newspaper home delivery

The ANF has published an email with details of a meeting with News Limited CEO Kim Williams late last week. At this meeting, Williams provided newsagents with greater clarity on the position of the company in relating to handling newspaper distribution in the future.

Here is the text of the ANF Newsflash:

Associations met with News Limited CEO to discuss new model

On 20 April, all Newsagents Associations met with News Limited’s CEO Kim Williams, Jerry Harris, Managing Director of Group Newspapers and Digital Products, and Gary McKay, Group Circulation Business Manager.

It was an opportunity for the Associations representatives to meet with Kim Williams and discuss the current state and future opportunities of the newsagency channel, in light of restructuring taking place at News Limited.

Mr Williams was very positive about the value of the channel and said News Limited needed the newsagency channel to be part of its progression into a print and digital future. He said a new process to produce new sales and distribution arrangements for News Limited newspapers will be rolled out starting in June 2012 for Queensland. News Limited has stated that they will also commence the equivalent process for NSW/ACT and Victoria on a voluntary basis for agents that were prepared to meet the criteria of the new model.

This new model will be finalised at a meeting of News Limited Managers in early May.

Jerry Harris did confirm the following:-

• Leaving the model as we know it today was “not negotiable”. A new model will be implemented
• Customers’ details, including management and billing WILL be migrated from the newsagents system into the News Limited system
• Newsagents on the New Distribution Contract will be paid under a fee for service model not commission based
• Newsagents on a New Retail Contract will be paid on a commission basis to incorporate an incentive scheme, rewarding effort.
• All State Associations will be consulted and called on to assist in the implementation of the new model

The message from News Limited was very clear that the current territory system for newsagents was out-dated and not cost effective. Larger, more efficient territories is the major objective of this project.

After News Limited’s meeting in early May a formal explanation of this new model, including the new Contracts, will be made by News Limited.

Having informed Kim Williams of the current state of the industry and the need to put back the certainty and security that is sadly missing today, all Associations will be working hard to work with News Limited to achieve mutually win-win outcomes. Kim Williams was very aware of this need and reconfirmed his company’s commitment to achieve this.

The highlighting is mine – drawing attention to what I see as the most important statement in the release.

In a move NSW newsagents are certain to welcome, Fairfax has announced that it will increase fees paid to newsagents for The Sydney Morning Herald and The Sun-Herald an average 10 per cent as part of an overhaul of its payments to its home delivery distributors and specialist newsagents.

Fairfax claims that the increases represent the biggest single injection of funds – $3.5 million – into the newsagent network in many years.

I like that Fairfax briefed the newsagency software companies on the move in advance of the announcement to ensure that the software handled the fee changes.

This move reflects the learnings from changes made in Victoria a couple of years ago.

Click here for a copy of the media release from Fairfax about the move.

The media section in The Australian yesterday had a interesting article by Darren Davidson about the different approach being taken by newspaper publisher Fairfax to address uneconomic newspaper distribution compared to that of News Limited.  I think newsagents would find the article most interesting.

Beyond the usually News bias you read in any article they publish about Fairfax, there is the claim that the two publishers are taking quite a different approach to dealing with the migration of readers from print to digital. I am not so sure this is the case once you allow for the differences in circulation and the respective digital offerings. Their situations are fundamentally the same.

The cost of getting a bundle of newspapers to a regional or rural location is just about the same for both companies.

I am told that News Limited Circulation Director Catherine Woodside has resigned from her role with the company. This will be a blow to newsagents who have been waiting for more than two years for an outcome from News’ review, led by Catherine, of newspaper home delivery arrangements.

It was Catherine who responded to the newsagent associations following my News Limited in crisis on newspaper home delivery post of last month. Besides denying there was a crisis she established yet another round of discussions to talk through home delivery plans for the future.

Catherine’s reported departure is on the back of series of leadership changes within News Limited since Kim Williams took over as Managing Director. Crikey yesterday carried a report from an anonymous writer from within News Limited about the staffing changes going inn in the organisation. It starts with:

“In the continuing saga of executive management cuts at News Ltd (Macourt, Baxter, Howard, Klose, Bulmer, Sligo, Eilert … and you haven’t yet reported on Evan Hannah or Michael Prain) there’s another indicator of the big changes in management approach and culture. The long-stated and cherished policy of honouring loyalty is out the door. It was a hallmark of former CEO John Hartigan’s reign, which he stated time and again that loyalty was to be acknowledged and rewarded.

And ends some paragraphs later with:

“These ‘redundancies’ have made many of us middle and senior managers very, very nervous. Doing your job well, and having years of solid service behind you, count for nothing in the new News. And what about the Boston Consulting boys now embedded in Macourt’s old office.”

I don’t know the story behind the departure of Catherine Woodside from News Limited.  The concern for newsagents will be that their point person within News through the more than two years of consultation and analysis in pursuit of the newspaper distribution model of the future is no longer at the company.

While it is only speculation I do wonder if Catherine’s departure is in any way related to the apparent decision by News over a month ago to delay moving on the newspaper distribution model, thereby extending the period of uncertainty for distribution newsagents.

The Atlantic published a report, The Collapse of Print Advertising in 1 Graph, on Wednesday which included this graph. Talk about a picture telling the story. The report has been widely reported online. It pulls no punches:

You sometimes hear it said that newspapers are dead. Now, $20 billion is the kind of “dead” most people would trade their lives for. You never hear anybody say “bars and nightclubs are dead!” when in fact that industry’s current revenue amounts to an identical $20 billion.

Pile the figures from the US on top of the figures released last week for local newspaper publisher Fairfax and you start to get a sense that it’s game on for the future of newspapers as we know them.

Regulars here will know that I have had doubts about the viability of newspapers for some years, certainly the viability in the context of mass distribution through newsagents. Publishers have addressed the viability question by holding the cover price down and causing newsagents to be fa4 worse off today in real terms than ten years ago. They have also addressed viability in terms of home delivery by not allowing newsagents to charge a delivery fee which addresses the real costs of landing a newspaper in a subscribers yard.

The share price of newspaper publishers, especially those earning the majority of their revenue from print, reflects the challenges of print.

All of this is important for newsagents to consider as they wait for News Limited to talk with them abut their plans for the future in terms of newspaper distribution.

I liked this paragraph from a report at Business Insider about The Atlantic report:

The good news is, contrary to the fears of some doomsayers (also generally people who worked for newspapers), the world has never been better informed. Thanks to blogs, Twitter, Facebook, Google, two billion online fact-checkers, and some amazing online news sites—including some run by newspapers—we now know more faster than at any time in history, by a mile.

News Limited head office responded (sort of) to Mediaweek and to Crikey about my blog post News Limited in crisis on newspaper home delivery yesterday.

It is curious that News Limited would respond to the two media outlets which published my blog post in full but not to me or here at the blog.  I guess that I understand why not – to do so would have legitimised this blog and that’s the last thing they would want to do.  News people have told me that they are not to engage here.  This in itself is interesting because News people have sought me out on this issue.

News corporately has sought me out to brief me previously so that at least one blog post was written with the knowledge of their position on a development.

What News does not understand is that a response here would have been respected by newsagents, especially a response form the states where most newsagent relationships have been managed for years.

Now to the response.  Here is the statement News Limited provided to Mediaweek:

News Limited has responded to comments made by Mark Fletcher on his Newsagency Blog earlier this week.
Mediaweek received this statement this morning:
Contrary to reports, there is not a crisis at News Limited on the future of home delivery of newspapers.
We have for some time been working on a plan to improve our distribution system which delivers our newspapers to retail and homes.
We have consulted newsagents and their associations throughout this process and welcomed feedback through meetings, focus groups and via a dedicated email address we set up. Using information newsagents have been helping us collect we are doing the hard task of understanding the pros and cons of the current system and how best to improve it.
We want to get this right and so are working methodically and diligently. Newsagents may feel frustrated that this is a long process, but it is difficult one. It is taking longer than anticipated but the project has not been put on hold.
We will be discussing our next steps with newsagents within the next month.

I stand by what I wrote yesterday – that there is significant disagreement within the News Limited organisation about how the company is handling and should handle the future of newspaper home deliveries.

What I see in the response from News is, with respect, spin. The company has been at this for more than two years and they want more meetings. They know that the numbers currently do not work because of the controls they have placed on then.

Newsagents need certainty. News can provide this by allowing newsagents to charge commercial fees for delivering newspapers and by encoding their relationship with distribution newsagents in a contract on which newsagents can rely for entering into leases and negotiating with their banks.

Nurses in Victoria are facing a similar situation on pay. They are acting. Other essential services in Victoria faced this over a year ago and they acted. When will newsagents go beyond their bleating and act? I think that News thinks newsagents will not act and this is one of the reasons the company has, after two years, not provided the certainty sought.

The Australian Newsagents Federation has picked up the issue I raised yesterday about News Limited commentator Mark Day saying newsagents have been protected for more than fifty years.

The ANF response and comments by newsagents here serve to challenge News Limited to resolve the misinformation put about by the Day comment. Personally, I’d like to debate the issue with Day in a public forum.

Here is the ANF communication from yesterday in its entirety:

Alf Maccioni, CEO Australian Newsagents’ Federation has responded on behalf of the industry to Mark Day’s comments in The Australian, Monday 6 February.

In commenting on the plans of News Limited’s CEO Kim Williams to overhaul News Limited, Mark Day said Williams sees a need to reinvent the way newspapers are delivered and sold, which means a new approach to relationships with the newsagency business — protected from competition for more than half a century.

Mr Maccioni wrote:

In Monday’s Australian News Limited’sMark Day has made some inaccurate statements about the newsagency channel, namely that it is a protected channel. Newsagents have not been protected since last century when the ACCC deregulated the industry.

Newspapers are sold everywhere from petrol stations to corner stores; they are given away at hotels and football matches and discounted heavily on subscription – direct to News Limited. Newsagents have no monopoly on the sales of newspapers.

The only thing that newsagents do have all to themselves is the home delivery of newspapers.They serve their customers and get the paper through, even though they make little money doing so.

Newsagents receive 25% of a cover price that in some cases have not risen for 10 years.

Newsagents are not protected; they are usedby News Limited to keep their print product distributed.

Kim Williams is right – there is a need to reinvent the way newspapers are delivered and sold—rewarding and recognising the people who do this will be part of the future of newspapers.

News Limited has been promising newsagents a ‘new distribution model’ – and newsagents are still waiting.

The newsagents of Australia welcome Mr Williams’ statement that newspapers are not dead, that it is a customer-focused business, and look forward to his reinvention of the way newspapers are sold and distributed.

Much can be done to boost newspaper sales and fresh thinking in News Limited is the way to go about it; not stale thinking that newsagents are somehow protected andneed to be deregulated.

As much as News Limited, Australian newsagents want newspapers to survive and prosper and will work to bring this about – but not for nothing. They too seek a fair and just reward.

You could say that newsagents are over reacting.  I’d say not given the timing of the comment from Day. News Limited has been chipping away at the newsagent business on a rang of fronts and doing so in a commercial environment which provides newsagents with no protection. So, Day’s comment is wrong, so wrong that the opposite is true thanks to the efforts of the company he works for.

I wonder whether we should go as far as to complain formally about the knowing inaccuracy of Day’s statement.

Buried in Mark Day’s piece in The Australian on Monday speculating that Lachlan Murdoch may take over from his dad as Chairman of News Limited is this when he is writing about new News Limited boss Kim Williams:

He sees a need to reinvent the way newspapers are delivered and sold, which means a new approach to relationships with the newsagency business – protected from competition for more than half a century.

Seriously Mark?  I am shocked that you would have the audacity to write that. It is grossly inaccurate I am disappointed that News Limited would bless the publishing of such a misleading statement, unless they have done so because it serves another purpose for the organisation.

Newsagents are not protected.

News Limited ushered in a new relationship with newsagents in 1999 when the Howard conservative government ushered in deregulation of the distribution of newspapers and magazines, stripping newsagents of the protection of the monopoly system created by the publishers decades earlier.

Mark Day would know this so why would he write what he did?

News Limited started changing its relationship further with newsagents around three years ago.  Some changes have been implemented and the newsagency channel waits for more changes due in the coming months.

News Limited has financially punished newsagents by not increasing cover price in line with CPI and refusing permission for newsagents to pass on reasonable fuel and other cost rises in delivery fees. The end result is that newsagents in the home delivery business have become the working poor, often making less than minimum wage … and sometimes delivering newspapers which do not meet occupational health and safety requirements. So, not only is the pay for some below what could be paid an employee, the work is sometimes unsafe.

The cover price of the Daily Telegraph has not changed in fourteen years. How is this protection?

Yet Mark Day prefers to make out that newsagents are protected.

Over recent years, News Limited has entered into agreements with non newsagents to take over business won and nurtured by newsagents. I have written here before about News taking delivery business from hotels, business newsagents won from their own hard work.  How is this protection?

Newsagents are not protected and have not been for thirteen years.

I am disappointed that Mark Day has written  and The Australian published such a false and ignorant statement.  Maybe that they did speaks to how they see newsagents in the future.

Will The Australian publish a retraction? I doubt it. Will newsagents complain? I doubt it. We will be too scared that they may take more business from us.

I have read and re-read the Day article and the contentious passage several times. He seems to be inferring that new News Limited CEO is the person to break our “protection” and thereby reinvent the distribution of newspapers. If I am wrong maybe Day or someone at News can comment here and explain how. They won’t – but I leave the opportunity there for them.

News has to understand that thousands of families of newsagents and their employees are on tenterhooks about the future of newspaper distribution. This statement by Day and published in The Australian serves to heighten their anxiety and disrespects decades of service which has benefited the bottom line of the company enormously.

UPDATE: (5:45PM) The ANF has issued a statement this afternoon about this.  Click here to see a copy.

Imagine how a newsagent feels when they discover that they will lose their distribution of The Canberra Times at a little more than a week’s notice?  This is what happened to one newsagent this week.  The newsagent quit their Fairfax relationship six months ago as it was loss-making. Now, without notice, the folks at The Canberra Times are taking their business away.

While there has been no formal contract, the newsagent and publisher have operated for enough years on consistent terms to imply a contract.

While there is no doubt that newspaper home delivery is in significant play, some publishers could approach the structural changes with more respect than is currently on show.

Remember, newsagents have been long and faithful servants of newspaper publishers, putting up with a decline in real income for many years with the promise of change which never eventuated. Now that publishers need to drive consultation, some are doing so in a disrespectful and hearth reaching way.

It has taken the folks at The Age more than two weeks to sort out newspaper subscriber data file issues.  Late last year they sent several newsagents files to facilitate consolidating runs. The files were of a non-standard format. The people at The Age had not consulted experts like those at my newsagency software company Tower Systems. The result was many man hours lost trying to clean up the files and communicating with the people at The Age who were clueless on the need to follow industry standards.

Finally, last Friday, the issue was resolved … an issue which never should have occurred in the first place. Indeed this would never happen with the Herald and Weekly Times.

What frustrates me the most through this is that our people explained to the person handling the matter for The Age that they should speak with our a senior manager about the matter. The refused. They would only speak with someone on our help desk. When we explained that one of our senior managers could help resolve the issue more quickly they refused to take this route.

How stupid is this? Very! Newsagents have been let down, my software company has wasted many hours and still no one from The Age has accepted responsibility or said thanks.

On December 29 I wrote to senior managers at The Age responsible for this project. They are yet to respond.  here is what I wrote:

Publishers are the first to criticise newsagents for failing to follow standards. It’s like the people at The Age refuse to let the same rules apply to themselves.

Clink on the image to see the notice sent by Fairfax to NSW newsagents re the handling of the Sydney Morning Herald over the Christmas period.

As is usual from Fairfax about these things the communication is unclear and the work confronted by newsagents frustrating at a busy time of the year, especially for distribution newsagents.

While newsagency software can handle these distribution challenges, newsagents still need to do some work to set everything up.

I am sure that with a bit of effort Fairfax could have made this much easier for newsagents. This would have been appreciated given the time of the year and the heavy demands on time in a newsagency.  Also, these Fairfax bumper editions cause customer frustration – of which newsagents bear the brunt.