magazine distribution

In October 29, 2008 I asked Is it time to Kill off Universal Magazines?  I wrote this in frustration about my inability to control the supply of product from Universal Magazines. After years of getting nowhere with suppliers on achieving an equitable supply arrangement for I felt I had to strike out and bring the supply model issue to a head. That morning, Universal was on my mind because of what I saw in my shop.

A couple of weeks ago I met with senior executives of Universal.  This was a good business discussion around the challenges from both sides and how the magazine distribution model is a real barrier to publishers and to newsagents.

In the months since the initial blog post, Universal executives have dug deep into the magazine supply model to understand why I and other newsagents who commenter to the post were so angry. The result of their investigation and reflection is improvements to processes and around the supply of their titles which did not exist last year.

From my own face to face discussions with the folks at Universal I also understand more about their goals. Interestingly, we agree on many discussion points. It is the magazine supply model between their business and my newsagency (and newsagencies around Australia) which is the barrier to an idyllic relationship.
magazine distributors lept to the defence of Universal quickly in October last year. The issue underscoring the blog post was their performance and decisions they make and not so much about Universal – it is breathtaking that they did not out their role in the problems at the time.

Hopefully, over the next few months, progress will be made on the model so that independent publishers and Australian newsagents can achieve a more mutually beneficial and rewarding relationship.

Following some discussion here, I have been taking more notice of titles I get in one newsagency and not another.  Take Green Power Today.  Had I known this was available I might have put my hand up to give it a go because I like the idea of an environmental segment.   Gotch is good at letting us know about new titles.  The other two magazine distributors are not so good.  Maybe more visibility of what is available would see newsagents being proactive at building segments and categories or magazines.  The challenge with that approach that it would need to come with the ability to more easily remove (permanently) titles from distribution and there is the problem for the distributors.

As for Green Power Today, while I would have liked to try the title, please don’t send it NDD.

The Complete Aussie Guide to Camping did not sell in our newsagency. We received eight copies at the end of November and returned all eight this week, three weeks earlier than requested by the distributor. By the time we are credited for the unsold stock our cash will have been taken for two months for this title. The distributor has access to our cash and maybe the publisher. This is an excellent example of how small business newsagents are used as banks. When we try and mitigate our losses, some distributors step in and deny us the right to reduce supply or cut titles altogether.

We need an arrangement where fringe titles such as this camping guide are paid only on a scanned sales basis. This means newsagents are not used as banks, do not have to fund theft and have more time and resources to act as retailers.

Our key asset for magazine publishers is our retail network. If only we controlled this as an asset and priced access accordingly.

I was disappointed to see Kochie’s 101 Ways to Survive 2009 on the shelf of one of my newsagencies. Kochie what are you thinking? I can get this information online for free. You’ve sent it to newsagents with a thirteen week on-sale period. We will lose money on this unless it sells out in the first couple of weeks. That’s not small business friendly Kochie.  The publisher will say the distributor controls supply quantity.  The distributor will say they have a contract to distribute what the publisher prints.  That is how these discussions always go.  In the meantime, newsagents have the stock on their shelves and they fund the title.

This publication is a book, not a magazine – we should be on book margin. Given the long on-sale period we should not be billed until the last week.  Like the John Tickell book, Kochie’s 101 Ways to Survive 2009 unfairly relies on newsagent financial support.

The new issue of Donna Hay magazine arrived in newsagencies yesterday but the old issue is not due to come off the shelves for another month. While the publisher will say that it may sell, they don’t pay the retail rent or the labour to manage the additional stock. Delaying the return a month is a cash grab from which I suspect the publisher and distributor benefit. The process of managing a new issue of a magazine ought to be straightforward – the new issue goes out and the old issue is returned. To require newsagents to hold an old issue for a month after a new issue arrives is an unfair financial impost on small business newsagents.

If a publisher believes that having an old issue on the shelf next to a current issue will generate sales then they should back their judgement and not bill newsagents until the old unsold stock is due to come off the shelf.  In other words, they should take the risk with their money and not rely on newsagents to be their bank.

There are several battles being waged at present around which businesses can get direct supply of magazines.  I know of newsagencies selling more than $8,000 in magazines a week which are being denied direct supply access while a small supermarket nearby selling considerably less is given a direct account without challenge.

There are some who would say that the distribution newsagent must be protected.  These same people do not fight when a new supermarket or convenience outlet opens and gets a direct account – because newsagents lost that fight years ago.  They only fight when a newsagent (subagent to them) wants to go direct.  They do this because the magazine distributors will probably agree with them – the individual newsagent wanting a direect account is not as powerful as, say, IGA, Coles or Woolworths.

In situations of which I am aware right now, goot retail newsagents are being blocked from accessing direct supply of magazines.  This will encourage them to reduce focus on magazines.  Publishers will be the losers.  I wonder if they know how magazine distributors are managing the representation of their product in the changing newsagency channel.

I agree it would be difficult to let go of revenue, especially from a business you have helped grow.  However, competition policy is on the side of the consumer.

Behaviour I have seen recently shows that some playing in this area do not understand competition law.

Magazine publishers, already reeling from a slowdown in advertising and circulation, have gotten slapped with word that a major distribution company is about to jack up the rates it charges to deliver issues to retailers.

Anderson News earlier this week informed publishers that it would impose a 7-cent charge for each copy of a magazine that it delivers to stores, and warned that any publisher that refuses to pay the fee could no longer count on Anderson to distribute its magazines.

Go to the New York Post for more on this story.  While the magazine distribution model is different here in Australia, I’d expect distributors to be looking at revenue opportunities from publishers.  They are chasing revenue from newsagents through (sometimes but not always) distributing more product they know will not sell.  One distributor is working on a book model.  Another distributor has started promoting potato chips.

Be sure to read the whole Post article, especially about returns and retailers paying only for scanned sales.

Newsagents need to look seriously at their situation around magazines.  Making money only off of what sells does not work for many titles.  Our network is our asset and unless we start to price access to that others will make even more from this.

New Home Trends and the various other Trend titles are poor performers.  Not only in my newsagencies but others I have seen recently.  They have a long shelf life (five months for New Home) and, overall, a poor sell-through (25% or less).  Despite the poor sell-through, the distributor (NDD) continues to send product.  While the NDD response will be that I can early-return the product, their internal systems should have alerted them that I will be lucky to sell one copy let alone all they sent me.  I either let them take my cash for product which will not sell or fund the cost of early return.  This is a perfect example of where we should rip off the cover and only send this back – to ensure that this title does not do the cycle further and cost more newsagents.

If NDD cannot sort these problems out, more newsagents will shut their accounts with the company.  A better outcome would be fair supply based on sales data. 

This problem matters to all magazine publishers in Australia because the money and time wasted on these Trend and similar titles (Universal Magazines) which are oversupplied and with a long shelf life is money and time not available for more productive titles.

I am happy to carry the Trend titles but only on equitable terms.  The current terms are anything but.

One day publishers will wonder why newsagents either shut or dramatically reduced magazine space.  The problem I have described in the blog post, and many others like it, will be a key reason. 

We have not sold a single copy of Groovy Grandmas since it launched six weeks ago.  As I blogged at the time, we received 19 copies.  We early returned the stock today.  Besides being out of pocket for a time for the cost of the initial stock, we have to pay freight to send this now dead stock back.  This is a considerable impost on small business newsagents. 

While I understand that the publisher has risked tens of thousands of dollars, maybe more, in the launch of Groovy Grandmas, that is their choice.  Newsagents have not been given a choice as to whether they want to invest in a new title.  The distributor is not out of pocket in such a launch.  Only the publisher, who had a choice, and newsagents, who had no say in whether to invest.