Author: Mark Fletcher

Courtesy of Tim Porter: 10 reasons to read a newspaper; and, 10 reasons to read news online.

It bothers me that too many in the newspaper supply chain remain ignorant of such conversations and technology developments. The world outside the bucket of sand has changed dramatically.

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?

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.

News Corporation reports it has signed an agreement to purchase IGN Entertainment which includes the AskMen.com website. This is a very significant purchase for News and takes them considerably closer to a profitable and clear internet strategy.

“The Wikipedia, which has surged this year to become the most popular reference site on the Web, is fast overtaking several major news sites as the place where people swarm for context on breaking events.” Reuters.

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?”

Further to my earlier post on shopping basket analysis in newsagencies, I have been breaking the basket data out by day of week and have found, among other things, that Sundays spike significantly in terms of basket penetration for newspapers.

I have seen newsagencies where Monday through Saturday the average basket penetration for newspapers is 35% where on a Sunday it spikes at 70%. Overall the Sunday spike averages at 70%. That is, newspapers make it into 70% more sales on a Sunday than any other day.

The kicker is that in 65% of newspaper sales on a Sunday they are sold alone. In the data I have seen so far, Sundays are the least efficient day for high street and shopping centre newsagencies.

Newsagents need to heed this data and work harder at achieving add on sales. Publishers could consider developing Sunday specific strategies which work in with their retail network since an inefficient network on a Sunday when labour rates are so high benefits no one.

This research project involves 8,000,000 shopping baskets of data from over 100 newsagencies spanning three years.

With the Government plans to sell its remaining shareholding in Telstra exploding on a variety of fronts this week (for example here and here and here, it was interesting to see Prime Minister Howard come out fighting on the 7:30 report on ABC TV tonight. In that stoush The Prime Minister said that the government had a “conflict of interest” owning the shares in Telstra and controlling the regulatory regime. This is the situation with Australia Post.

While the government hides behind the provision of postal services in its comments about why Australia Post cannot be privatised, it does not answer the charge of the conflict in controlling the regulatory regime which delivers exclusive and low cost consumer traffic to the Australia Post shops where the government also sells stationery, greeting cards and many other lines traditionally offered by independent newsagents.

The government is a very happy 100% shareholder of this retail driven business and seems to have no qualms that it is taking revenue from the struggling small business sector.

The government has double standards here. The argument it uses to support its sale of the remaining share of Telstra applies to the government owned Australia Post retail stores. The government has no business owning these and it ought to divest to individuals and small businesses as a matter of urgency.

I have no qualms with the Licenced Post Offices as they are owned and operated by small business people. My issue is with the government owned retail stores competing with newsagencies like mine and using their government ownership to provide an unfair advantage.

That’s a conflict of interest!

Rayma Creswell, CEO of the Australian Newsagents Federation was quoted in yesterday’s Australian Financial Review as saying “If you go into an Australia Post shop, you’ll see that the offerings they have are really computer consumables and telephony consumables, more than stationery, as we do.”

Ms Creswell is wrong in her assessment. In Government owned post offices around 40% of floor space is devoted to general stationery and another 20% devoted to greeting cards and related product. Less than 10% of floor space is given over to telephony product.

In three Post Offices I visited yesterday less than 5% of stationery lines were the computer consumables to which Ms Creswell refers.

It is disappointing that newsagents are so ignorantly represented on this matter. I am a member of the ANF and am frustrated at their lack of attention to the competition from Australia Post.

One only has to review the Australia Post annual report to understand the importance of the broad retail offering in Australia Post outlets.

Elsewhere in the article, Ms Creswell says the ANF represents 5,000 newsagents. The reality is that Australia has 4,600 newsagents (source: ANF Year Book) and of these around 1,000 are ANF members.

Australia Post is taking business from Australia’s independent newsagents by using the traffic generated by its stranglehold on postal items to sell traditional newsagent items such as pens, pencils, staples, paper, cards, paperclips and so on. This is our own government using the monopoly they control to take business from shops like mine. They have only been in this space for a short time compared to newsagents.

So much for their support for small business.

The Columbia Record is a citizen journalism initiative from Knight Ridder. Australian newspaper publishers would do well to take a look at what Knight Rider has done. It acknowledges the importance of citizen engagement in reporting and commenting on news. There is a business case and a social responsibility in this project. We need more sites like The Columbia Record.

A decision is expected very soon in the UK about changes to the distribution of magazines and as this report from the Financial Times shows, the proposals from the Office of Fair Trading are bringing together people usually at opposite sides of a debate.

What is happening in the UK is of interest in Australia not because we have a similar magazine distribution regime but because you have regulators playing with a model without consideration for the small businesses and their role in the community. My understanding is that if the FT rules are adopted we’re likely to see fewer independent retailers and more clone businesses.

“There is no doubt in my mind that podcasting is not only here to stay but will also shortly threaten established media broadcast systems. It’s not so much that they will all be destroyed by homebrew networks, but podcasts will be taking away just enough listeners to be a major concern.” John Dvorak writing at pcmag.com.

Dvorak is a well established and respected commentator. His column is further evidence that the impact of podcasting will be far reaching for existing media companies. While many in these same existing media companies disagree, the reach of podcasting in its one year of life so far is extraordinary.

While the implications are talked about in terms of broadcast media (TV, radio), I see implications for newspapers and magazines as stories lift off the page and present in a more emotive, more accessible and more connected way.

Good to see the Australian Financial Review provide some coverage to my call for the government to sell the Australia Post retail network. AFR, Sept. 6, pg 47. I’d link but it’s in the premium member area of the AFR website. This half page story picks up on some of the comments posted here.

Since newsagents began 130 years ago newspapers have been the core product, the one item just about every customer visited to purchase. They drove the traffic. In 2005, however, we are seeing shopping basket penetration data for high street and shopping centre newsagencies which suggests a fall. This data, representing 8 million baskets worth, shows that in 2003 49.6% of all sales included at least one newspaper. In 2005 that figure has fallen to 40.4%.

This change can be attributed to newsagencies carrying a greater variety of product; that newspapers are available in more retail outlets; that over the counter sales for newspapers are falling; and/or that sales of other items in newsagencies (lotteries for example) have increased.

No matter what reason for the change, it is real and should be acted upon.

Whereas previously we used to use the newspaper traffic to try and leverage sales of other items, we have developed a strategy to try and leverage newspaper sales from other high traffic items. We see this as a tipping point, a realisation that newspapers are not the might traffic generator they once were.

Our goal is to lift basket penetration for newspapers in our newsagency to 2003 levels.

Talk to those who owned newsagencies up to the 1990s and they would respond saying that everyone who wants to buy a paper buys a paper. I don’t agree. Hence our strategy. We’ve been driving sales efforts at our lottery counter (a high traffic generator) and now plan to push elsewhere in our shop. I’m confident significant numbers of customers leave our shop who would buy a newspaper if we offered it to them. The challenge is to find the approach which works and which is cost effective.

Publishers need to engage as well. They need to develop in store marketing strategies beyond competitions which reward newsagent success and build a consumer connect with the newspaper as a newspaper again.

There is a certain arrogance among publishers that they are the heroes to newsagents and that it is their traffic which props up the struggling retail channel. More open and honest communication could navigate a win win here and engage newsagents in boosting over the counter sales of newspapers by leveraging other traffic.

The Media Center (at the American Press Institute) is holding what looks likely to be an exceptional one day conference event. As their literature says:

We Media fosters collaboration through conversations, connections and shared knowledge. We’ve organized conversations with individuals and organizations who are using the Internet as a collective force of unprecedented power. We’ve created a setting for you to talk to them and to each other – a day for learning, and sharing, ideas and opportunities.

No ordinary conference, We Media is about how we
create a better-informed society by collaborating with
each other. Arrange meetings in advance or during scheduled meet-ups at the conference

The day-long event will be held on Wednesday, October 5, hosted by The Associated Press at its world headquarters in New York City.

The web has plenty of coverage of Katrina and the dreadful aftermath. Some of the coverage demonstrates the importance and value of citizen reporting. Here are my top three picks for what it’s worth.

Ourmedia.

Wikipedia.

Nola.com. This one was based on New Orleans.

There are others but these are the very best.

CNN calling for stories from citizen journalists.

Thanks to mobile devices and some stumbles by some news organisations, citizens are more actively engaged in reporting news and providing commentary than ever. Here in Australia maybe a publisher could find a way to use our 4,600 newsagents to more closely connect with would be citizen journalists.

With faster, easier access and better quality mobile devices, consumers will be happy to pay to follow a story or areas of interest. This will give stories in popular magazines and newspapers life in another medium. It will also compete with those products.

iTunes in the US has shown that consumers want to buy individual songs so why not stories?

PayPal, the eBay company agrees. They are extending their micro-payments service to include forms of low-cost digital content beyond music. The PayPal announcement makes it a convenient and low cost payment option for greeting cards, magazine and newspaper stories, advertisement placement – individual items of content rather than aggregated product like a full magazine or newspaper.

CBS will commence podcasting, Guiding Light, a 68-year-old soap opera, Tuesday. Guiding Lightstarted as a radio series in 1937. It is the first podcast effort from CBS Netcast.

From the CBS press release:

“Podcasting has become one of the fastest growing programming and promotional tools in media today and with this dedicated site we plan to be part of this new medium in a big way,” commented Larry Kramer, President, CBS Digital Media. “With this move, we continue to expand our entertainment programming portfolio on CBS.com in way that engages the consumer with a unique experience that complements the broadcast on the Network.”