PMP yesterday released their first half figures for the 2012/13 financial year. EBIT for the first half of this financial year is $200,000, 89.4% lower than for the same period a year earlier. revenue for the same period was down by 9.7% to $167.5 million.
While these are challenging times for magazine distributors, newsagents are even more challenged with many unable to reduce their investment in magazine inventory.
The PMP numbers show that Gotch is making less from magazines – distributing fewer magazines. I suspect there is a difference in in scale out changes between magazine retail channels. The supermarkets, for example, would get attention beyond their market share, they would demand and get greater efficiency while newsagents demand and remain ignored.
I suspect that Gotch is seeing a reduction in magazine profits because more and more publishers will become tired of them constantly pulling rabbits out of the hat with their arsenal of profit-making tricks and take their business elsewhere.
These “tricks” are designed to increase their profits at the expense of publishers. After shopping around I am told that all distributors use similar tactics. It should be illegal! I am pretty sure they are doing the same kinds of things to screw newsagents as well but this is what I have to deal with as a publisher over the past 6 months.
Classic case of the tricks they use: (these are all real and have all happened to me in this order)
1. Oops we’re sorry but when we paid your remittance last month, we FORGOT to take out our distribution fee and therefore we will have to take it of your next remittance and therefore you will get nothing.
2. “Our analysts say that because your magazines sales are increasing, we think you should increase your circulation (and our distribution fee will also go up) – Oh you want to see the breakdown of sales and where they are occurring before you decide to increase? Actually we’ve reviewed it and you can keep it at the current level if you like” (sales figures and breakdowns were not forthcoming)
3. My magazine is bi-monthly yet I do not get a remittance for 3 months, why? Because they have conveniently made the recall date fall into the next billing cycle and AFTER the next issue goes on sale. I have asked them to fix this and ensure regular bi-monthly payments from now on, we’ll see how that goes.
4. When NZ never received their stock of issue 12 (the current issue):
“Oops but your printer didn’t label the NZ stock correctly and so we have distributed all those extra copies intended for NZ around Australia. (even though I have evidence and a signed docket from Gotch stating that the stock they received WAS correctly labelled for NZ and the printer assured me it was all done correctly and had proof)
I demanded that they recall stock incorrectly distributed and send it to NZ – I am told it is too late and they have all gone out already.
5. My local newsagent only gets 5 copies and sells out in one week – why did they not get more seeing as all this NZ stock was supposedly distributed around Australia?
6. The final straw. I went into my newsagent today and asked if they would like more stock to last the 2 month on sale period. “It’s OK, they say – we went on the Gotch website and it said they had plenty of stock in the warehouse so we ordered more and they are now here”
Gah, Lisa, that all sounds rather annoying! But I can’t see how any of that stuff makes the distributor actual money. With #1, if they forgot to charge for distribution, it’s you who’ve got “their” money until the next remittance cycle, right? With #3, they’ve got “your” money for a month, but how much actual revenue could fall out of fiddling with terms of payment?
With #2, is the distributor incentivised to maximise sales, or just maximise distribution? I don’t know what the commercials are, is it rude to ask you? And did your overall sales figures point to an increase or steady sales?
#4, 5, 6, I can’t for the life of me see how that’s a profit-making trick for the distributor. Especially since it’s so aggravation-making for the publisher.
I love the look of your magazine, btw, I’ll keep an eye out for it.
I am assuming Red either
a) has no idea what he/she is talking about
b) works for GG
Seems pretty easy to me what Lisa has a gripe over and also how GG would “save” money through these tactics.
Might be more of a cashflow grab, either way the publisher and newsagents lose out
Chris, I’m pretty new to the industry so no, I don’t have much idea what I’m talking about. That’s why I asked a bunch of questions. If it’s obvious to you, I’d be grateful if you (or anyone) explained it to me. Yes I can see what the gripe is. No I can’t see how it makes the distributor any money. Leaving aside #3 — if you’re arguing that increased terms of trade end up as profits then ok.
I have read Lisa’s comments with interest and see similar tricks they try on us particularly with off sale dates. At least we can early return to avoid off sale date for on time returns in the first week in the next month. By the way even though something returned a week early is called an early return a find this hard to accept for on sale periods of 4 weeks or longer.
Lisa are changing distributors or are you locked into a contract?
On point 2 when we have tried to decrease quanties of a title, they have used the story of historical data to increase quantities when our figures have showed a decrease in the same title. Just another con job they use.
Lisa,
If your looking to change, NDC will only offer you more of the same. IPS may be a better solution to your issues.
I have been tracking both of the big 2 dist for 2 years now. Every new year they use the seasonal sales period to increase supply.
Why do I need to be supplied 220% of my monthly costs of goods in a market experiencing a 5% p.a. decline.