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Newspaper distribution

New circ. system for News coming to Victoria

Following our successful implementation of News Ltd’s new circulation and subscriptions solution to Northern Territory News in July and New South Wales last year, the company is now preparing to implement at The Herald Weekly Times and The Geelong Advertiser in Victoria during November. This is a good move as it brings subscription handling a step closer t a national solution.

Newsagents will need to have the current release of their software to be able to work with this new subscriptions system.

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Newsagency management

Advice for newsagents on handling aspects of T020

Last week I sent a letter to all newsagents (through my newsagency software company) with information on handling some of the data merge and management aspects of T2020.  It’ starts…

HOW NEWSAGENCY SOFTWARE HELPS NEWSAGENTS HANDLE T2020

Tower Systems has been helping newsagents merge distribution businesses for many years. This, and our work with South Australian newsagents through the Migration Project, the forerunner to T2020, has given us experience vital to helping newsagents with T2020.

Just as T2020 is about rationalising newspaper distribution businesses, it is also about driving efficiency at a range of points in the newsagency channel.  We have already acquired the NewsPOS newsagency software business.  Another is in negotiation.

Tower Systems is committed, I am committed, to delivering newsagents software to meet T2020 and other industry standards, providing a technology platform for driving newsagency business efficiency and profitability.

We are also committed to helping retail newsagents navigate change and create more valuable retail businesses.

We serve distribution businesses today delivering in excess of 10,000 newspapers and serving more than 160 sub agents … and have done for many years.

We can and will help newsagents step up to handling scale.

Yes, there are challenges in moving from a business with a few hundred customers to being part of a business with, maybe, 10,000 customers. Good technology is vital.  We have people on our team and customers in our community who will help you face T2020.

Click here to access a copy of the letter.  I wrote it to educate newsagents as well as to counter some mis information about the work involved in merging distribution data.

T2020 is about driving operational efficiency in pursuit of business performance. Investing time to get the optimum performance of delivery runs is time well invested.

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Newspaper distribution

Preparing advice on T2020

With several newsagents successfully building distribution businesses of a scale equal to that foreshadowed by News Limited’s T2020 plans, there is good knowledge out in the marketplace to help newsagents.

My newsagency software company Tower Systems has been directly involved many of these amalgamations.  I have asked the Tower team to prepare advice on the practicalities of amalgamating newspaper distribution territories, particularly the management of the data involved and how this is done to serve the needs of News and the needs of the new distribution business.

I hope to publish something in the next few days to quell the in some quarters that what News is asking of newsagents is not technically possible. It is possible. Others have done it already and I’ll explain how.

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Newspaper distribution

Some ignorant comments on newspaper distribution consolidation

Too many people, not just newsagents, are jumping at shadows in relation to the newspaper distribution model News Limited has announced it will trial in Brisbane this year.

Rather than look at the evidence of what has been achieved in managing consolidated newspaper distribution territories in a range of regions in Victoria, the achievements of the migration project in SA and the information provided by News, some people prefer to put about inaccurate commentary.

I know from my work with the newsagency software company I own, Tower Systems (serving 1,800 newsagents), there are newsagents who have consolidated to the scale targeted in the News plans.  The software handles it, management embraces it and newsagents from separate territories join in.

My own assessment as a distribution newsagent eight years ago was that scale was vital. This is why I put together the Circulation Fulfilment Australia business plan.  I was not alone. VANA shortly thereafter hosted a one day forum to explore and discuss newspaper distribution models.  I spoke and several newsagents who were already involved on consolidation spoke.

Details of how to and why to consolidate was out there for newsagents to see. the reasons for consolidation were also in the public domain.

The result is that more newsagents consolidated.  I’ve been involved with most through my software company.

My point here is that the target News has announced and the need to consolidate is not new. The marketplace itself was aware from around seven years ago.

While a target of 10,000 newspapers delivered by a distribution business will be too big in some situations, in suburban areas there are live examples of it working for consumers, newsagents and publishers today.  There are other valid questions being asked which need to be answered.  Drawing conclusions without answers is inappropriate right now.

I am concerned that the agendas of some are driving inaccurate debate and commentary. In a couple of cases these are people who failed to act years ago. It’s not the channel’s job to move all newsagents together – such is the nature of a competitive marketplace.

As I have noted, I appreciate the concern about change and the challenge of navigating change. It will be important to watch what happens over the next six months and to hold News to account for being transparent through the process.

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Newspaper distribution

Newsagents need to trust that they can build bigger profitable distribution businesses

Barack Obama was elected the President of the United Sates by a surge of hope for change on the back of a simple catch cry: Yes we can.

While his effectiveness in leading change and achieving goals from the wave of hope will be determined in the election in November this year, his campaign was effective in getting many Americans to believe in themselves again.  I am certain that the campaign in itself led to individuals and groups embracing and leveraging change.

While some of us have spoken with and to newsagents about change for many years, the detail of the announcement from News Limited this year has made embracing change an imperative for all newsagents. I see it as a catalyst for better business planning, faster business decisions and better quality newsagency management.

I have spoken to many newsagents this week who feel that they can’t step from a business delivering 500 or so newspapers a day into being part of a business delivering 10,000 or more newspapers a day.  While it does seem like a big leap, there are newsagents who have made the transition and many of these operators are happy to share their experiences with their colleagues.

There are newsagents who have merged runs to form a larger business. There are others who have acquired the runs of others to create their bigger business.

The core skills are business planning, operational process management and a focus on excellent customer service.

These are newsagents who have lived the transition already by chasing it for themselves. While there have been challenges, each of these have previous experience which can be tapped into by those yet to make a move.

This is a time for newsagents to talk with each other … to explore possible partnerships or to learn from experiences of others.

Newsagents large and small have demonstrated an extraordinary capacity for hard work and working through change. The changes ahead in newspaper distribution can be embraced by the channel. I am sure of that.

Newsagents outside the three regions in Queensland that are part of the next phase should be talking with colleagues (including those who have consolidated ahead of the change) and considering business plans of their own. This should be happening now so that when their time comes to actually make a one they have considered all available scenarios.

Our channel has its  deniers and procrastinators. Look at those who were shocked by the News announcement this week. The reality is that it had been forecast long ago and discussed many times publicly following first being forecast.

Most of all right now, newsagents need to believe in themselves … that they can navigate the changes ahead and take on larger distribution businesses if that is what they want.

I can be reached on 0418 321 338 for any who want to discuss the changes.

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Newsagency management

Newsagents need to take time to digest newspaper distribution changes details

Newsagents are understandably concerned about the impact of the newspaper distribution changes released at 10am today. Their concerns have been heightened by poor communication about the coming changes over the last two years … poor communication from News and state based newsagent associations.

Today’s announcement is an opportunity to start again, to reset if you will. It is the first time newsagents have had direct access to considerable information from News Limited on their plans.

I urge newsagents to take their time to read all of the material and consider their own business goals.

While News will accept newsagents being retailers and distributors, newsagents do need to make a decision to be one or the other in my view – in the city and major regional locations at least.  In the country it’s a different story.  This is where the News approach will provide information to help determine the best approach further away from large population centres.

I have read the News Limited documents. Regulars here would know I support distribution consolidation.  Check out a proposal I outlined in 2005: here.

The restructuring of distribution has been long overdue.  Newsagent data, association data and publisher data for close to ten years has shown that this is necessary.

While News could have solved the issue by giving existing newsagents more money that would not have been a solution. Indeed, it would have rewarded the inefficient system we, all of us involved for many decades, have allowed to exist.

There are plenty of newsagents who saw this coming and started consolidating years ago, some have more than 10,000 deliveries today. Kudos to their entrepreneurship.  This is business pure and simple.

So, something had to give.  News looking at the print model made the decision and has now announced a plan.  This plan will proceed.  Yes, it makes it clear that existing territories have no goodwill value. It also makes it clear that new territories will only have goodwill value in the context of a five year agreement.

This is a new paradigm for newsagents.  There has been enough information in the marketplace for the last few years to see this coming.

I am worried that too many will get caught in the loss of goodwill for the current business, the need to bid for a territory and or the need to run a distribution business of a scale fare greater than the traditional newsagency distribution business today.  Worrying about these things would be a waste of time.

Newsagent attention and association attention should be focused on the how and not the what and why.

As this is a national issue, the ANF ought to establish a national office staffed with an accountant skilled in business planning, a business planner / manager / mentor and an overall project manager as leader.  This team should be put at the disposal of newsagents first in the three Queensland regions and then elsewhere as News rolls the changes out.  I have shared ideas with the ANF on how this could be partially funded.

Newsagents should assist in funding the ANF establishing this national office tasked with running this issue on behalf of newsagents and providing advice, assistance and support for newsagents directly affected.  The states should also support it and stop trying to use this issue at a state level.

Why is this not a state issue? News is moving nationally.  For the first time the company is operating outside its traditional silos. If News can operate nationally the only option for newsagents is to take a national approach.

By establishing a national office newsagents can deliver organisational efficiency to match the operational efficiency News is looking to achieve through the distribution changes. Yes, the News announcement today is as much an opportunity for how newsagents organise their own representation as it is about restructuring newspaper distribution.

I urge newsagents to read all the documents and to consider the information in the context of a business plan.

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Newsagency management

A big day for newsagents and newspaper distribution in Australia

Today at 10am, newsagents will get to read more about changes in the newspaper distribution model. At 10am, News Limited announces the changes being delivered through the T2020 project. Click here to see the FAQs document from News.

While the changes most immediately affect retail and distribution newsagents in three regions in Queensland, newsagents in other states, except for South Australia, will eventually be affected.

What will be announced today by News Limited are the goals and processes of the restructure of newspaper distribution. Newsagents will read about the target distribution territory size and the process involved in expressing interest in and ultimately bidding for the right to handle newspaper distribution in a territory.

The new newspaper distribution remuneration model – fee for service – along with the new model based around scale (and operational efficiency) represents the most significant change in newspaper distribution in living memory. While we can argue about the time this has taken and complain about the misinformation along the way, we need to focus on the announcement itself for this will be what really matters to newsagents.

News Limited will lay out a process through which distribution newsagents can engage in a contract which provides certainty for a fixed period of time. At the heart of the contract is the desire for newsagents to have a business model which enables them to be profitable.  With so many newsagents operating unprofitable distribution businesses, a newsagent profit focused goal from a newspaper publisher is welcome.

The newsagents who will be the first affected by the changes, those in the three areas in Queensland, have been briefed in a series of face to face meetings with News Limited executives.  This in itself is a sign of good faith by the company – having senior management face to face in newsagencies talking with newsagents directly affected.  The approach News is taking in these trial regions is one of active consultation with a view to tweaking the process based on feedback.

The approach News is taking reflects learnings from what the company delivered in South Australia a few years ago.

Newspaper distribution restructure activity beyond the three Queensland regions will not to be looked at until 2013. While this will frustrate some, it’s a good move as it enables thorough analysis of the Queensland trials.

I have been briefed on the changes as have the industry associations.  The process makes sense to me. The goals are good for newsagents and necessary for News.  Yes, some newsagents will be unhappy at losing their distribution businesses. This has been in prospect for several years now. Those with a view to the future have had an opportunity to sell up.

There will be some who paid too much to purchase their distribution businesses. I wish there was an easy answer here.  There is not other than to wonder what advise was provided at the time of purchase and what due diligence was undertaken.

Today is the beginning of a new era. I urge newsagents to engage with the process and to consider carefully the business decisions they will need to make.

The most important role newsagent associations can play in all this is to be an association, working with newsagents on business plans, budgeting and the tender process. I say this because I worry than some may prefer to play a commercial role while neglecting their real role.

From a personal perspective, through my newsagency software company I’ve been involved with many territory consolidations from small to the largest in Australia. As an indication of what I see for the future, I have signed off a significant investment by my company in software enhancements to get to the next level of newspaper distribution management facilities newsagents will need in 2013 and beyond. These changes will be delivered to newsagents at no cost.

The Australian has the story on page 28 today.

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Newsagency challenges

The Age cover price increasing, newsagent compensation changing

Victorian newsagents received notification last week of cover price changes coming for The Age and significant changes in the structure and quantum of fees paid to distribution newsagents for home delivery.  These changes are part of the significant changes being lead by Fairfax as it restructures its business in response to changes market conditions.

The changes coming in Victoria are similar to but not identical to the changes brought about recently in NSW. It is the difference between the approach in the two states which is challenging implementation inVictoria.

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Newspaper distribution

News Ltd outlines timing for newsagents on newspaper distribution

News Limited yesterday provided newsagents with more details of timing and clarity around process for changes to the distribution of newspapers up and down the Eastern Seaboard.

This latest statement confirms what was discussed here last week and makes it clear that the company is committed to newsagents and will focus on negotiating commercially viable arrangements for the distribution of newspapers.

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Newspaper distribution

News International threatens to stop supply to a newsagent over cover price dispute

The National Federation of Retail Newsagents reports that News International has threatened to stop supply to an independent newsagent who added a 10p surcharge to the price of the weekend Sun to maintain margin after News cut the price of the Saturday newspaper in advance of the launch of the Sunday Sun.

Since February this year when News International cut the price of its Saturday paper to 50p to fund its new Sunday edition, also priced at just 50p, newsagent and NFRN member Walter Bush of Baginton Village Stores, Baginton near Coventry has added a 10p surcharge to both newspapers to ensure that his margin is maintained.

But when News International got wind of his action and despite a Trading Standards official giving it a clean bill of health, the newspaper publisher told the retailer that if he continued to persist, his supplies of the Sun would be stopped.

I support Walter Bush and the stand that he has taken to set the price of the products he sells. This is his legal right. No supplier should penalise him or his business in any way while he is acting lawfully with their products.

News also came under fire when it increased the cover price of the Sunday Times by 30p and cut newsagent margin from 23.5% to 21%.

Newsagents are also in dispute with the News distribution arm over the handling of deposits which other distributors pay after a period of satisfactory trading – News holds the deposit until the business is sold.

While newsagents in Australia navigate the challenges, and opportunities, of change here, spare a thought for our colleagues in the UK and the threats they face in what is clearly a brutal marketplace.

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Newsagent suppliers

News and Fairfax provide newsagents with clarity around newspaper distribution

I was fortunate to be at the NANA Newsagent of the Year awards last night in Sydney. The highlight of the night was a panel discussion involving Nick Chan (CEO of Pacific Magazines), Greg Hywood (CEO of Fairfax), Jerry Harris (Managing Director, Group Newspapers and Digital Products), Russell Parker (Joint CEO Hallmark International) and Yasmin King NSW Small Business Commissioner).

It was the information shared by Jerry Harris and Greg Hywood which was most timely and interesting.  They each reiterated what their respective companies had announced around two weeks ago.

Jerry Harris explained that News will redraw distribution territories and invite newsagents to tender for this. One newsagent challenged this from the floor of the event, explaining that he felt he was being “shafted”.  Jerry Harris copped this on the chin and explained why News needed to control the drawing of the distribution map and why they were proceeding with newsagents tendering.

News will start in QLD in the next couple of months and then move onto NSW and VIC.

News and Fairfax made the point that they need newsagents to make money from home delivery. They acknowledged that newsagents have struggled to do this in the past.  I was thrilled to hear them make both points. Acknowledging that many newsagents don’t have profitable runs today is an acknowledgement which has been denied for too long. Committing to a structure through which newsagents are profitable in newspaper distribution is vital.

While associations have said that they want to control the distribution map, this will not happen and was never going to happen. The publishers control the newspapers and own newspaper subscribers. They will assert control over the distribution territories to drive business efficiency.

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Newspaper distribution

Possible GST claim back for newsagents from News Limited subscription credits

Chris Green of QNF Sales has uncovered an anomaly in the handling of GST of newspaper subscriptions which could have seen newsagent under claim GST. Following thorough research Chris contacted News Ltd and they confirmed that subscription credits to newsagents do not have any GST applied.  As Chris has published…

We are now fairly certain, that due to the GST treatment of subscription credits, and subject to how Newsagents may be book-keeping their News Ltd statements; it is likely Newsagents who have customers subscribe directly to News Ltd; could be under-claiming their entitled GST.

Click here to see the details on the possible GST claim back opportunity for newsagents.  For more on the excellent work on behalf of newsagents by Chris and QNF sales, click here.

The implications for newsagents receiving subscription credits could be considerable. After allowing for appropriate adjustments, newsagents could be entitled to credits reaching thousands of dollars – going back to 2006. Beyond the possible tax benefits, there could be implications for newsagents and their banking relationships as the research could result in some businesses being more successful on paper than they may have looked.

The work done by Chris for the newsagency channel is valuable.  That he is sharing it widely ought to be appreciated by all newsagents. His research has been thorough and newsagents already are appreciating the results … I have spoken to a couple of are set to benefit to the tune of thousands of dollars.

Newsagents can contact Chris at Newsagencies For Sale Pty Ltd trading as QNF Sales by email at: cgreen@qnfsales.com.au.

There are plenty of newsagency brokers who claim to support newsagents. Few do this type of work which genuinely benefits the channel.

If you are a distribution newsagent and you have customers on News Limited subscriptions, check out your handling of GST today.

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Newsagency management

Decision on splitting News Corp to come tomorrow

News Corp. will announce its decision tomorrow on whether to split publishing and entertainment into two companies according to The Australian. The Wall Street Journal also has more on this.

Paul Barry has written ann interesting piece on the potential split for The Power Index. Barry speculates on whether Australian management knew of the plans to split the business:

So did Williams know this split was coming? It seems not. The word in Holt Street is he was summoned to New York over the weekend by Rupert. And the hacks are speculating that he was called there to be given the news.

We’d love to be a fly on the wall in that conversation. How disappointed would Williams be, having crafted his big restructure, to be told he’ll have to go back to the drawing board.

On the other hand, if Williams knew this was in the wind, it might explain why he was so reluctant to put a number on the jobs that could go when News Ltd, like Fairfax, moves to an 18 hour-a-day newsroom, digital-first newsroom.

But either way, those numbers are likely to look a lot larger than they did a week ago.

This matters to newsagents because of Williams’ involvement in changes to distribution arrangements for newspapers.

The turmoil is a timely reminder to newsagents to build businesses which do not rely on a single supplier for a significant portion of your revenue base.

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Newspaper distribution

Fairfax prepares for a digital only future. Are newsagents prepared?

Newspaper publisher Fairfax announced major changes to its operations today under the heading of FAIRFAX OF THE FUTURE.

The changes prepare the company for a digital only model.  Indeed, on page 17 of the investor briefing document, Fairfax acknowledges that the move to digital only is inevitable, tying remaining in print to revenue. With print revenues in steady decline for years, there can only be one end point, an exit from print.

Click on the image to see the point made on page 16 of the investor briefing. See the pie chart – 34% of the company’s cost base goes to production and distribution. The document notes these as: costs not required in a digital only model.

Every part of the announcement from Fairfax today prepares the company for a reduction and, possibly, ultimate complete retreat from print. The move of The Age and SMH to compact formats (great move and long overdue by the way), the introduction of digital subscriptions (somewhat overdue for their quality journalism offer), the closure of the Chullora and Tullamarine print sites and their digital-first editorial model make the end game clear for Fairfax … and for newsagents.

Fairfax has intensified its focus on cost cutting, targeting annualised savings of $235 million by 2015. It’s in a race again market forces as evidenced in the chart on page 12 of the investor briefing showing the Fairfax audience by media type … chilling stuff.

I suspect that market forces will impact this plan and see the company act on at least one or more of its daily mastheads either shedding some days from the print roster or move to a digital only platform before 2015. Circulation continues to decline for all but a couple of daily newspapers in Australia and this is putting pressure on advertising revenue. Page 17 of the investor briefing makes it clear Fairfax will move to a digital only model if print advertising and circulation revenue declines materially. I think this is happening.

A day by day analysis of the return achieved for The Age newspaper, for example, would, I suspect, reveal at least three days of the week to be loss making: Monday, Tuesday and Friday. I’d expect Wednesday to be doing okay because of classifieds (but only just as advertising is falling away rapidly), Thursday to be strong due to the Green Guide, Saturday to be strong due to advertising and Sunday to be strong due to a good weekend read.

If my assumptions (above) are right, we could (should) see The Age cut days. A number of seven day newspapers in the US have done this. Equally, Fairfax could switch from seven days to digital only of the cost savings of eliminating all production and distribution costs justified the move.  I think we are more likely to see days cut in advance of a complete move – but a switch to digital only is inevitable.

I’d note that the news itself will most likely result in fewer people reading the print products as it puts migration to digital more top of mind.

The Fairfax moves are focused solely on their share price. They should not come as a surprise to anyone, especially not to newsagents. However, I think there will be newsagents who are shocked by the Fairfax moves.

Some state based newsagent associations have spent and continue to spend more time and effort on print distribution issues and plans than on retail yet the future of our channel depends more on retail. I wonder when they will realise their mistake.

While there is value in distribution newsagents consolidating in pursuit of efficiencies, there is even greater value in developing a newsagency model in a world where most newspapers in Australia are replaced by digital only platforms. We know from Fairfax and News that distribution costs are a key focus. There is no up side for newsagents from this focus. What little control newsagents had to drive their distribution businesses is fading. But this is not news.  If only channel leaders realised this and engaged with their constituency more proactively. They should have been spending more time representing the whole channel and not just distribution.

Fairfax is doing what it needs to do for its survival. Its needs do not match the needs of newsagents. Newsagents need to act on what is right for them. In my case, the decision to get out of distribution years ago feels more right every day.

Are newsagents focused on their future? Some are but not enough of them. Hopefully, today’s announcement from Fairfax will be a wake-up call for those with their heads in the sand.

While I feel for the 1,900 jobs Fairfax will shed, many more will be shed in newsagencies as digital replaces print for new consumption. This is a moment of fundamental restructuring which cannot be blamed on anyone. We have seen it coming for a while. Maybe some of those losing their jobs will not engage with more flexible and content driven online platforms.

News Limited is next up to the microphone with their announcement.

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newsagency of the future

Misleading tweets from The Age

While it was terrific to see The Age using Twitter to promote their Good Bar Guide, a disconnect in their distribution system saw not all newsagents with the title. Shoppers see newsagents as newsagents. They don’t know if they are retail only and relying on a commercial distribution newsagent to support their publisher supplier by placing a product in the newsagent outlets they supply.

I did not get the Good Bar Guid yet shoppers see my business as a newsagency.

I wish for a distribution system which enables me to access supply of newspaper related product from elsewhere. I have an account with IPS, why not use IPS for this type of title?

A distribution newsagent making petty decisions in an effort to block or harm my business also lets down their supplier and consumers. Dumb.

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Newspaper distribution
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