Author: Mark Fletcher

I have been analysing the results in my newsagency of our now ten month old magazine sales strategy. Take 5 best illustrates the success of this campaign.

Year on year our sales are up 53%. That is phenomenal growth. But, the real success lies underneath these numbers. Whereas a year ago, 16% of all copies of Take 5 were sold alone, now that number is 10%. That is, fewer customers today purchase Take 5 alone than a year ago. Further, a year ago less than 1% of Take 5 customers purchased TV Week whereas today more than 5% purchase TV Week as well.

While we cannot know if we are poaching sales from other outlets, my suspicion is that at least some of the sales are incremental for the title because of the value proposition which underpins our loyalty campaign.

Our magazine club card campaign is getting our customers shopping the category with more depth. It’s also delivering loyalty.

Engadget is reporting of a Scottish group working on an e-paper project. The store includes this quote about the research from the local newspaper, The Scotsman: “potentially life-changing creation.”

Reuters reports that Apple has sold more than 500 million songs through iTunes.

The success of iTunes and the impact of file serving software has killed hundreds if not thousands of inpependent music stores and put some significant retail chains at risk.

The iTunes success is a business case which players in channels through which ‘soft’ product is sold (like newsagencies) ought to research. Too many in the newsagent channel have their head in a bucket of sand and ignoring the success of iTunes and the changes in mobile access space will only serve to limit the life of their businesses.

News is putting money on then table in pursuit of the new focus on the Internet set by Rupert Murdoch three months ago through their acquisition of MySpace.com. MySpace is a bit like rsvp.com which Fairfax bought last week. However, it also includes some interesting fringe technology businesses which add value of the News acquisition.

In April Rupert Murdoch addressed the American Society of Newspaper Editors and said, in part:

“Scarcely a day goes by without some claim that new technologies are fast writing newsprint’s obituary. Yet, as an industry, many of us have been remarkably, unaccountably complacent. Certainly, I didn’t do as much as I should have after all the excitement of the late 1990’s. I suspect many of you in this room did the same, quietly hoping that this thing called the digital revolution would just limp along.

Well it hasn’t … it won’t …. And it’s a fast developing reality we should grasp as a huge opportunity to improve our journalism and expand our reach.”

Now, three months on, we’re seeing movement in the News Corp. digital world. Fox Interactive Media is a first step on what in expected to be a new road of significant endeavor for News.

Today’s online model demands a shorter and faster supply chain between content creator and consumer than ever before. News has been slow to adopt to the opportunities of the wireless world. Now they are in the game it will be interesting to see how well they play. In Australia we’re waiting for some significant announcements from the Optus/PBL relationship.

TV stations continue to promote their news services as trustworthy and providing quality. You hear their advertisements in radio, see them on billboards and read them in print. Radio stations, too, promote the quality and depth of news and current affairs coverage. Not so much newspapers or am I not seeing content focused sell promotion? Sure newspapers use their own pages to promote themselves, but not outside, not to prospective readers.

I see plenty of promotions outside for houses, cars, trips and cash. I see Sudoku puzzles, CDs, DVDs, pins and stickers – being pushed by newspapers. But nothing promoting the quality and coverage of news.

I wonder about the impact of all this non news on the masthead. Surely it must be confusing consumers. The time newspaper customers become the most animated, except when their home delivered paper has been missed, is when there is a new competition or a coupon to clip for a sticker or pin. They like the games and I guess that’s why the publishers keep them coming.

It’s not about the news. But then again nor is their supply chain any more. Just as content has morphed from news to entertainment (for some newspapers) the supply chain has been moved from the specialists (newsagents) to all and sundry.

A few weeks ago I moaned here about the Sudoku craze and how it had overtaken newspapers. And it had. BUT, it’s spawned a new segment in the crossword niche. We have five Sudoku titles all traveling well and they’re generating new business. I don’t mind that.

I guess I long for well spent and successful effort in getting people reading newspapers for news again. Oh well, one can long I guess.

BBC3 is broadcasting each episode of the comedy series, The Mighty Boosh, online a week prior to broadcast. This is an interesting experiment to see what type of audience is attracted and the impact on the broadcast show.

By Eli Noam, professor of Finance and Economics at Columbia University and director of its Columbia Institute for Tele-Information
and published July 14 by the Financial Times:

Are people drifting away from news? Not really. What people are drifting away from is paying for news. And that will be hard to reverse beyond the most powerful or specialised of news brands. It’s happened to music, and now it is beginning to happen to newspapers. Yes, the technology will create many new tiny news media. But the overall result will be more media concentration – a lot fewer but more comprehensive mainstream news organisations as the integrator of most information. First, the paper element of their operations is beginning to vanish. And then, the news part, too, will become unsustainable. Today’s newspaper becomes tomorrow’s news-integrator.

Well, that’s how Noam finishes his piece. It’s a well thought out paper which offers direction and hope (if they pick up on the direction) for publishers but not so much for the current supply chain serving publishers.

What Noam writes makes sense to me. You’ve only got to consider the changes (local and international) over the last six months to see the direction.

The new News Ltd. magazine, Alpha, is doing good business according to stories from around the traps. Many newsagents have sold out while others are reporting strong sales.

The launch at a price of $2.00 (purchased with the major News Ltd. Daily) is working. While some are grumbling at the need to offer it to the customers, the up sell is getting newsagents engaging – and many are happy with the result.

We’ve gone all out in our own shop for Alpha with two significant displays. The sales results are good with strong sales on the launch day (last Thursday) and strong sales also Saturday. Even today, five days in we’re getting good business.

Alpha is creating a new niche since it’s not pure sports nor pure men’s interests. We’re finding strong interest from women – maybe because of the cover.

Alpha is a big test for newsagents as it challenges us to do more than put product on our shelves. It challenges us to engage with customers and prove that our channel can add value to a product launch. While non newsagents carry the product, I;’d expect newsagents to be more successful with the up sell because of the unique nature of their customer relationship. At least I hope that’s the case.

If Alpha sales are weak in newsagencies for issue #1 I’d expect ramifications for our channel.

BIGresearch, an Ohio based research company, has studied 14,000 consumers and their media influencers. Their press release provides a summary of their findings. Here’s a great quote:

“The 18-24 year olds are digital nomads who have adopted new media more readily than any other age group,” said Joe Pilotta, PhD, BIGresearch’s VP of research. “Not only do they use new media more, they are influenced by it much more than any other age group, when it comes to making purchase decisions. Which says that they have integrated new media in their daily lives,” said Pilotta.

No surprise. Good size survey and interesting data. This key consider group is mobile and content hungry but not bricks and mortar loyal.

I wonder how many such studies need to be undertaken before small business owners in the firing line of changes coming as a result of these trends act on their own business plans.

Whereas I can see regular activity from publishers in response to consumer, technology and societal changes, newsagents, who rely on newspapers and magazines for more than 50% of their sales, are not responding in a business planning sense.

podblaze.com has released a white paper on how to leverage podcasting as a marketing tool. It’s a quick read and provides a good starting point if you’re wondering what podcasting is and whether there is a context for your business.

Playlist Magaizne has a good story online summarising where some of the US major players are at with podcasting.

Cameron Reilly of the Australian based The Podcast Network (TPN) is reporting that the number of downloads rose from 91,965 in May to 205,766 in June.

That’s huge growth by any measure.

You can read the full release here.

TPN is following a publishing model and has a stake in each show available through its network. This makes their offering different to the traditional directory service. Some of their shows are a good example of what I mean when I have talked here in the past about setting the stories free from their traditional aggregated product such as newspapers and magazines.

Having an Australian platform gaining such traction at this stage is good for our voice internationally even if the production qualities of the AFL (local football) show could use a boost.

The News Ltd launch yesterday of Alpha – the slick sports magazine being sold for just $2 with News Ltd major dailies seems to have gone well from the newsagents I have spoken with.

Many have provided significant in store real estate to provide a strong presence for the new title.

In my own store we have strong displays in two locations plus we have Alpha at the counter and are offering it as an up sell. It’s a challenging product to up sell because most of our customers are female and over 50 so that’s a demographic issue for us.

The pitch for the product is strong with a good cover and good point of sale material. Where there is a challenge is what’s it about? That message is not as clear as it could be and this leads to a confusing message from newsagents in merchandising and pitching the product.

It’s early days since this product has a 30 day shelf life. The key in my situation will be the weekend sales. We’re planning a very strong pitch on Saturday.

Newsagency customers are very segmented. Eyes down, freeway into the part of the store they want, purchase, freeway out. Alpha is trying to get newspaper customers purchasing a magazine or vice versa. My experience yesterday is that we need to systemise that a bit more so that we get the sales uplift necessary to make it work for us and for News Ltd.

For example, there is a strong story at the newspaper display but not as strong a story and integration at the sports magazine display. At that place the story needs to be different to the newspaper stand story.

Further to my earlier post on this Fujitsu has just announced a wireless version of e-paper which will be available commercially to consumers in around a year. They are saying it could be 2007 but with the scramble by several major companies in this space now the pressure to be first to market is considerable. The applications are from mundane price tags in stores through to content such as magazines and newspapers.

The Guardian reports on 290 news vendors in Paris, who work 16 hour days for an average A$2,000 a month, staged a historic six-day strike over low pay and working conditions last month.

The story ends with this quote from one of the newsagents:

“At least half of what we get, sometimes up to 80%, is unsold. It’s madness: we have to be allowed a say in what we stock. That’s only common sense,” said Mr Maignan. “I’m in the middle of the financial district, so I sell a lot of business magazines. Colleagues in the suburbs won’t sell a single one – but they’re still given them all.”

These French newsagents are similar to Australian newsagents. Their channel was created by the publishers. While publishers have put their product elsewhere in pursuit of sales and moved content to new media in pursuit of advertising revenue, the channel they created has starved. While the publishers owe the channel nothing, there are opportunities for engagement which could benefit the publisher and the channel.

Publishers will bemoan the vast difference in compliance among newsagents as a reason for not engaging with the channel. There are ways this can be and ought to be addressed. All it would take is one publisher to pull back from going everywhere and focusing on the newsagent channel or even part of the channel in pursuit of a more viable model for both players.

To allow slow decay helps no one.

The Guardian story is timely and should encourage talks between publishers and proactive newsagents.

The blessing from the “bishops” at Apple was all that was needed. Mainstream media players across the globe are doing it and they are reporting about whereas for the first year of the life of what is becoming a great advertising channel they, in the main, ignored it.

When a something new makes it ot the pages of USA Today you know it’s something the punters will understand and want to know about. Unfortunately this report suffers from the USA Today affliction of shallow reporting.

On ABC Radio National this morning, Fran Kelly had a story about podcasting with some depth. Good coverage of the development in mainstream media in the US and an interview with a Nine Network executive to give a local perspective from a television point of view.

I’ve heard publishers bemoan the lack of respect and effort their products receive from newsagents and others in the supply chain. They argue that newspapers generate the most traffic yet receive the least attention. They wonder what happened from the halcyon days of newspapers (any time up to the late 1970s).

Besides that society has changed (television, mobile phones, working hours, recreation opportunities), newspapers are not what they used to be.

Until recently the news was the thing. Today news, in many newspapers, news has taken a back seat and there are consequences for that. Getting the retail and distribution channel to promote puzzles, games, CDs and all manner on non news devices to boost sales may give the circulation kicks necessary to achieve poor audit results however I doubt that these tricks create loyal customers.

Newspaper customer loyalty is rooted is trust for the masthead and this is earned through coverage. That does not mean high brow. It means news. The tabloids could be more about news than trying to run the political agenda or paying for gossip stories. Sometimes newspapers offer a consisted and strong news story from their front page but not often enough.

All it takes is one publisher to lift the ante, declare a puzzle and competition free zone and focus on creating much better content value. The supply chain should respond with more effort as a result of greater respect and this should result in sales.

Okay, that’s fairy land and the current market forces dictate how publishers react.

My point is that by pursuing all these non news strategies publishers are inviting their supply chain to be equally confused in their representation of newspaper product.

I’ve been ranting here for a while about the need for newspapers to embrace podcasting if they want to maintain and even increase the connect of their brand with consumers. Steve Outing discusses this topic in a good post today at Poynter online.

Newspaper journalists and columnists could take us beyond the page and use podcasts to build respect for the masthead. There is an opportunity for newspapers to reclaim ground as providers of trusted and respected news and analysis content and podcasting can provide a transparency and depth words on the page sometimes cannot offer.

As part of the newspaper distribution and retail channel in Australia I’d also like to see podcasts so that I may provide added value to the newspapers I sell in my shop. If I can broadcast, for example, the audio (or part) from an interview it provide more reason for people to visit my stores and others in my channel. Plus is enables browsers in my shop to hear and this cold/should lead to a sale which otherwise might not have happened that day.

We in the supply chain ought to be taking this to the publishers otherwise they might not find the opportunity on their own.

Is it a world first? Will it take off elsewhere? Who knows? It’s real though. Ningbo Daily Newspaper Group and Ningbo China Mobile in China have launched what they are calling a mobile phone newspaper. Customers will be sent stories, images, video and sound.

Those of us in the newspaper supply chain business will watch, learn and plan – if we’re smart we’ve been doing that for ages already.

Guardian Unlimited (from Guardian Newspapers) earns early adopter status for their decision to launch a mobile phone based crossword game as covered by Media Bulletin. Access will start with a free trial and then move to a paid model with costs reportedly to be 50p per day.

Are they a newspaper publisher or a games publisher? Content is content I guess and anything to accompany advertising which punters will be loyal to is all that matters. I can’t help but wonder about the brand. I mean, what does it stand for?

As others launch into this space and push their brand outside the traditional news it will become easier for pure news outlets to focus on news and analysis. Everything old is new again.

Plenty of reports (including this one from the Denver Post) about the Google, Hearst and Goldman Sachs in Current Communications Group – a company leading in an area of technology called broadband over power lines (BPL). If hopes/plans are realised, BPL would allow electric companies to become an alternative to the cable and telephone companies providing high-speed access to the Internet.

This will be interesting to watch.

There has been considerable discussion amone newsagents in recent weeks that they ought to purchase magazine distributor Gordon and Gotch from PMP.

I am not aware of PMP having any desire to sell Gotch and even if they did have such a desire I would suggest that newsagents taking ownership would be problematic for several reasons:

Our ownership of one distributor might present problems in or dealings with others.

Newsagents have had sufficient difficulty agreeing on national representation strategies for the last 20 years to suggest that we might have challenges agreeing on strategies for a national distributor.

Distribution companies are complex cans of worms which require specialist skills beyond what many newsagents would be used to.

Frankly, we’d be out of our depth.

If we had the kind of money (or could find it) necessary to purchase Gotch then I suggest that we would achieve a better return being invested in future traffic generators. Magazine sales will continue to ebb and flow. There are many new revenue opportunities that newsagents investment could bring to our channel. This is where I see a bright future.

Fairfax has announced this morning the purchase of RSVP. Publishers are slower in Australia to purchase online players when you consider all the activity in the US over recent months.

The deal is important for Fairfax as it shows them to be a buyer, having stalled previously with seek.com.au (if stories on the street are right.

The big question is what is next? RSVP has to be but a small step.

If I offer a discount for stationery in my shop it’s me offering the discount. Off the bottom line. Likewise, if I produce a brochure offering the discount I pay for it myself. And, I have no exclusive product traffic generators I can use to leverage interest in the discount offering.

Compare that to our government owned Australia Post. They are offering 10% off all stationery purchases between July 1 and August 31 this year for purchases of $50 or more as long as you have one of their brochures.

Okay, so that’s a fair business practice except that it’s my government competing against me. My shop is directly opposite one of the participating Post offices.

My real gripe with this promotion is that it is promoted through a colour flyer which is 80% about postal products and that means the monopoly postal side of the business probably paid for the flyer. This is a government commercial enterprise benefiting from its government sanctioned monopoly – to the detriment of independently owned small businesses.

The Australian Government ought to divest itself of all Australia Post retail outlets to independently owned small businesses.

The latest issue of Circulation Management is reporting US ABC audited circulation data for business and consumer titles and there are some interesting results.

PC Magazine Digital-only subs of 119,771 for 2004 compared to 19,256 in 2003. Total qualified circulation in 2004 was 926,276 compared to 968,274 in 2003. Most of the digital edition growth has been achieved without cannibalising the print edition.

Cosmo Girl! Digital-only subs of 80,356 for 2004 compared to 41,076 in 2003. Total qualified circulation in 2004 was 1,380,320 compared to 1,365,735 in 2003.

Barrons Digital-only subs of 1,617 for 2004 compared to 725 in 2003. Total qualified circulation in 2004 was 300,040 compared to 295,706 in 2003.

Circulation Management lists the TOP 15 titles. I have chose these three to demonstrate diversity of titles and the significant growth achieved between them. There have been a couple of falls but there are reasons for that.

Remember, this is data from 2004. With the significant enhancements to digital delivery of magazine content this year and stronger competition between the platform players one could reasonably expect digital only circulation to rise. They have been focusing on improving the consumer experience and the results are stunning.

The growth in Cosmo Girl! is particularly interesting but not that surprising given that it’s from the demographic more attuned to computer and wireless delivery than most.

Digital delivery is yet another space to watch for newsagents and others in the news and information supply chain – particularly in the fringe subject area, titles outside the top, say, 200. My feeling is that the small and independent publishers will move to the digital model faster than mainstream publishers because of cost savings. For a fraction of today’s real world costs, they can get professionally presented content including paid advertising into subscriber hands.

While the newsagent distribution model puts titles in front of prospective consumers, it comes with a cost. With newsagents pressuring on returns achieved from their expensive retail real estate, the metric for small publishers could swing with them forsaking eyes for dramatically lower circulation costs.

Newsagents, publishers and distributors ought to be talking about these issues and navigating their way, co-operatively, though the changes digital delivery and other technology changes are bringing to the channel.