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newspaper home delivery

Noise complaint threatens newsagency with closure

I received an email over the weekend from Jennifer Round of Gerroa Newsagency, Post Office and General Store – a coastal town located around 90 minutes from Sydney. The local council says it will fine them $10,000 every time there is a complaint about the noise associated with wrapping newspapers early in the morning.  Jennifer’s own words best describe the situation:

The business and residence is combined with a vacant block to one side and a property to the other with a cliff at the back. The house next-door to us is used during holiday periods.

In February 2007 a neighbouring newsagent gave up there newspaper territory and we took it on and unlike others we are actually making money from it.

However, the increase in work re wrapping papers, trucks arriving in the night, vehicles in and out of the driveway in the we hours have lead to a neighbour lodging a noise complaint. We were a little annoyed since the complaint is from a semi part time neighbour who never came in and saw us just filled a complaint with the council whom are now threatening to issue us with fines if we do not cease operations.

We are in the process of tying to reduce the noise as best we can. We have striped the garage and have lined the walls and roof with insulation have relined the walls with noise reduction plasterboard. Have laid rubber mates on the floor and will laid some on the walls in an effort to reduce the noise of the wrapping machine which seems to be the issue of the complaint.

We are after other ideas we have contacted an acoustic engineer whom has quoted us $10,000 in improvements however they aren’t able to say that after all that work it will make too much of a difference.

We do not have anywhere else to wrap the papers. We have looked at other locations in neighbouring towns but still have the same issues we have at the moment commercial/industrial properties surrounded by residential properties. It would also be unprofitable to move.

We are wondering if any other Newsagency have had issues with noise complaints from neighbours, businesses and alike. Moreover, if they have how have they managed it.

If we are not able to work something out it looks like our doors will be closing not because of hard economically times but because of our local council who are more interested in fining us up to $10,000 for each complaint than finding a solution that will benefit the community as a whole.

As Jennifer says, if you have suggestions, please post comments here.

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Newsagency challenges

Delivering a good laugh with the newspapers

Robyn Ritchie from newsXpress Whittlesea this morning delivered the newspapers for the first time.  Their regular driver has relocated following the loss of his home in the bushfires.  Robyn and one of her girlfriends hit the road early and tried their hand at the whole newspaper throwing thing.  She said the only complaint they are likely to get is about the noise they made as they laughed their way through the round.

I bet lots of newsagents can recall the first time they threw a newspaper.  It’s a good thing to reminisce about.  Up at Whittlesea things are a bit different thanks to the considerable challenges brought about by the fires.  It is inspiring that Robyn and Neil are finding some laughter amid those challenges.

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newspaper home delivery

What newspapers will not report about their handling of small business newsagents

This is a story you will not read in your newspaper.  It is about how some newpspaper publishers treat small family businesses.

Years ago, when a publisher ran a home delivery deal, they would pay newsagents what the margin would if the paper was sold at full price. As I wrote here last year, I know of newsagents getting less than half to deliver to customers who have accepted deep discount deals. To go from a slightly profitable customer relationship to one which is loss making because a supplier decides to discount is another reason more newsagents are walking away from home delivery.

So, what is the answer?

I’d like to think that if I were a newspaper publisher I would be investing in a key asset such as the newsagency channel rather than starving it.
Publishers can stop newsagents handing back runs by:

  • Providing fair rewards for what publishers say is the best newspaper delivery system in the world.
  • Provide newsagents with mechanisms which respect them as business people and not as process workers.
  • Taking total responsibility for subscription deals rather than forcing newsagents to share the cost.
  • Giving the service more visibility – help newsagents be proud of what the de for the publishers and newspaper subscribers.

Newspaper home delivery is unlikely to grow. That does not mean that those providing the service ought to be treated with the contempt I see in some states today.

When I left the Board at the end of 2004, the ANF had the data necessary to guide newsagents to make real progress on representation around the delivery fee matter.  It is clear that this opportunity was squandered.  While there has been some noise over the last week, for many it is too late.

My proposal in 2004 was that newsagents call for a Productivity Commission review of the home delivery model, as review of the 1999 deregulation if you like.  Such a post deregulation review is not unusual and would be good government in action.  Unfortunately, I was unable to muster support from newsagent repreentatives to push for such an inquiry.

The situation today is serious.  The publishers know it.  Some are responding by investing in infrastructure to take over delivery.  This is not the answer as each territory handed back is another (often meagre) income taken from a family.

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newspaper home delivery

The cost benefit of quitting paper for digital for newpapers

Nicholas Carlson writing at Silicon Alley Insider asks whether the New York Times would be better off giving all subscribers an Amazon Kindle to receive the newspaper electronically rather than a print edition.  Fast Company picked up the story and summarised the numbers:

And then there’s the math: From the NYT’s financial report, production costs in terms of raw materials and wages/benefits tally around $844 million a year. Carlson has info suggesting the newsroom costs total around $200 million a year, meaning it costs some $644 million to print and distribute the physical newspaper.

The Times reportedly has 830,000 subscribers. A Kindle costs $359. Thus distributing a free Kindle to each subscriber would cost about $298 million.

This example illustrates the perfect storm scenario for Australian newsagents who handle newspaper home delivery.  Not that a publisher would give away the Kindle (it does not work here in Australia anyway) but rather that the numbers for a completely different distribution channel are so compelling.

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Media disruption

The Illawarra Mercury subscription deal

imer.jpgI’m told that there is a post-it ad stuck on the front cover of the Illawarra Mercury today promoting a home delivery offer. Pay $4.00 a week for six days of the newspaper. The usual price for six days is $7.50 plus a delivery fee. On top of the massive discount, which the newsagents is forced to partially fund, the publisher is giving away a $50 Coles / Myer Gift Card and a bunch of other freebies.

It is appalling that a newspaper publisher forces newsagents to pay for a campaign such as this when the newsagent has no capacity to balance the cost with other revenue in their business. It is an abuse of the newsagent / publisher relationship.  If I were affected by this I’d be asking the ACCC what the Trade Practices Act says about such an arrangement – despite that a contract between publisher and newsagent may speak to this type of deal.

The publisher is prepared to discount because they will win through protecting advertising rates by staving off circulation falls. The newsagent gets no cut from advertising.

I went to the Mercury website to check out the details. I clicked on the ad and it took me nowhere. So I clicked on subscriptions and was given the email address and phone number for the circulation manager. I clicked on promotions and found nothing about this. Someone in marketing stuffed up.

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newspaper home delivery

Newspaper half price offer misses opportunity

While on the Gold Coast yesterday, I saw the coupon being used in the Gold Coast Bulletin newspaper to attract consumers to the half-price offer. Prominent in their pitch is a drive for subscription sales. Given the retail only status of some newsagents involved in the campaign, this ultimate goal of taking sales from retail to home delivery is cheeky.

While I accept that the publisher has to try and drive sales, I think the Gold Coast Bulletin publisher is missing an opportunity to build loyalty around consumers who prefer an over the counter newspaper purchase. I am certain that newsagents would embrace such a campaign.

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newspaper home delivery

The Age modifies subscription model

The Age notified newsagents yesterday that they are changing the subscription model, or how they deal with newsagents at least.  They are moving from fixed-term subscriptions to open-ended subscriptions.  Beyond giving newsagents only seven days notice to make considerable data and system process changes, there are questions customers will have when the previous fixed-term subscription continues.  While The Age ‘manages’ the customer relationship, newspaper home delivery customers often like to talk about these things face-to-face.  Of course, in this day of subscription based home delivery the newsagent no longer owns the customer.

As a retail newsagent, I would prefer The Age invest in over-the-counter customers.  They are as loyal yet cost significantly less than home delivery customers … except that the margin for The Age on retail sales is not as good as their home-delivery model where newsagents share the cost of subscription campaigns.

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newspaper home delivery

Making good newspaper news in Australia

There is plenty of good news we can make about newspapers in Australia, to balance my three posts from earlier this morning.  While none of the items below will ‘protect’ the whole category, combined, they make newspapers interesting for newsagents who embrace them.  We have an opportunity to make business decisions in pursuit of better sales:

  • Local newspapers sell.  Take the Melbourne Observer.  Once customers know you have it they are loyal.  We can sell 100 copies a week.  Customers come to us because we have it.  There are plenty of local newspapers like this around the country.
  • Foreign language newspapers are growing.  Unit sales are up 10% year on year and even more in many newsagencies.  They drive good add-on sales in various categories.  The key is to display them well and offer a good range.  The challenge is the restrictions applied by some distributors who will not provide direct accounts and therefore lose sales.  Foreign language newspapers account for 12% of our newspaper sales at Forest Hill.
  • Special interest papers sell.  Newspapers about racing, motor sports, collectibles, markets – local interests.  Some newsagencies feature these and have found regular customers and good growth.
  • Rewarding loyalty works.  With publishers placing their product in various locations – petrol, convenience, coffee – newsagents could run their own loyalty club specific to their store and thereby own the customer.  The key with any loyalty program, however, is to not reward usual behaviour but reward above average behaviour.  Some newsagents reward usual behaviour in other categories and it does not benefit their bottom line.
  • Sell the free local newspaper.  Most local newspapers are delivered free of charge.  Some newsagents give them away in their shops.  Since this is a service for which there is a cost, consider a charge to reflect your investment.  A smart publisher will support this and thank you for promoting their brand.
  • Co-locate.  Putting newspapers in a second location in your shop, at the lottery counter for example, will win additional sales.  The key is to change this.

While there is no doubt that newspapers are challenged, newsagents can take actions in their businesses to soften the impact of any downturn.  My list is far from complete.  The key is to do something rather than watch the tide come in (or the tsunami if you believe that).

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Newsagency challenges

VANA unsuccessful on home delivery fees

Further to our Bulletin dated 13 November 2008 re Home Delivery Fees. VANA has been discussing a Home Delivery fee increase with HWT for quite some time and we are extremely disappointed to advise that Peter Blunden, Managing Director of HWT has informed us that we have not been granted an increase.  He has stated the following:

“After giving the matter careful consideration, we have decided to seek alternative ways of addressing the issues raised”.

With that, VANA has announced that it has failed, again, to deliver for its members. 

No wonder newsagents are quitting newspaper distribution. 

In what other business is a service provider expected to carry cost increases every year in labour, fuel and other areas, cope with a reduction in margin and survive with no increase in service to compensate? 

Newspaper publishers will wonder, at some point in the future, why newsagents abandoned what was the best newspaper distribution system in Australia.  The answer can be found in this decision and many similar decisions which preceded it – to not pay a fair day’s pay for a fair day’s work by newsagents. 

I know newspaper executives are concerned about the number of newsagents quitting home delivery.  They invite such action with decisions such as this.  Sadly, the VANA announcement contains no passion on behalf of newsagents. 

I wonder who VANA used to prepare and represent its case?  If this was done in-house or by VANA Board members then it has let its members down.  On a case such as this, professional representation is essential so that the newsagent position and negotiation is as strong as the other side.  Such a case would have included information on advertising rates as a comparison among other things.

Home delivery is a service by newsagents.  It is only reasonable that they set the fee they cahrge for the service they provide.

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Newsagency challenges

Newspaper home delivery discussion

Further to recent discussion here on newspaper home delivery, click here for a copy of the business plan I developed three years ago when I was looking to expand in this area.  As I was unable to interest anyone in this or acquire any adjoining runs I sold my home delivery business.  Timing is everything as they say.  I was lucky.

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newspaper home delivery

Newsagents could leverage the Detroit situation

Some diesel fumes must have leaked into the executive suite at Detroit Newspapers and driven the bosses mad. The decision-makers announced Tuesday that the daily newspaper reading habit was as dead at the domestic auto industry. I call it Motor City Madness.

Read the rest of the assessment here by John K. Hartman, professor of journalism at Central Michigan University, of the announcement this week to cut newspaper home delivery in Detroit.

While there is certainly robust criticism in newspaper circles globally, that the shift is happening puts home delivery onto the agenda – as if it was not already.

If I were a distribution newsagent I would be calling for a summit ASAP, in the next couple of weeks (not after summer) to look at the Detroit move from an Australia perspective.  Such a newsagent only summit could also develop strategies around pursuing a fair return for home delivery effort. 

Something has to hapen because those representing newsagents on this have failed for decades – up to an including last week.  Use Detroit as a reason to come together and roll up the sleeves and decide what is best for newsagents and their families.  Then pursue that with vigour.

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newspaper home delivery

Seismic shift in US newspaper home delivery

The reports of a change in home delivery arrangements for two newspapers in detroit have proved to be accurate.  The Detroit News overnight announced details of their new newspaper home delivery model.  I say this is a seismic shift because it will result in more newspaper publishers thinking outside the square.  For example, if it works in detroit (or even looks like it might work) others will follow.

The US home delivery model is quite different to here.  Publishers carry considerably more of the costs and penetration (efficiency) is not as good as we see in Canberra, Melbourne and Adelaide – three strong cities for home delivery.  That said, I am sure that bean counters within newspaper publishers are watching the action in Detroit intently.

Home delivery of newspapers has a high cost.  Just ask most newsagents who receive no clip from advertising.  Now is the time for people representing newsagents to be on the front foot, considering Detroit and other models which may be more appropriate for newsagents and publishers in providing a home delivery service.

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Newsagency challenges
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