Reusing the Alpha magazine stand
A newsagent colleague sent me a before and after photo of their Alpha magazine counter unit. Repurposing the Alpha stand is reasonable given the decision by News Ltd late last week to cut newsagent margin on Alpha and to take home delivery business and give this to Australia Post. Using the stand for another title is better than not using the stand at all.
Newsagents take Alpha magazine off the shelves
Newsagents are telling me that they have removed Alpha magazine to the back room ready for return. They say they will continue to do this with new issues of Alpha. It is certainly a practical way to let News Ltd know the extent of your anger over their decision to cut margin and take away home delivery sales.
If many newsagents do this, refuse to display Alpha in-store, sales of the magazine will drop. This will bring the title to the attention of advertisers who would be expected to seek a reduction in advertising rates.
It will be interesting to see how many newsagents take action on this. In the past, newsagent actions have not matched by their words. I suspect that News Ltd is banking on this. They have in the past.
News Ltd decision on Alpha stresses newsagents
By reducing the income newsagents make from Alpha magazine, News Ltd places further financial stress on Australia’s family owned small business newsagencies. Newsagencies are mixed businesses – no one part of a newsagency can stand-alone. Newsagents rely on the profits from some departments to cover loss making home deliveries and to cover the falling profit, in real terms, from News Ltd newspapers.
The decision to cut margin on Alpha by 40% and to take home delivery sales of the title away from newsagents and shift this to Australia Post is being taken by newsagents as an indicator from within News Ltd of how the company views newsagents and an indicator of a closer relationship between News and Australia Post.
For all the talk in the pages of News Ltd newspapers about everyday people, News Ltd walks to a different beat.
I’d like the opportunity to debate their decision in a public forum. They have to face up to the stress they are causing for newsagents and their families.
Newsagents suffer from Alpha magazine change by News Ltd
The importance of newsagents and the Australian newsagency channel to the launch of Alpha magazine by News Ltd three years ago is clear in a promotional document I found at the Australia Post website.
The document praises newsagents including our compliance with the demands of News Ltd: Three weeks after launch, ALPHA magazine was still positioned with the newspapers in over 88% of retailers nationally. Yes, we did that.
Newsagents are a key reason Alpha has been such a success. Thanks to our efforts we have made it a sought-after title among consumers and other retailers. In hindsight, we were too generous with our commitment.
Rather than sharing the rewards of the success of Alpha, News Ltd is doing the un-Australian thing, they are doing a runner on a mate after the mate helped them. This is appalling behaviour.
It is no surprise to me that newsagents are angry. Check out the comments at my original post on this topic and the follow up post. I know of newsagents who will write to NDD saying they do not want the title. I know from my past experience that NDD will not permit newsagents that right. I suspect that for some newsagents, this will be the issue which drives them to cloes their NDD account.
Ethics lacking in News Ltd decision on Alpha
The decision by News Ltd to cut the margin paid to newsagents for the sale of its Alpha magazine by 40% demonstrates the double standards of the organisation.
In the pages of their newspapers, News Ltd paints themselves as champions of small business, yet in their boardroom they make decisions which hurt small business. There is no good news for small business newsagents in the Alpha decision by News Ltd.
Having launched and built Alpha sales to an excellent level, newsagents are to lose margin, customers and other benefits. This is an arrogant profit focused decision by News Ltd.
While there is nothing illegal in their decision about Alpha, it is my view that News Ltd has acted unethically towards newsagents, their so-called partners.
There will be more decisions like this in the coming months and years as News Ltd re-jigs their business to today’s economic and news distribution requirements.
John Hartigan, Chairman and CEO of News Ltd is on the Federal Government’s Business Advisory Group and has been regularly called on by government to serve on boards and in other capacities. I wonder how his colleagues on these boards would view him if they knew that he presided over a company which treated small business owners unfairly and, as I content, unethically.
News Ltd cuts small business newsagent income by 40%
After playing a key role in making Alpha Australia’s largest selling men’s monthly magazine, newsagents have been ‘rewarded’ by News Ltd. News has cut newsagent margin by 40%, cut revenue by direct (non newsagent) supply to Woolworths, Coles/Bi-Lo, Franklins, Big W, 7-Eleven and Coles Express, seized control of newsagent home delivery customers and shifted distribution to NDD.
Newsagents earned 50% margin from the sale of Alpha. This was in return for prime space allocation – next to newspapers. It is this prime space commitment from newsagents which got Alpha to the circulation it has today.
For the last three and a half years, newsagents have been told to only sell Alpha with a News Limited newspaper. In the early days some News representatives were quite threatening to newsagents about this. That strategy is out the window with these latest changes. I am curious as to what this makes of News demanding that newsagents sell it with a newspaper.
Curiously, the announcement from News implies that the changes with Alpha will benefit newsagents. There is absolutely no benefit in these changes for newsagents. It is offensive for News Ltd to suggest otherwise.
Newsagents are white-hot with anger toward News Ltd about this move with Alpha. They feel “conned”, “ripped off”, “cheated”, “abused”. This is the issue of the moment among newsagents.
News makes a big deal in its announcement that the commission through NDD is 5% more than is usual for magazines through NDD. While that may be the case, it is less than newsagents have historically made from Alpha. Indeed, newsagent margin has been cut by News by 40%.
You’d expect us to be used to this abuse – building a product and having what we have built taken away by a supplier. For all of our complaints, however, we do not fight back. We feel helpless.
Publishers will do what they think is right for their businesses. Newsagents need to start to do the same.
Rethinking airfreight titles
We need to rethink airfreight titles because of the confusion they cause some customers. There is the issue of what appears to be fluctuating price – the airfreight edition costs significantly more. There is also the issue of sequence – take Model Engineers’ Workshop. Issue 148 (airfreight) came in three weeks ago. Yesterday, issues 147 and 149 (airfreight) came in. So, we are rethinking whether selling airfreight titles is appropriate for our shop. Based on questions I have been asked I suspect not. There is also the issue of the higher cost of theft – given the cover price. My concerns aside, however, I do know of newsagencies where it is appropriate.
Recycled magazine junk hurts newsagents
Express Publications sent out a bagged magazine today which is a waste of money and space. The feature title is an old copy of Caravan and Motorhome – two issues older than the one we currently sell. We have eight caravan titles and each struggles so why Express and Network Services would think we would want a ‘new’ (old) title is beyond me. Gotch would handle this better – I could say no prior to allocation.
I am early returning the junk today from Express – I don’t have the spare space for it.
Magazine short supply costs sales
The counter display we did for Good Taste magazine worked a treat – we sold ten copies in two days. The other ten copies we were short suppliers will not arrive until next week – too late for us. had NDD continued its Friday deliveries we would have suppoirted the sale through the weekend and sold double what we achieved in two days. Ugh!
Damaged chocolate devalues the magazine
The value of the free block of chocolate bagged with the latest issue of Australian Natural Health which came out yesterday has not survived the distribution process well. The packaging of every block Scraborough Fair organic blameless chocolate in my shop looks damaged. These giveaways are only valuable if they look good to the consumer in-store. We considered featuring this title but could not find any worthy of the prime space.
Magazine supply needs urgent adjustment
Magazine sales are down across the newsagency channel since the start of the year yet magazine distributors are yet to adjust supply except for major publisher titles with tightly managed print runs. Given that we are twelve weeks into 2009, I would have thought that the distributors would have had sufficient sales data with which to adjust allocations.
My concern is for titles outside the top 200, titles which, in most newsagencies, are borderline profitable. With magazine sales down in newsagencies, on average 12%, magazine distributors ought to be cutting supply and therefore not expecting newsagents to act as their bank until the economy (and magazine sales) improve.
While distributors will argue that they do adjust to reported sales volume, I am only seeing this with titles from ACP Magazines, Pacific Magazines and one or two other publishers. Supply for the majority of titles has not been adjusted to reflect sales data. While I am sure there are instances where adjustments are done to reflect slower sales,this is not widespread.
I’d like to see the major publishers engage with the distributors on this issue. Supply at the current level starves newsagents of cash and this challenges their ability to professionally serve the needs of the top selling titles. The major publishers could use their economic muscle to help newsagents and help themselves.
Through the work I do with the Tower Newsagent community I see data from many newsagencies each week – I know what I am talking about when it comes to current sales data and the worsening, by inaction on sales data, supply situation for many magazines. I’d be happy to work with suppliers and provide evidence to support my claims.
Newsagents can easily see the situation for themselves by printing a Magazine Sell Through Rates report. This will show the fall in performance – due to supply at 2008 levels – for many titles.
The magazine distributors can fix this situation easily by not using newsagents as their bank – by adjusting to reflect current sales data.
This is on my mind this morning because of another email from a newsagent in trouble. They are losing money on magazines and the main distributor at fault is making it hard for them to adjust supply.
ACCC proposes to grant collective bargaining to newsagents
Thanks to the efforts on the QNF, the ACCC has announced that it proposes to grant authorisation to collective bargaining arrangements designed to give newsagents a greater voice in the terms and conditions we receive from publishers and distributors of newspapers and magazines. The ACCC announcement quotes ACCC Chairman Graeme Samuel:
“The ACCC accepts that newsagents are generally small businesses that are negotiating with well resourced and experienced large suppliers such as News Limited or Fairfax,” ACCC Chairman, Mr Graeme Samuel, said today.
“In this context, collective bargaining is likely to lead to public benefits by addressing the imbalance in bargaining power between newsagents and the major publishers and distributors.”
This is timely given that new contracts are to be negotiated soon.
Why Melbourne Home Design and Living is a cheap title
Melbourne Home Design and Living is a magazine which without the generosity of newsagents would most likely not be published. We will carry this title on our shelves for six months, making $1.73 a copy. We need to sell three copies a month to cover costs. Being so thick we have to give it flat-stack space. There was none so something else had to go. Publishers like United Media Group and their magazine distributors do not realise that we have finite space in our shops. The sooner we negotiate commercial terms for access to our real-estate the better.
Melbourne Home Design and Living is primarily a vehicle for advertisers. Glancing through the latest issue, I suspect that this publisher will make more of their revenue from advertising than cover price than compared to a regular magazine. This explains the low cover price for such a thick title. That access to our channel is so cheap lets them get away with this.
The cover price is only about covering logistics and a crumb or two for newsagents. One day we will successfully say no to situations like this. Use of our assets has a cost yet we do not price them this way.
Do we need the People yearbook in Australia?
The People magazine yearbook has an expected shelf life of four months. It has a cover price of $17.95 and a potential margin for me of $4.48. I need to sell at least a copy a month just to pay for the real-estate it occupies. I still have the stock I received a week ago. If I don’t sell any by early April I will return the stock. The cost of the space and the risk of theft is too great.
I’d expect that People is sold into Australia by the US publisher on a firm sale basis. I can’t see local sales being counted for their US audit. If I am right then why can’t we purchase it firm sale and for a considerably better margin? The high price, too, ought to drive a better margin – because of the higher risk of theft. The current numbers don’t work.
The current situation which gives us little or no control over a title like this accessing our valuable network is unfair to newsagents.
The magazine distributors groan when they read a blog post like this but they soon forget about it because they know that newsagents do not have the guts to fix this problem.
Seattle PI newspaper closes, moves online
The Hearst Corporation has announced that the last edition of the Seattle Post-Intelligencer will be published today (Tuesday) US time. Read how the newspaper is covering the closure of its print edition here. They are maintaining the online brand – the closure is of the print edition only. Seattle is another major US city to move to one-newspaper status.
Newsagents know about and share in the costs of newspaper distribution. They are a reason that Australian publishers are not currently under the same pressure as US newspaper publishers.
Here in Australia, if a publisher does a home delivery deal, the newsagent carries a portion of the cost, the discount. In the US, my understanding is that the publisher carries the cost of subscription deals.
The move by the people at the Seattle Post-Intelligencer will, I suspect, be seen in the future as being smart and ahead of the game. Ad revenue is falling. Circulation is falling. Print distribution costs are increasing. Where print will end is clear to those with open eyes.
Express Publications abuses the newsagency channel
Express Publications, publisher of Xtreme Fords, Xtreme Holdens, Zoom, Street Commodores, Street Fords, Fast Fours, Fast Fours and a bunch of other titles, sends newsagents sealed bags of, often out of date, magazines on a never-ending merry-go-round of abuse of the channel.
Their bagged magazine packs suck newsagents of cash, labour and retail real-estate. The title facing out of the bag this month will come back in a bag as a freebie in a few months. Newsagents fund this gross inefficiency by paying to send back bags of magazines which have failed to sell, because their bags take more space than a usual magazine and because most of their titles are inefficient. In my view, Express Publications abuses small business newsagents.
The magazine distributor controls supply and permits these bagged heavy titles to have access to the newsagency channel. While I am sure they will claim to have sales data to support a claim that they are doing nothing wrong, they are not paying the bills newsagents pay, they do not assess the true economic benefit of the titles to a newsagency business. Many of us need a sell through of 60% or more of these titles within 30 days of on-sale just to break even. Anything less than this and we lose money.
The Express titles are in categories which are well satisfied with what I’d call real magazines – titles with fresh content and which are presented in a browser friendly format.
We ought to negotiate better terms around these titles, terms which reflect the additional costs associated with. That or we cut them altogether.
Scrapbooking Memories abuses newsagents
The new issue of Scrapbooking Memories went on-sale yesterday. The old issue is not due for return for some weeks. While I am sure between the folks at Express Publications and their distributor there will be excuses, these will not help newsagents. One excuse will be that we can early return – that work if you have a distributor who respects the newsagent and makes the process easy and certain.
Some days are extremely frustrating dealing with magazine issues in newsagencies. It is always the rats and mice titles, those outside the top 200, which cause the most grief and cost us the most time and cash.
Print at home newspapers
MediaNews Group in the US is planning on releasing a print at home personalised newspaper offer according to a report yesterday at PaidContent. Apparently, the company plans to sell or rent special printers with which customers would print personalised copies of the newspaper. The project focuses on cutting the most expensive costs from the current newspaper model – printing and distribution. The New York Times has more on this story. Of course, we have had this flexibility online for years.
Country Collections Diary to be recalled
Further to my blog post about the Country Collections Diary issue, Universal has arranged with Network to issue a recall this week. This is an excellent outcome. Hopefully, the cause of the problem will be uncovered.
Selling sport magazines
Sports magazines perform very differently between newsagencies from the data I see. Cricket magazines, for example, perform poorly in my Forest Hill shop while Golf, Soccer and AFL titles perform well. Since many are small volume titles, they need careful management at the distributor end. Unfortunately this is not always the case and newsagents end up over-serviced in one sport and under-serviced in another.
Since magazine distributors act in isolation, it is a challenge for them to adequately manage the category for newsagents. While it is impractical, sharing data, even category data, between distributors could lead to more equitable distribution for newsagents. Outside of the Trade Practices Act issues with this, I suspect that such sharing may not be in the commercial interests of the distributors.
Can newsagents sell the Country Collections Diary in March?
We received stock of the 2009 Country Collections Diary from Network Services in my newsagencies on Wednesday this week. I was surprised, so was the publisher, Universal Magazines, when I contacted them. While they have investigated and resolved the issue for my newsagencies, they have not, yet, addressed the issue in other newsagencies. I have encouraged Universal Magazines this week to:
- Publicly acknowledge the problem.
- Tell all newsagents to return the diary in their next returns cycle.
- Advise the distributor to immediately credit all stock pending reconciliation with newsagent returns.
- Communicate this to newsagents through various forms urgently.
I am not happy that I have been taken care of as this issue is not about my businesses. This issue is reflective of systemic behaviour by distributors and, to some extent, publishers. The solution needs to be systemic.
Too often, our suppliers fix problems for noisy newsagents yet continue the bad behaviour with the majority of newsagents who are not noisy.
Fixing the Country Collections Diary problem in my newsagencies does not help the channel and it is the channel I care about more than my three newsagencies.
This is why I am blogging about it this morning. Universal Magazines needs to understand that the distribution system which abused newsagents with supply of the diary this week is the problem. They need to urgently fix this so that I can trust commitments they have med to me in recent times.
UPDATE (9/3/09): Universal has gained agreement form Network to recall these diaries this week. This is an excelleent outcome.
Good news on Cycle Sport
Following my blog post earlier this week on Cycle Sport I was contacted by the Senior Account Manager at Network. The UK publisher last year moved to air freight, necessitating a price rise. This is to change back to sea freight with the issue on sale in May. This will bring the cover price down. With the move back to Sea Freight, Network is also reviewing newsagent allocations in pursuit of supply quantities closer to actual sales. It has been bumpy recently due to the switch from sea to air and associated cover price moves.
The cover price discrepancy between newsagents and the magshop online service will be resolved.
While it would be good to have not had the issues in the first place, I am pleased to know more of the back story and that a better outcome for newsagents is being pursued.
Best Buys magazine not such a good buy
This is not that good of a deal, certainly not a best buy. We received 15 copies of Sound & Image Best Buys Home Theatre on December 31, 2008. As of yesterday morning we had sold two copies. For our gross return of $4.47 we have paid out $14.00 for the retail real-estate the title has occupied for two months.
Even though Best Buys is not due for return for another two months we are returning it this week – we have to cut our losses.
While I support independent Australian publishers, a model which sees me and other newsagents so heavily investing in titles like this is unfair. Wolseley Media, the publisher, ought to consider offering more equitable terms to newsagents if they want to stay on our shelves.