think News sees that as an option. They have been saying (whispering and now saying out loud) that the current system is dead.
So the time may have past to sell your runs then?
We sold ours some time ago but if they are talking merging runs (either forced or voluntary), then disclosure would mean you have to tell the potential buyer that the run may be taken away with no compensation. So who would buy it. Where is the associations in protecting newsagents goodwill in all this?
Thats fine with me. I just hope that newsagents who are adversely affected by the new system don’t just roll over but terminate their contracts as they are not financially feasible.
If you are in this position contact NANA, thats what they are there for.
There’s no reason that a newsagent with a non viable home delivery territory should expect to receive compensation for it if it’s not profitable.
Value is, and can only be, a ratio of profitability.
There has to be concern that owners of non viable territories will hold up any transition to a better way by being having unrealistic expectations.
Ricky, what about the smaller but profitable runs that could be taken with no compensation? I know of smaller operators that have healthy runs that backs on to a larger territory and they are getting threats that they will be forced to merge and lose all their hard earned goodwill.
I’m sure they will not compensate some and not others, it will be a case of too bad so sad.
You will get nothing for any round
Luke I am concerned about threats too. Too many have been made in recent years against newsagents. Unfortunately, when challenged, people further up the line deny … it’s an established pattern.
Luke – my comments were directed only towards unprofitable rounds.
Equally newsagents should consider their own initiatives while this discussion has some traction.
Voluntary mergers could a be good common sense consideration regardless of the size or profitablity of the round.
Mark, if newsagents oragnise consortiums amongs themselves, then threats become a non issue.
You seem to think that newsagents will have a say in any mergers or any dealing with News Ricky , from past dealing this is not the case.
hard to believe anyone would want pay for a delivery round, their will be no future in newspaper delivery no matter how big the territory, current fees do not cover the costs, and will not increase to keep pace with future cost rises. Basic economics says its only a matter of time before its gone the way of other home delivery services.
I have a run, and have just purchased another agency in town, so have their territory as well, and i charge above the set delivery fees, always have.
Consolidated runs may be economic in the short term, but hard to find any true value that would justify paying for additinal runs.
Rick there are some good medium term opportunities if you can drive economies of scale.
We are currently investigating merging our territory with someone else who is slightly larger than us.
While we have not gone through the figures yet, I believe that this will enable us to lift our profit dramatically by using the economies of scale to cut costs and drive efficiencies. By having a business partner it will also give us access to brainstorming with someone else who has a vested interest in the business, hopefully coming up with better ideas.
I can also see the opportunity to merge with or buy out other territories and lift the profitibility even greater.
This would also allow some of us the opportunity to “sack ourselves” as mentioned in the Sunday idea of the day, and either get a job elsewhere, or pursue another business opportunity, as the business would only require 1 person to run it.
We are just waiting for the details of the HWT contracts to come out before we commence serious discussions.