An Australian publisher asked me this question yesterday. In the discussion I said I would pose it here, without identifying them.
They asked because they are concerned at the continuing fall in engagement from newsagents supporting their titles. For context, most titles have cover prices today that they had four and more years ago.
I said margin dollars was the issue – this is made up of a low GP% of 25% and a static cover price, and falling sales, which combine to make the titles less financially rewarding today than four or five years ago but requiring the same labour, space, shrinkage risk and cash flow investment as four or five years ago.
Magazine publishers increasing cover prices in line with CPI at least and offering a respectful GP% of at least 35% would, in my view, encourage greater engagement.
What do you think…
What would it take for newsagents to engage with magazines again?
Margin is particularly important for magazine resellers. The handling, unpacking, store replacement restocking, display promotion, putaways and returns plus accounting procedures. All these and I’m sure there are more, especially FLOOR SPACE or Occupancy costs make magazines the most expensive product in the store to service. Combine this with falling sales and the magazine companies and the resellers have a major problem.
Retailers cannot afford floor space with the kind of inefficient display used by most, with only getting a G.P.M. of 25% on sale price.
The need is at least 40% The model needs a complete overhaul form distribution to retail as well as Sale or Return versus Firm sale options.
Margin is the Key.
I would also think that the delivery days would help more if it were on wednesday we are already busy on thursday morning and this would increase foot traffic.
I would need geographical exclusivity and better margin. I will not commit to a low margin product when the supermarket 5 doors away creams off the top selling titles.
I would also like to se a kite mark for recommended magazine stockists who would receive special promotions. The kite mark would require performance on range and service. I would not award kite mark to old toxic newsagents.
So much discussion over so many years. Improvement – Zip.
Difficult to engage now – I think the horse has bolted.
I think Leona is close to the mark suggesting the horse has bolted. It started well over 10 years ago when publishers started overloading their tiles with advertising. I lost count of customers telling me “magazines are getting that way they are just full of ads and crap…” Decided to do a count of ads to quality / valued reading in Cosmopolitan one day; results Ads 72% Quality 23%. Provided the feedback to the distributor … all on deaf ears. Yes, understand local publishers need advertising to cover some costs but who in their right mind would buy a magazine which is 3/4 full of ads. And then came along the digital magazines at a highly discounted rate. So in a lot of ways the local publishers are now reaping (or not reaping) what they sowed some time ago. Hey Leona, I think I just saw Winx “fly” by!
Margin is definitely the key issue – 25% is not adequate given the retail space required and the cost of rent. But the supply model also needs complete review – retailers must have more control over supply levels and content for their individual locations. There is currently too much variation in supply from month to month – variation that clearly has nothing to do with sales history -just distributor cash flow issues one suspects.
How long have newsagents, as individuals or as a groups been telling Australian publishers what it would take for newsagents to fully engage with magazines ?
Now perhaps they are beginning to realise what you’ve all been saying for years really did need an ear.
Yep, it’s probably too late for them to save themselves, but it’s not too late for the retailer to take action to save themselves…………if they want to…..
Everyone is spot on
We have been telling them for the past decade.
Commission too low
Overloaded with mags that don’t sell
Partworks – launched in Newsagents, then moved to subscription because of better deals
Cheap subscriptions on offer
Supermarkets paying publishers for display space
Could go on, but let us see how fair dinkum they are.
Cover prices have largely stayed static, or close to it, for years.
Unit sales have fallen 50%+. Labour and rent costs are up at least 50% on 7 or 8 years ago.
There has been no money to be made in magazines for years – no matter how well you manage it. The percentage of newsagents making money on magazines in Australia would be at best single digit – and has been for a long time.
To get interested in magazines again, I want:
Absolute minimum 60% of the cover price (low priced unit sales) – advertising revenue should cover all other costs for the magazine and retail sales pay only for retail and distribution;
No returns – everything done via Xchangeit;
Easy and efficient mechanism to control what I get;
Any title with on sale period exceeding 2 months is on consignment.
Do I think this will happen? Absolutely not. Do I engage in my magazines any more or am I likely to in the future? No – why waste time on something you know that, no matter what you do, you cannot make money on. There are too many other categories performing well and making good money to worry about magazines.
I have been engaging with the relevant stakeholders for 20+ years on magazine sustainability and everything has fallen on deaf, disinterested or disbelieving ears. Leon is spot on, the horse has bolted long ago.
I see no future for magazines in newsagencies, and am planning my future accordingly.
Simple
Better margins
Pay as you sell not as you get
No Jason. That is different. That seven-0step strategy to which you refer helps newsXpress members achieve above average magazine results. It does not address the margin% / cover price challenge. Thanks for your interest though.
What would it take, simple, genuine engagement from the publishers, distributors, and xhangeIT. Had more than 13 years of what ifs and maybe’s. If magazines continue to decline, I will out last the 3 groups mentioned above, so who should be the most motivated to fix the f@#ked up model. They should be inviting us to the table on blended knee, not us offering up solutions.
May have to talk to the publishers soon. Our beloved Ovato (Gordon & Gotch ) shares touched 8 cents this week, just 6 months ago they were 87 cents, that’s a 90% fall.
We have not ever disengaged from the magazine business, yet we have many frustrations with the setup. For the margin and the volume we expend far too much time handling arrivals, billing and returns. The systems and processes are archaic as they are based on 20th century technology. XIT is an anachronism. There are far cheaper, less complex and less time consuming methods of transferring data in this day and age. In regard to margin, a sliding scale would make sense. Say 25% for high turn over weeklies, and up to 60% for low volume seasonals. Returns policy of the distributor needs to be more equitable. Long term agents should be able to self-report (with occasional audit to keep us honest) There seems to be an approach which has soft rules for supermarkets and hard rules for small businesses.
Xchangeit doesn’t show the full picture.
It collects sales data, but doesn’t show how many magazines are transferred to and from Subagents.
It shows how many are in stock as a whole, not how many are actually on OUR shelves.
eg OK magazine.
we have been cut back and cut backwith our supply.
Sometimes we get allocated 2, one for our shelf, and one for a subagent.
Sometimes both are sold, sometimes 1 is sold.
If we sell ours, and the subagent returns theirs, we return 1 to Ovato. They then cut us to 1 because according to them, we only sold 1.
So the next week, we keep it in store because we’re not going to give a subby 1 and leave ourselves none.
So the magazine may not be seen by a customer in the subbys store that may have been looking for it.
For Ovato to prove they are willing to engage with us so we can engage with our customers, surely getting as many facings as is reasonably possible, a better picture is required for all parties ???
Woman’s Day is giving subscribers a 12week subscription for $1 an issue.
Who regularly discounts 70-89%.
New Idea is available via subscription for 45%
Better Homes and Gardens 47%.
These sorts of discounts are not new to subscribers.
Once upon a time I exclusively used the magazine distributors for stock. Not anymore. I know how many magazines I sell of each title…it rarely changes month to month. I use the distributors for those titles I am unsure how many I will sell on a regular basis.
The Spectator currently has a deal for 10 copies for $10…why would we bother ?
Baz