newspaper home delivery

I am concerned about reports of newsagent requests to hand back newspaper home delivery runs being blocked by a publisher.  How can a publisher force a newsagent to continue offering a loss making service?

Publishers control most business levers in the newspaper home delivery service: cover price, the delivery fee charged by newsagents, additional revenue opportunities with the newspaper home delivery and cash flow. Publishers, on the other hand, make most of their money from advertising revenue.

I am aware of newsagents with runs which lose in excess of $200 a week.  This is not a new problem.  Indeed, publishers have been talking about this with newsagent associations for most of this decade.  To date, there has been little real progress from a newsagent perspective.

I am guessing that publishers block the handing back of some runs because they do not want to carry the loss.  Yes, let’s rely on the contract we have with these families and force them carry the loss.  They did sign the contract after all.

For the health of newspaper home delivery, something must give – especially in regional areas where merging home delivery runs is not practical. One solutions which I put to publishers years ago is to ensure fair compensation for the service offered. Newspaper subscribers have shown that they are prepared to pay a higher price for the newspaper on their doorstep yet publishers refuse to permit newsagents to do this.

Blocking newsagents from charging a fair price for an excellent service is a factor in some good newsagents exiting our channel.

Unless the issue of fair compensation for newspaper home delivery is resolved in the next few months, the world’s best newspaper home delivery model will break up.

Politicians played a role in creating the current situation, maybe they could play a role in helping thousands of families across the country achieve an equitable outcome.

I am told by  a newsagent that today’s Sunday Telegraph newspaper weighs 900 grams.  The July 2006 Nery report, an OH&S report commissioned by the ANF in 2006 and provided to News Limited that same year, recommends a newspaper weight of no greater than 600 grams.  On the basis of the recommendations in this report, News Limited would know that today’s newspaper would be considered by the report’s well qualified author to be unsafe to deliver.

The Sunday Telegraph bulks delivered to newsagencies weighed 16.2 kilograms.  This  is 1.2 kilograms above the recommended safe weight of packages.

Newsagents have an obligation to provide a safe and healthy environment for employees.   The only safe way to deal with today’s Sunday Telegraph would be to deliver in two bundles.  Such a move is impractical and uneconomic.  So, newsagents and employees deliver the overweight newspaper.

This problem needs to be addressed by publishers since they control the weight of newspapers.  Indeed, it should have been addressed in 2006 when the report was first presented.

This issue needs to be aired and debated and a solution found for the health of newsagents and their employees.  Unfortunately, you will not read about this in newspapers.

I understand that there are at least two new newspaper home delivery trials underway (or about to get underway) in Australia where flat pack delivery is being (or to be) trialled. Outside of the physical challenges of delivering newspapers flat is the challenge about who owns the bag.  The bag in which the paper is delivered is valuable in the hands of a smart business person.

Five years ago, the ownership of the bag, regardless of who paid for it, was non negotiable.  The newspaper publishers made it clear that they controlled the bag, what was printed on it and what was delivered inside the bag with the newspaper.

For entrepreneurial newsagents to make the most of the home delivery opportunity, they need to have mechanisms through which they can add value.  A flat pack bag is one such mechanism – the OH&S and time challenges of flat delivery notwithstanding.

Some newsagents meet in an ANF organised meeting in Adelaide today to discuss plans by Advertiser Newspapers to take over collection of payment for all News Limited product home deliveries in South Australia – subscription as well as direct to newsagent accounts.

While the meeting appears set to attract between 60 and 80 newsagents, I am disappointed that the ANF did not open the meeting for all newsagents.  Any association claiming to national suppliers and arms of the government to represent all newsagents cannot afford to turn its back on all newsagents.

The ANF has made mistakes in their handling of the Advertiser changes so far. They acted on poor advice from people who stood to gain from the changes.  They had not done due diligence before indicating support for the plan.

The ANF can remedy the situation by listening to newsagents and representing all views.  They can turn around their mistakes on this matter by serving newsagents ahead of worrying about how they may look.   I don’t mind that they made a mistake – as long as they deal with this and fix the situation and stop trying to control what newsagents say.

A newsagent in rural Australia reached agreement with a newspaper publisher around six months ago to hand back their newspaper home delivery run.  The publisher was unable to find anyone prepared to take on the run and has demanded the newsagent continue with the financially unviable run.  The newsagent feels helpless in the face of legal threats by the publisher.

The newsagent does not control the margin on products sold nor the delivery charges to customers for the service.  They also have little control over the costs of the business – labour, fuel and other costs.  The only part of the business they can influence is the number of customers to which they deliver.  However, the geography of the area means that additional customers would increase their losses.

I am sure this newsagent I have spoken with is not the only one in this situation.  The problem lies in the contracts where the publisher controls both sides of the transaction and does not provide the small business newsagent with the ability to operate in a business like way.  This is why my post from yesterday is important for newsagents.

Crikey.com runs the story today asking whether News Ltd is considering a free newspaper model.  While I don’t know whether this is under serious consideration within News, I do understand that they considering many changes as they assess their newspaper distribution model.

News Ltd is surveying newsagents, in some states at least, on home delivery costs including distance covered in delivering newspapers, time spent delivering newspapers, time spent wrapping newspapers, number of vehicles used and a bunch of other data about home delivery. This data has been gathered many times over recent years by newspaper publishers and industry associations. Excuse me for being cynical but this seems like more busy work for the newsagent.

News only has to look at the home delivery runs handed back by newsagents this year to determine the costs.  My understanding is that nationally, close to 200 newsagents have handed back their home delivery business.

Many newsagents want to continue to provide a home delivery service.  For this to be achieved, they need fair compensation for their efforts.

I wonder if the survey has anything to do with reported research into making News Ltd newspapers free?

The newspaper home delivery model in Australia is in crisis as more newsagents hand back home delivery runs to the publishers.  Crisis is not my word, it is what some publisher insiders call it along with many newsagents.

While publishers are responding by increasing internal services for managing these handed back home delivery rounds in-house, there appears to be inaction on addressing the cause.

Many small to mid-size independent newsagents are walking from hundreds of thousands of dollars of goodwill paid when they purchased the runs. It says something about the home delivery model whey they are prepared to write off this investment rather than continue to lose money.  To an outsider, this could be seen as a takeover without paying for the assets.

Publishers could stop the mass exit of home delivery by offering newsagents an equitable relationship. While this will cost significantly more than newsagents are paid today, it will cost less than the publishers providing the service in-house.

Offering fair compensation to newsagents for home delivery service would provide a basis for increasing subscriptions and through this increasing circulation. It all comes down to the will of the publishers and whether they want the current system to remain.

From numbers I have seen, home delivery fees need to double.

Back when I had home delivery in my newsagency I know customers would pay a higher fee – they are happy for the convenience of the service. Home delivery newsagents I have spoken with recently tell me the same thing. I wish that publishers had the guts to test this.

The financial challenge for newsagents of home delivery is not new.  Newsagent associations and publishers know that.  There have been various studies, the most comprehensive by Fairfax working with the ANF and KPMG in 2004.  The net result of the various studies, workshops and meetings on the topic is that more newsagents than ever are walking away from newspaper home delivery.