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

Author: Mark Fletcher

Newspaper circulation rorts – Fairfax under scrutiny

crikey.com.au has been running stories about newspaper circulation tactics used by our two major newspaper publishers News Ltd and Fairfax. Fairfax are receiving the most recent attention as a result of the pallet loads of newspapers offered free to people attending sporting events, gymnasiums and the cinema.

I own a newsagency and make a living selling newspapers. My success is tied to the value of the mastheads. The more newspapers given away the lower the value of them masthead in consumer eyes. This is a practice which ought to stop not only because of the devaluing of circulation figures but also because of the damage it is doing to businesses like mine.

If the newspaper has a price tag of a dollar then sell it for a dollar. If it is to be free then make it free for everyone.

This game being played at present is nuts and Australia’s independently owned small business newsagents are suffering as a result.

Newsagents are angry but will not speak up publicly because of fear of retribution.

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Newspapers

Newspaper sales falling in shopping centre newsagencies, publishers need to act

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Newspaper sales basket penetration 2003-2005, 120 newsagencies. Source: Tower Systems.

Newspapers are losing their importance to shopping centre newsagents according to our analysis of three years of sales data from 120 newsagencies. This research covers 8 million shopping baskets worth of data.

The fall could be due to newsagents not promoting newspapers as well as they used to; overall falling newspaper sales; or newspapers now being sold in other outlets such as petrol stations, supermarkets, coffee shops etc.

No matter what the reason, the figures are concerning. My theory is that shopping centre newsagencies are showing the fall because that’s where the most significant competitor action is. Take my shop at Forest Hill in Victoria for example. We now have newspapers in Big W, Starbucks, Coles and Safeway as well as my own two newsagency outlets.

Publishers treat their retail outlets differently. Newsagents are full service and provide the best in store display and over the counter support for newspapers. They are a core product. Other outlets offer newspapers as the add on and treat them as such in terms of real-estate and promotional support. Yet newsagents are recognised for their effort by publishers putting product in more and more outlets.

The publishers are wrong to pursue growth or at least stem circulation falls by putting their products into other outlets.

Newspaper sales are challenged, there’s no doubt about that. Going into more outlets with a confusing value proposition message (i.e. Starbucks you can get The Age for 50 cents whereas at my newsagents 30 feet away it’s full price) only hurts sales.

Newspaper publishers ought to reduce outlets and focus on building a mutually valuable relationship with small business newsagents. They could immediately boost sales by offering a reward for consumer loyalty. Newsagents would get behind this. The result would be retail customers purchasing the newspaper more days in the week than at present.

Publishers have put tremendous effort into chasing home delivery customers over the last 10 to 15 years and neglected loyal retail customers. By association they have neglected retail newsagents. The home delivery marketplace has a high acquisition cost and a high churn whereas retail does not. Over the counter sales are about convenience, comfort and service. A smart publisher would reward newsagents for delivering on these and boosting sales appropriately.

Newspaper sales growth can be achieved if the publishers engage with newsagents, reward consumer loyalty and reward newsagent success.

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Newspapers

Online lottery sales booming and could hurt independent small business retailers

In a challenge to independently owned small business newsagents, Tattersalls is leading the way in online lottery sales in Australia (and maybe the world). They have an easy to navigate website and an excellent marketing campaign. This puts their product on computer desktops across the globe. While their website is very clear in explaining where (geographically) Tattersalls is licenced to sell product, it seems easy to get around – unless they check the IP address for country of purchase.

The Tattersalls promotion of their website is a concern for existing Tattersalls outlets because it is a strong corporate competitor. The growth of online will slow or even decline the goodwill value of Tattersalls outlets. I expect Tattersalls would disagree with this assessment. They would not want their existing network to consider that Tattersalls’ moves online could harm the value of the existing network. But think about it. It must. I accept that Tattersalls online will gain incremental sales. However, they will also pull people off the existing network to an online purchase only situation and that’s where the cost will be to the existing bricks and mortar network. Having said all of that, it’s an appropriate development for Tattersalls and one I would take if I were them.

Newsagents need to engage with Tattersalls and leverage a portion of revenue. This is justified because of the considerable real-estate given over by newsagents and other Tattersalls outlets in brand promotion. It’s this brand promotion which builds sufficient trust to enable consumers to comfortably purchase online. Tattersalls could not build an online model without such a high profile bricks and mortar network.

Tattersalls sales in newsagencies are a vital traffic generator. Even though their sold alone percentage is high – 65% in suburban stores – there is evidence that customers who purchase Tattersalls product in a newsagency today are back multiple times in a week to purchase other product. If they stop making the Tattersalls product purchase trips these other visits are at risk and that, in turn, puts the newsagent business model at risk.

Newsagents need to be discussing these challenges with each other, with Tattersalls and with other retailers who rely on Tattersalls product traffic (publishers, card companies etc).

The Tattersalls move is but another supply chain related challenge for Australia’s independent small business newsagents.
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Lotteries

News on mobile devices, supply chain challenges for news retailers

Courtesy of mocnews:

Report from Kansas City Business Journal that Handmark has signed a deal to bring Associated Press content ot mobile phones.

Report on mediweek that the International Herald Tribune is launching a new service to provide mobile phone users access to its news.

A report that Reuters has done a deal with Vodofone to provide access to Reuters video content.

The tail of the existing news and information supply chain isn’t aware of the changes these and related developments will ultimately have for them. These are primarily small businesses which rely on news and information product traffic to support the sale of others products in store.

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Supply Chain changes

More on mainstream media embracing an online model

American Business Media, an association of business media companies, has announced that it will begin broadcasting via its website edited footage of selected events they host.

The first videocast features Dan Bigman, managing editor of Forbes.com, discussing the effects of online media during ABM’s “B-to-B Meets: e-media, RSS, blogs, et al” on August 3, 2005 at Scholastic International.

This is another example of mainstream media embracing online.

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New media

Broadband over Powerline (BPL) commercial trial in Tasmania

Further to my post here in July about Google investing in a broadband over Powerline (BPL) company comes news that the world’s first large-scale trial of BPL technology began in Tasmania yesterday. BPL technology uses existing power lines and offers Internet access through every electrical power outlet in connected premises. Users plug a modem into the power outlet to connect to the Internet.

The large scale Tasmanian trial covers fast Internet access, VoIP and video delivery.

The Aurora website had details of their offering.

BPL shrinks the traditional supply chain for news and information and makes it more widely accessible. It provides a left field competitor to traditional communications infrastructure suppliers. While BPL has attracted plenty of criticism, the potential for consumers and content providers is enormous.

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Supply Chain changes

Zinio launches global newsstand for digital magazines

Zinio Systems, Inc., has announced the launch today of the first global distribution channel for published digital media. Zinio currently offers access to digital magazines from nine countries from its global newsstand website.

Newsagents in Australia retail plenty of product from overseas and while Zinio does not currently offer the depth newsagents offer, one must expect the online product range to expand with time. A niche publisher will weigh the return of scale out to, say, 4,600 newsagents for sales of, say, 2,000 copies verses an online only supply chain. The online model may generate less sales in the short to medium term but it does not have the same distribution cost. Having said that and based on the most recently published sales data for digital magazines, consumer up take could be expected to quickly surpass newsstand sales in many titles.

I’d tag this move by Zinio as a tipping point in magazine distribution.

Newsagents on the one hand don’t want to carry titles which do not pay their way yet was to ‘own’ range in the magazine category. That Zinio global is operational opens a new and lean competitor to the newsagency channel in overseas titles. Take Business Week for example. At Zinio global I can subscribe for around US$27.97 a year. In my retail newsagency I sell Business Week (Asia edition) for $6.60 or $343.20 a year. It may not be the perfect comparison but it makes my point. As a Business Week reader I’d be happy to purchase the digital version. It’s better value. I can access the product where and when I want. There is consistency of supply.

Zinio’s announcement yesterday has altered the playing field. Magazine distributors and newsagents need to respond. It would be ignorant to dismiss the Zinio move as irrelevant at present. Hindsight will prove such a view wrong.

I applaud Zinio for their move. It makes sense to their business model and was always to be a key part of their expansion plan. As newsagents we need to educate ourselves about such moves and get about building our businesses with products and services over which we have more control.

Here are some quotes from the Zinio press release:

“Our global newsstands open new markets for publishers needing to appeal to consumers around the world,” said Jeff Bruce, president, publishing for Zinio. “Today, magazines are instantly available to global magazine consumers with the convenience of language and currency preference at domestic prices. These benefits and the immediacy of the digital format will boost subscriptions and revenues for publishers.”

“Zinio is the clear market leader in the U.S. and offers a compelling model for magazine publishers abroad,” said Paul Cheal, Publishing Director, IPC Country and Leisure Media. “The global network offers us the potential to target and convert new readers through Zinio’s international sales channel and delivery platform.”

The Zinio Global Newsstand Network offers about 400 magazines available through franchise partners in local markets, including Poland, Spain, Denmark, Norway, Sweden, Taiwan, and Thailand. The network also features a UK newsstand with more than 40 magazines from fourteen publishers.

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magazines

Micropayments will set stories free

Few commercial news and information sites sell stories. Instead you pay a fee to access the site for a period. This is, in part, due to the cost of processing the payment. Thanks to the work of PayPal and others that is about to dramatically change.

Several companies have new technology on the cusp of release which makes handing payments of even cents easy and cost effective. This will enable consumers to purchase a full story for download quickly rather than going through a laborious registration and payment process. This will bring more traffic online and allow writers and publishers to build online revenue. It will more fully unlock the Internet as an alternative channel for selling content on a per story basis. Róbert Párhonyi, Lambert J.M. Nieuwenhuis and Aiko Pras of the University of Twente in the Netherlands have authored an interesting report on the new generation of micro-payment solutions.

It’s a paradigm shift. Whereas today someone pays me A$1.00 to buys the Herald Sun, in this new world they could take a story on page 3 and pay a few cents for it. But only online.

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New media

Sensis uses Google AdWords to poach consumer interest in other businesses

A good report on last night’s ABC TV 7.30 Report about the Telstra owned Sensis, through their Trading Post business, using Google’s AdWords and similar services from other search engines to siphon traffic to their site by posing as relating to businesses NOT advertising at the Trading Post. The 7.30 Report story was primarily about the Trading Post trying to grab traffic destined for Stickybeek, a local free classified advertising site.

Beyond the apparent appalling behavior by Trading Post management (and by association Sensis and Telstra Management) is the lack of interest shown by the ACCC which bothers me – especially since the Trading Post activity was against a micro business.

So much for business ethics.

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New media

eBay buys Skype

So, eBay has agreed to buy Skype (provider of voice calls over the internet) for between US$2.6 billion and US$4.1 billion.

This is a whole new business for eBay and with that comes challenges. Sure there will be the benefit of reading an ad and calling the advertiser with the click of a button. But it’s a ton of money to pay for that.

I’m sure the folks at eBay have a strategy. What it does for sure is it puts eBay back in orbit with the other major online players. The big get bigger and the smaller, well… Now more than even the Net is a size game and executives are tossing truckloads of cash and paper around to get big or remain big. It all looks amazing from where I sit in my small retail newsagency and software company. Interesting reading nevertheless.

If those of us in the news and information needed a ‘sign’ that our world has changed then this and the recent deals announced by News Corporation are it. We need to be building business models which rely less on over the counter news and information product.

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New media

Movies on mobile phones – download in seconds – bypasses traditional supply chain

Porto media, in a joint venture with IBM, is reportedly close to delivering kiosk based rapid download of movies to mobile phone or other portable devices. This makes purchasing TV show episodes and series more accessible and strengthens the focus on mobile device development. The device is the thing. That and fast download access.

The traditional movie supply chain: theatres, DVD publishers and retailers, free to air TV networks, DVD/video libraries, and cable TV networks are all bypassed in this model.

The traditional news and information supply chain is where there will be significant impact as content producers get closer to consumers.

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New media

Pete Townshend of The Who blogs a novella

Conflict of interest notice. As a kid The Who was my band. Their Tommy was and is awesome. I bought every version of the records (and now CDs), I saw it live on stage here in Melbourne Australia and decades later a couple of times on Broadway. I’ve seen the film countless times. They can do no wrong. Nor can Townshend.

Pete Townshend, the creative genius behind The Who, is publishing a novella through his blog and website. While Townshend is not the first to do this, he is a significant new participant in the world of online fiction publishing via a blog. The novella, The Boy Who Heard Music, is a work in progress. Townshend is blogging the novella to encourage feedback. His official website will have online from September 24.

Given the rapid change in mobile devices maybe the eBook is coming back for a second go. Amazon publishes eBook only versions – often as a means of testing the waters for new authors. This Townshend development is interesting since he would not have had difficulty getting a publisher if he wanted to go down the traditional route.

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New media

Podcast about Recovery 2.0

Jeff Jarvis of BuzzMachine has been interviewed for National Public Radio’s On The Media about Recovery 2.0 – a citizen driven initiative to consolidate relief efforts and plan for future events like Hurricane Katrina. Recovery 2.0 is a great example of how “the people” can take initiative using the tools of the Net to help people where the government response has been inadequate.

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Recovery2

Move over news, drink coasters drive sales of The Age

From newsagents I have spoken with an the experience in my two retail outlets, sales of The Age in Melbourne yesterday will be excellent thanks to the free coasters given away with the newspaper. The give away creates some in store fun and that’s always welcome. A couple of customers commented on the number of giveaways with The Age recently and wondered why The Age was doing it. One even said “don’t they realise it’s a newspaper”. True story.

I look forward to the day newspaper publishers in Australia will actively and consistently advertise the quality and depth of news and analysis as a reason to purchase their product. I’ve seen The Australian do this recently but not enough in my view.

In the meantime how about a rest from the likes of drink coasters?

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Uncategorized

Newsagency refuses to sell some newspapers at Brisbane airport

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I was in Brisbane yesterday and saw this sign at the Newslink newsagency near gate 24 at Brisbane Airport. (Sorry for the poor photo quality.)

The sign advises that due to uneconomic arrangements they do not offer newspapers from Queensland Newspapers. It directs customers to the Newslink newsagency in the main shopping area of the terminal. The newspapers which this newsagency has chosen to not sell are: Courier-Mail (the major daily for Brisbane), Gold Coast Bulletin, Sunday Mail, The Australian, Daily Telegraph and the Herald Sun (Australia’s largest selling daily).

Here is a high profile newsagent in an exclusive and prime position seemingly refusing to sell selected titles because of the economic terms they are offered.

As I boarded the flight, sans newspaper, I wondered what would happen if newsagents across Australia made such choices. What would we refuse to carry? How would publishers react? How would consumers react?

The decision by Newslink opens a conversation on the commercial viability of products newsagents carry. That they have chosen to do this with newspapers is a surprise however.

The Australian newsagent channel has evolved through mutual co-operation between suppliers. In the circulation categories of newspapers and magazines it is only the very top sellers which fully pay their way. However, combined, the categories work in most newsagencies because of the range and the mutual support for common resources such as labour and floor space. This is why I am critical of decisions by suppliers which harm the balance of mutual co-operation.

Newslink are, in my view, sending a wrong message to consumers. Especially when you consider that mum and dad newsagents don’t have the luxury of making the decision they have made.

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Uncategorized

New magazine success are growing the category for newsagents

Madison, Notebook and Real Living and the three new magazine success stories from 2005 as far as I am concerned. Alpha just misses out based on my criteria. I’m looking for titles which grow the category, which are easy to sell and which deliver sustained sales. It is in this last KPI where Alpha fails in my book. But, hey, it’s only issue #2 so it may pick up from here. Refer my previous posting on Alpha.

Madison sales are strong and we’re several issues in. Issue 2 of Notebook has been out for two days and newsagents I speak with are already declaring it a winner. Real Living, while only at the end of issue 1, has outperformed in each location I have checked.

This all tells me that the magazine category is alive and well at the top end, where good in store promotional materials are provided and where the title is well supported with advertising.

At the bottom end things are ratty. Newsagents could lose 200 titles and their bottom line would improve. None of these titles are promoted other than by newsagents putting them on the shelves in the hope they will sell. The capital tied up in this dead stock is wasted when there are new titles to promote.

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magazines

Recovery 2.0 establishes a model for the world

Recovery 2.0 demonstrates perfectly the power and value of citizen driven, online and mobile engagement. Recovery 2.0 is an open source disaster recovery initiative of and for the people. It has been established in the wake of Hurricane Katrina. The folks behind Recovery 2.0 are pioneers in a movement which must become global and do so before there are more disasters of the proportions of Katrina.

For years newspaper publishers have been critical of citizen journalism initiatives and socially conscious websites like craigslist. These things newspapers have been critical of have been essential in the US in the days since Katrina as they have provided a living notice board through which problems can be solved. Without hysteria and without it costing anything.

If newspaper publishers wondered about the value of citizen driven and other online initiatives compared to their traditional offerings then Recovery 2.0 is essential reading. It illustrates the community setting its own agenda and creating its own conversations about the agenda.

Recovery 2.0 ought to be supported by governments from around the world.

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Recovery2

Publishers pull out freebies to get more circulation growth

I want to talk about my hometown broadsheet, The Age, but note that I could be writing about almost any Australian capital city daily newspaper.

This Saturday you get a free set of coasters if you buy The Age. Recent other giveaways have included: a yoga DVD, a Music CD (several times), posters and so on…

Each of these giveaways provides a sales spike but a sales spike does not create brand loyalty. Thinking about The Age, the best loyalty they have comes from their excellent Green Guide, TV guide (Thursday), Epicure (Thursday), Domain (Wednesday), EG (Friday) and classifieds (Saturday).

I’d rather see them invest marketing dollars in the product rather than investing in spike type campaigns. Coasters have nothing to do with a respected broadsheet newspaper. News is what it’s about and the day by day feature sections. The more the marketing focus is directed away from news and the core attributes of the newspaper the greater the disconnect with consumers.

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Newspaper marketing

SmartMoney on newspapers and the impact of craigslist

SmartMoney has published a report on the performance of newspaper stocks. The report includes one particularly telling paragraph about Craigslist:

“The trouble for newspapers is clear. Classified ads account for about 40% of the average U.S. newspaper’s advertising revenue, according to Mort Goldstrom, vice president of advertising for the Newspaper Association of America. Craigslist is their kryptonite. It competes with newspapers essentially by not competing. Why would customers pay if they don’t have to?”

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Uncategorized
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