A blog on issues affecting Australia's newsagents, media and small business generally. More ...

Author: Mark Fletcher

Publisher compensation?

Things have gone very quiet in NSW about the matter before the Industrial Court. So quiet in fact that I suspect an agreement may have been reached. The question will be whether Fairfax has paid or is paying the newsagent for taking over their newspaper distribution territory. If any money has or does change hands it would create a precedent of interest to newsagents. Such compensation has been a no-go zone in discussions between newsagents and publishers since deregulation in 1999.

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Newsagency challenges

UK supermarket investigation shows us the way

The UK Competition Commission has issued an interim report, which outlines its “Emerging Thinking” behind its current investigation into the grocery sector. The investigation includes consideration of the supply of newspapers and magazines to supermarkets. The Emerging Thinking document looks at a range of issues often discussed here in Australia in terms of supermarket behaviour: market power, below-cost selling, price flexing and demand withholding.

The UK Office of Fair Trading, which referred the matter to the Competition Commission, claims to have reasonable grounds for suspecting that trading practices with supermarkets restricts competition. These are my words – read the full terms of reference.

The next phase of the investigation is around local trading.

While there is a risk in any investigation, I am certain that Australian Newsagents and other small retailers would welcome a similar investigation here. The conditions are worse than the UK with just two retail giants controlling the grocery, liquor and fuel sectors. Newsagents have a voice at the table in the UK and this is far more valuable than the many words of comfort (and little action) from Australian politicians in our direction for the last decade.

The UK investigation, while a long way from completion, provides UK newsagents and small retailers with information they would otherwise not have known. Some myths are dispelled and others proven to have substance.

Newsagents in Australia ought to work on engaging the Productivity Commission, the ACCC and the Australian Government Competitive Neutrality Complaints Office in research so that we too can better understand the state of play and, maybe, help our politicians make better decisions affecting newsagencies and other small businesses.

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Newsagency challenges

Happy Valentines Day – Shane Warne and Simone Callahan get back together

Reports that Simone and Shane seem set to get back together will ensure the strong start to the year in the women’s weeklies category continues. The Age says that New Idea has exclusive photos. We know from last year that Simone has great pull – I’d expect New Idea to come close to selling out this week with the FIJI photos of the couple.

Opportunistic as it is, a big local story like this is essential to the vitality of magazine sales. We’ll embrace the romance and use it as a key part of our Valentines Day theming – it’s perfect timing! Thanks Shane and Simone!

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magazines

Leveraging lottery traffic

Here’s an example of how we leverage lottery traffic into better business. To the left is a pen offer and to the right is a magazine offer. To compensate at our key newspaper traffic point we often promote a lottery offer.

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Yes, we are breaking supplier rules by doing this. It’s my business and I need to maximise the return. The sales figures speak for themselves – the lottery company is happy.

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Lotteries

Former newspaper executive writes about life inside the tornado

The problem facing metropolitan newspapers is essentially the same one encountered by department stores. Department stores are facing a tough slog everywhere because almost everything they do can be done better by a specialist retailer. There were many specialist providers chipping away at the motoring, real estate, business, employment and sport sections of papers. In 1998, Fairfax – then John Fairfax Holdings Ltd and now Fairfax Media Ltd – had an enviable newspaper franchise with a deserved reputation for strong, independent journalism and dedicated readers. Although this resulted in pricing power in the market, the source of revenue that leveraged the company’s business model was under threat.

This is an excerpt from The Fairfax Experience: What the Management Texts Didn’t Teach Me, by Fred Hilmer (former CEO of Fairfax) with Barbara Drury.

The excerpts published in The Australian so far are a fascinating insight into how Fairfax was dealing with competition and technology driven disruption.

Like any of these books it is, in part, an attempt by the author to control history. Newsagents will find the book interesting because the challenges navigated then (and now) by Fairfax are challenges faced by newsagents. Fairfax experienced a chipping away at its core revenue stream. We do in our newsagencies as well. The difference is that Fairfax is resourced with advice to guide a road forward whereas newsagents are too much under the pump from current suppliers; too under resourced; too ignorant (or all of the above) to engage in pursuing their road forward.

Fred Hilmer’s book is published Feb 1.

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Newsagency challenges

Kudos to Fairfax for page one euthanasia story

A common positioning in any debate about the future of newspapers is that they will evolve away from breaking news. The Age and Sydney Morning Herald today on page one publish a story which I feel reflects that evolution. It’s a story about an Australian Doctor with a terminal illness who traveled to Switzerland to die.

James Button’s story about Dr John Elliott and his desire to die with dignity is compelling reading – his words are appropriately sensitive while dealing with a highly emotive and often misunderstood topic.

While coverage of euthanasia is not new, such page one prominence in an Australian newspaper is.

I don’t know if Fairfax, publisher of The Age and The Sydney Morning Herald has made a conscious decision on less time sensitive lead stories or whether this is a one off. I hope it’s the former and that they are adjusting their offering in response to changes in consumer habits in terms of accessing news.

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Newspapers

The drug pusher and the junkie who wants to go clean

Newsagents have been the magazine specialists in Australia for more than 100 years. Even in today’s highly competitive market where around 50% of magazines are sold in supermarkets, petrol outlets and convenience stores, newsagents remain committed to the category. They see their range of magazines as a point of difference.

Magazine distributors and publishers often complain about the lack of compliance by newsagents in the areas of retail display, data management, adherence to terms and service. The complainers ought to consider their behaviour before complaining about the most cost effective and compliant retail network they have.

In recent years, newsagents- the junkies in the magazine space given the huge range of titles they carry – have been trying to get clean. They have sought to reduce oversupply and not overstock in the various categories. Magazine distributors, the pushers, have made this hard on newsagents. They don’t want their customers to get off the magazine drug.

Take NDD. They know the crossword category is well served with local and imported titles. Yet when one distributor decided not to continue with a range of imported titles because of poor sales they took up the contract. Look at what we received yesterday, January 26, 2007:

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These are Christmas titles from the UK. The competitions touted on the front page are over. They do not have any point of difference to the Australian product other than that they are more expensive. They have an 8 week shelf life. I doubt that any newsagent will make money from these titles.

NDD will make money. They get paid per copy distributed. So, they contract to take thousands of copies, push them out to their naive and disorganised junkie makes and sit back while the money rolls in. For NDD it’s easy money. For newsagents it is a scam.

The government, through the deregulation of the newspaper and magazine supply model in 1999, helped create the current situation. It is disappointing that they are not prepared to look at the impact of their decisions back then. Families are in distress because of the broken magazines supply model – because of the unconscionable behaviour of companies like NDD in distributing product which is not commercially viable for newsagents.

There is no other channel where a supplier can so easily send out product it knows will lose money for retailers as the newsagency channel.

The only solution for newsagents is to boycott grossly underperforming titles and distributors. These titles from NDD are a perfect example. They did not work when Gordon and Gotch had them. They will not work now. NDD does not care because it is paid for its services. Newsagents are left penniless like most junkies.

To the NDD executives reading this – I am not targeting you. Your behaviour in sending grossly underperforming product and long shelf life product brings attention upon yourselves.

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magazines

Grass-Roots Classifieds Momentum

We’ve received welcome coverage from Sandra Hanchard at Hitwise, the respected web traffic measurement company, on the impact sites like Find It is having on mainstream classified sites:

While the top 10 Classifieds websites accounted for 83.1% for the week ending 21 January 2006, they now comprise 75.3% for the week ending 20 January 2007. The decline of 7.8% in combined market share for the top 10 players means we’re seeing a more competitive industry. This is a trend for the major classifieds to keep an eye on.

Read the whole post here.

Newsagents, through over the counter grass roots efforts, are helping build Find It traffic and local community relevance – especially for our free community classifieds.

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Online classifieds

Sharing the love of my newsagency

We’re going to experiment with what we’ll call workplace love. We’re creating t-shirts for team members to wear if they want. The message of I love my newsagency personalises how they feel about their workplace. And making it optional makes the message more personal.

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Too often and in too many businesses customers encounter grumpy people. We want to provide an environment which focuses on the customer experience and we can’t do that until we focus on the employee experience.

In discussing the t-shirts with the team we’ll get to talk through what’s good and not so good about our workplace and, as a result, make changes to improve the experience for all. The t-shirts will help us facilitate any necessary change.

Newsagencies are visited, collectively, by millions every week. Customer service is often the only differentiator we have. By focusing on this in a personal way we can ensure that it works for us and not against us.

This is an initiative in my store only at this stage.

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marketing

Street marketing for online classifieds

We’re commencing the next phase of street marketing for Find It, the online classified site we’re building in partnership with newsagents. Here is a copy of a double sided card we’re handing out at key venues. We’ll hand out 100,000 and then assess the response.

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Of course we’re doing more than just these street cards. I’m posting this material here as an illustration of the more guerilla style marketing.

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marketing

US newspapers target mothers

Media Life Magazine has an excellent story about newspaper innovation. Lisa Snedeker writes about publisher interest in mums as the demographic of most corporate interest. The article is well worth reading. Chck out this passage:

Why didn’t someone think of moms before?

A good part was certainly that newspapers knew they already had moms, and in their ever-growing panic over declining circulation, the bigger issue has been snagging readers they didn’t have–and what they see as the next generation of readers–the young.

But another part has to do with the stodgy, male focus of traditional newspaper managers. As local monopolies, or near monopolies, papers traditionally put little value on understanding their readers’ different wants, operating on the premise that one paper fits all.

What’s caused all this to change is the realization, dawning on publishers and advertisers, that mothers are increasingly hard to reach through traditional mass media, such as the daily newspaper and network television. They are no longer a given, and that has made them a more valued demographic.

Mums are a big chunk of newsagent traffic. Our shops serve them through the journey of pregnancy, motherhood and well beyond. If newspapers were to focus specifically on the mum demographic as some are in the US newsagencies would be the ideal retail partner.

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Newspapers

Lottery counter gear

I’ve been contacted by people reading my postings here about lotteries commenting on the difference in equipment between the states. Here’s a photo of the full terminal – without giving away any Tattersalls secrets.

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Lotteries

Stoner magazine exploits newsagents

Stickypoint is “Australia’s latest and greatest cannabis magazine” – or so says their website. Distributed to newsagents today by Wrapaway, Stickypoint is another new title exploiting the low barrier to entry to the lucrative newsagent channel.

stickypoint1.JPGNewsagent generosity or stupidity allows Stickypoint to launch with little downside. Newsagents become their marketing arm and bankers. We guarantee eyeballs seeing the title and provide cash flow in advance of sales. Where else could a small publisher get such gifts?

Then there Stickypoint itself. I’d be surprised if there is a commercial market for a cannabis title. I received six copies and would be surprised to sell one – not because of any view I have about the subject matter but because of my demographic. This magazine was released to retailers in December. Newsagents have received their copies today. That suggests to me that we are their second tier retail channel. I can imagine the attitude – yeah, send it to newsagents, it costs us nothing!

stickypoint2.JPGStickypoint is a two cover magazine. The first cover (above) is the more traditional and the second (left) is chasing the girlie market. Neither title works visually in a newsagency. No matter where we place it, Stickypoint will look bad thanks to its low production values and a very dark cover.

It is disturbing that Wrapaway have entered this niche title space. The last thing newsagents need is another magazine distributor playing at this end. I hope everyone returns their Stickypoint stock right away and sends a message to the publishers and distributors.

I have retuned my 6 copies of Stickypoint and will not pay the amount invoiced. I did not order the title so why should Wrapaway have access to my cash?

I wonder if they approached Coles and Woolworths? Woolworths could carry the title as part of their renewed interest in farmers.

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magazines

Saturday newspaper sales versus efficiency

Data suggests newspaper efficiency for a newsagency improves as sales fall.

I have been tracking sales of newspapers in newsagencies on a Saturday for some time. While sales on other days of the week are flat or falling, Saturday seems to be the most volatile. Not in all newsagencies I should note – some are delivering excellent growth. With newspapers available in so many outlets now, newsagencies are not as important to the impulse purchase as they used to be – destination purchases make up more sales than before. This is reflected in growing efficiency of newspapers on a Saturday for newsagencies as shown in this graph.

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Efficiency in the graph reflects basket depth when a newspaper is in the basket. From the data from the small group of newsagencies, newspapers sales have become more efficient as sales have fallen. This suggests that the newsagency is more of a destination for these customers, making the customers far more valuable for the newsagent.

While the vast majority of Saturday newspaper sales are single item and therefore inefficient sales, the upward trend on efficiency correlating with a fall in sales is interesting.

What does this really mean for newsagents? I’m not sure. I want to dig deeper into the data and look at other days of the week. I do know that if I can build more efficiency around newspapers I can neuter the impact of falling newspaper sales in my shop.

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Newsagency challenges

Daily Telegraph drops shares listing

I’m not surprised the Daily Telegraph dropped its share price listings from the print edition. Newspapers overseas started doing this in 2005. The listings page directs people to the newspaper website. The News Ltd stablemate the Herald Sun still have a double page spread for its listings.

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Media disruption

Brilliant local area marketing

Hastings Newsagency in Victoria has distributed a promotional newspaper around its area. It’s brilliant. Inside are local stories mixed with stories about products and services connected with the newsagency. It’s an excellent initiative and a perfect example of local area marketing. They even got some local businesses ton support the newspaper with ads.

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Using the newspaper format connects well with what a newsagency is known for. It’s the kind of local marketing newsagents need to use to compete with the majors and to deepen their community connect. It’s great.

This newspaper campaign is an idea worth copying. Well done Hastings Newsagency.

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marketing

Australia Post newsagency

This is the Government owned Post Office opposite my newsagency as of yesterday. Looking more like a newsagency every day. See the Valentines card display in the entrance?

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I wasn’t going to post the photo here, fearing some would think I am obsessed about Australia Post. Maybe I am. Maybe you would be too if a 100% government owned business was taking sales from your shop. I don’t have an exclusive product like stamps to guarantee traffic.

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Australia Post

Back to School at Australia Post

wd-ap.JPGAustralia Post is running this ad on the back page of this week’s Woman’s Day.

Not content with chasing greeting card, stationery, calendar and book sales from newsagencies and other small businesses, Australia Post through its 863 government owned and operated outlets is now chasing the important Back to School market.

Government policy allows Australia Post to take revenue from small and other businesses in this way. They are trading of the highly respected postal service brand and achieving consumer interest for a fraction of what it costs businesses like newsagencies. They ignore competition policy by protecting Australia Post while also approving their targeting of newsagents through campaigns such as this one.

Every step by Australia Post into traditional newsagency space is further evidence of lack of interest by this government in small business.

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Australia Post

Future of media, future of newsagencies

Newsagents wondering about what the future holds would do well to look at the program for the Digital Media Summit to be held in New York next month. Keynote speakers include Rupert Murdoch. Session topics include:

User Generated Media – The Transformative Revolution in Entertainment, News Media, Personal Communication, Search and Advertising

Publishing 2.0: How Multi-Platform Newspaper and Magazine Strategies Are Transforming the Publishing Landscape

Television 2.0: Cable, Telco, Satellite, Broadband & Mobile Redefine the Future of Entertainment and Communications

Contextual Media & Advertising: Transforming and Redefining the Relationship Between the Consumer, Advertising and Media Platforms

Advertising NEXT: Social Networks, User Generated Video, Blogs, IMs, Podcasts, Broadband and Mobile, – It’s the Breakthrough Year!

Personal Media Redefines Entertainment, Communications & News: As User Generated Video, Social Networks, Blogs and PODs Become Mass Media and Big Business

Embracing the Connected Consumer – Entertainment and Technology – From the Digital Home to the Mobile Universe

Reinventing Advertising: Broadcast vs. the New Platforms: VOD, PVR, Broadband & Mobile

As the pitch for the conference says:

Disruptive technologies are changing the face of the media and entertainment industry and Media Summit New York is the conference at the epicenter of the disruption.

Newsagents are feeling the impact of such disruption today and this is why we need to refine our model from the shop floor up. I emphasis we because this is our problem. It is our capital invested in our businesses and it is time for us to act on that investment for our future.

I am not saying get out. Rather, I am saying we need to respond to media disruption and the other changes going on around us and develop newsagencies for the future. Our future has to come from within us.

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Media disruption

Time cuts jobs, focuses more online

Time Inc., the top U.S. magazine publisher, will cut 289 jobs from its estimated 11,300 workforce to slash costs as it invests more heavily in Internet properties. See Reuters for the whole story.

Time is not retreating from print. Rather, they are shifting resources to account for the greater contribution of their Internet businesses. Newsagents are not making similar business adjustments. While it is challenging to move a newsagency online, it <>em>is possible to refocus capital so that the business is not as reliant on sales of products which are moving online.

We need to question the amount of real-estate in our shops given to magazines, the location of the newspaper stand, the mix of stationery and how we package our services. As I mentioned in a post over the weekend, we are well served by habit based products. We are equally well served by products which enable us to add value in store such as copying, laminating, invitations and the like.

These considerations are opportunities for us to reinvent ourselves for these new times, just as Time is in the process of doing.

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Media regulation

Retail distribution for Dutch free daily newspaper

Metro Holland, a free daily newspaper will increase daily circulation to 535,000 from Jan. 22 by distributing in 224 supermarkets. Read more at the excellent Newspaper Innovation blog. This post made me consider how I would feel if MX or some other free daily used supermarkets to distribute here in Australia. I suspect it has been or is being considered. Free newspapers need traffic and I can’t imagine the publishers placing them in direct competition with high volume paid sales at newsagencies.

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Newsagency challenges

Powerball lottery sales slump

Powerball sales dropped by around 20% nationally in the second half of 2006.

Powerball, once the darling of Australian lottery games, is in trouble. Sales are falling across the country based on data I am seeing. Punters are migrating to OzLotto with sales of that game up by more than 50% – higher in some states. While it is hard to get a full national view, I have seen data from enough outlets to be confident in my assessment.

I am surprised by the extent of the Powerball sales fall since Thursday is a strong retail day and, for many, it’s still payday. However, since many are now paid electronically the payday view no longer holds.

If Powerball is to continue newsagents and other lottery retailers need to get behind the game and push it. Like any lottery product, it comes down to how well we sell the dream – across the counter, in posters and through in store offers such as syndicates. Arresting the sales slump ought to be a priority.

Lottery products are important to newsagents. 80% of the customers purchase out of habit. Enough buy other things to make them valuable to us beyond lotteries. We need to ensure that the habit is maintained and hence the need to support Powerball.

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Lotteries

Ghosts in magazines

laughter.JPGWe put some magazines in our returns trolley this morning and someone laughed at us. But there was no one else around – it was unnerving. It happened with the next bundle of magazines we put in. Someone was laughing at us! Investigation revealed that it was a magazine laughing at us – Dandy. Actually it was the free Desperate Dan’s Giggle Sack laughing when more magazines being returned were placed on it in the trolley.

For a moment there we thought we were going mad.

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magazines
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