From what I understand there will be no Christmas Day newspapers home delivered in Australia this year. If this is the case then kudos to newspaper publishers.
Christmas Day deliveries are expensive for newsagents. This causes many to do them themselves, eating into what should be a genuine day off from the business.
I’d love to hear from any newsagents who have been told that they do have to deliver on Christmas day.
A sunday newspaper subscription can be as valuable as a subscription for the other six days of the week according to a report published at Poynter.
But the shift goes deeper than an uptick in circulation numbers. With limited resources, newspaper organizations are investing more in the most profitable edition of the week, tacitly letting the daily audience numbers and ad revenues continue to slide.
This report by Rick Edwards makes for fascinating reading for anyone interested in newspapers and newspaper distribution. It includes this quote from John Murray, circulation expert from the Newspaper Association of America.
“Yes, a Sunday (subscription) is likely worth as much as the other 6 days combined and that realization is driving pricing and cross-platform subscription packaging decisions at newspapers as we speak.”
While the US newspaper distribution model is different to Australia, changes which have occurred there will come here is publishers see that they can be profitable. Newsagents play (and will play) an important part in the profitability of the Australian newspaper distribution model.
I linked to the Poynter piece because of the recent moves by APN which included reducing one of their newspapers from six days a week to one – on the weekend.
I heard from a newsagent yesterday that two schools had cancelled their (substantial) newspaper deliveries from next year. In one school, all students from year 8 and above (if I remember correctly) will have iPads. In the other school the move is about cost cutting.
The newsagent involved will lose thousands of dollars a year in sales.
Parlay this move out to, say, 100 schools in one state and you will see a serious dent in newspaper circulation.
With governments trimming budgets I can see more schools cutting back. With private schools chasing students, I can see them embracing iPads and similar devices more … for the hip factor.
Plenty was written yesterday about the decision by APN to close two newspapers and to cut another newspaper from publishing a print edition six days a week to one day a week.
While the APN move, the first from a major newspaper publisher in Australia, has been reported by some as a shock, it is an example of newspaper publishing catching up with some other parts of the world. In the US, for example, the daily Seattle Post Intelligencier, the newspaper of record for the city, moved from print to a digital only platform in March 2009 – for pretty much the same reasons put by APN.
We will see more moves like this. The sky is not falling. These closures are all part of disruption brought on by a changing news cycle and by easier and cheaper access to digital content.
Check out what APN Australian Regional Media chief executive Warren Bright told APN employees in an email according to a report in The Australian yesterday.
I am determined that we will be innovative and flexible as a company and not be caught standing as the world passes us by.
The newsagency business model needs to be a model which does not rely on newspapers to deliver traffic. We all need to be developing other traffic generators – as I have written here many times previously. We need to be innovative and flexible.
Newspaper publishers owe newsagents nothing as they face the challenge of digital and the structural decisions being driven by the new delivery platform. We need to understand that and make our own success focused solely on our own needs.
Newsagents should read the report yesterday at Press Gazette about accusations by UK newsagents that The Guardian is trying to steal their customers.
The spat between newsagents and The Guardian has rumbled on after the newspaper was accused of stealing customers from local retailers in London.
Trade body the National Federation of Retail Newsagents (NFRN) has condemned The Guardian’s decision to print a loose insert into a copy of last week’s paper offering direct delivery subscriptions to readers within the M25.
The NFRN claimed it was a direct attack on newsagents providing home delivery services.
It claims The Guardian is trying to “steal” customers through “unfair competition” by offering consumers free delivery, guaranteed delivery before 7am (8.30am on Sundays) and by giving subscribers a free gift worth £60.
This report is timely given the state of play of newspaper home delivery in Australia. It reinforces an understanding of the challenges being faced globally around the newspaper home delivery function.
The state based newsagent associations are taking proposals to News Limited for changes to the distribution of newspapers. The proposals are in response to a request from News Limited.
My understanding is that the Victorian and Queensland approaches are similar which the NSW/ACT approach is a bit different.
Some Victorian newsagents contacted me following a briefing from VANA last week to express their concerns at what they say is a narrow approach which appears to have been created to benefit those already well established with distribution only businesses.
I have not been to a VANA briefing and so cannot comment.
The reason that the states are driving this issue is because News Limited has historically managed newspaper home delivery on a state by state basis. Indeed, today there remain significant difference between the states and how newspaper distribution is managed.
Newsagents need to engage with their respective associations to ensure that they understand what is proposed and that their views are taken on board.
With newspaper publishers taking on more direct home delivery services as a result of these being given up by newsagents, publishers are getting a better understanding of the economics of operating a home delivery service.
I wonder what the accountants in their organisations tell them about providing the service for the direct overprice and delivery fee revenue involved.
Two sources have suggested to me that a capital city newspaper in Australia will announce the end of newspaper home deliveries before the end of this year.
I am not sure it is as simple as the rumor put to me however.
Both Fairfax and News know that such a move would damage newspaper home delivery across the country. I suspect that if there is to be an announcement, and remember this is only a rumor, it will be that the current arrangements, maybe of in house publisher managed direct to subscriber home delivery, are replaced with a completely different model.
What gives this rumor credence if moves I have heard being made by the publisher involved, moves which suggest they are about to cut back.
Why publish a rumor? Sometimes airing a possibility heightens debate which can help turn around a decision.
News Limited has announced changes in accounting processes for handling supply of their newspapers to Foodland and IGA outlets. Newsagents will no longer invoice Foodland and IGA for newspapers, News will do this direct.
The announcement says that there will be no change to newsagent commission arrangements and that the current settlement discount, something which I understand to the South Australian specific, will remain in place for the duration of the current agreement.
While the announcement from News appears to be fairly straightforward, it has naturally unsettled newsagents who are waiting to hear from News about the future of newspaper home delivery, not just in South Australia but nationally. Some newsagents expect n News to abandon home delivery while others expect a new contract offer. Until there is certainty newsagents, distribution and retail, will remain concerned for their future involvement with newspapers.
Given the uncertainty which is challenging sales of businesses, capital investment and other moves, I would have preferred News to not make any changes until they tell newsagents what their future in home delivery looks like. That said, I appreciate that they will have their commercial reasons for acting now.
LivingSocial deals site members received an email late last week offering 20 weeks of the Herald Sun on Saturdays and Sundays for just $24. That’s 60 cents per newspaper delivered, just about what it will cost the newsagent to do the delivery. The trouble is, I suspect that the distribution newsagent will not get this much from each delivery. I expect that they will ‘partner’ with News Limited on this loss making campaign.
A just sixty cents a newspaper I wonder how much interest there will be among subscribers in each of the newspapers delivered and the advertising they carry. I bet that some of the 2,440 who had signed up when I checked the site figured that $24 was such a small amount no matter if they would not have time to read every issue.
Steep discounting is a losers game. I think that newspaper publishers would be better off stopping all deep discount deals and thereby understand exactly where they stand in terms of genuine reader interest. Deals like this one lead to a false view of sales and readership.
The other issue for advertisers is the number of people who take the deal and then neglect to redeem the voucher they purchase. Is this counted as a sale of the newspaper for the 20 weeks?
The Sydney Morning Herald yesterday reported on support among advertisers for the Fairfax plan to cut unprofitable circulation. I like the quote in the report from the CEO of UM, Mat Baxter:
For me the real issue here is the credibility of newspapers with advertisers, tricks like subsidising the cost of papers through ‘educational issues’ at schools or promotional issues at gyms and Starbucks scream of desperation.
Cutting free and subsidised deliveries helps retail newsagents reinforce the position in terms of newspapers. It helps distribution newsagents cut unprofitable deliveries. I’d note, however, that not all these subsdised deliveries are unprofitable for newsagents.
Newsagents in Albury no longer get The Australian delivered by trucks from the News’ Victorian business the Herald and Weekly Times. Instead, The Australian is being delivered by News’ NSW business Nationwide News. Woodonga, 2km away, still gets The Australian from H&WT.
This change will see The Australian no longer available for consistent home delivery as Nationwide News deliveries to Albury are consistently too late for home delivery. H&WT deliveries were on time for home delivery. Oh, there are enough copies of The Australian for supermarkets on an early truck from Nationwide.
The switch is an odd decision if the company really does want to sell more newspapers.
A newsagent colleague handed back their newspaper home delivery territory two years ago. The distribution business was turning over in excess of $500,000 a year but was losing money and detratcing from the associated retail business.
The publisher appointed a contractor to replace the newsagent. They handed the distribution business back after a year.
The publisher appointed another contractor. They have just pulled out due to the run being loss-making.
The publisher has now taken on then run for themselves. Maybe they will realise, like the three before them, that their unreasonable and socially irresponsible approach to newspaper home delivery is what is killing newspaper home delivery businesses in Australia.
Publishers cannot expect newsagents to carry an unreasonable share of the cost cutting which is driven by subscription and other deals.
It is unfair that newsagents work for below minimum wage when publishers increase advertising rates and protect their own position.
The story I have shared is playing out beyond this one location because we have a situation where publishers protect their income through advertising rates yet refuse to give small business newsagents an opportunity to achieve a fair income through newspaper home delivery charges.
This is why newsagents are handing back their runs.
Call me a cynic but I am suspicious of the leaking of an internal News Limited memo about cost cutting. The report by Crikey yesterday includes this:
Hence this memo (leaked to Crikey) to News Limited bosses from chief financial officer Stephen Rue, announcing group-wide, cost-reduction targets of 15-20% over the next three years, due to “the last few months of trading [and] trends over the last three years”.
I am cynical because newsagents are waiting for News Limited to announce their plans for the future of newspaper home delivery. The cost cutting will play a role inn their future plans. It has to – not only for financial reasons but also for operational reasons taking into account the internal News limited forecasts of where their revenue will come from for news related mastheads … print versus digital.
Newsagents with distribution businesses should not be surprised about cost cutting. They have been living this for years and have had opportunity to plan for it. That said, many have not.
See what I wrote on June 28 about a News Limited decision on newspaper home delivery fees.
I was interested to see The Australian newspaper advertising subscription offers as a Father’s Day gift … and not an iPad promotion in sight. Nice. The only enhancement I;d like to see as a retailer is a promotion which respects the retail channel and allows us to promote The Australian this way. Maybe a pay for ten copies and get 14 for free over three weeks – this could fit more budgets for Father’s Day.
A newsagent has injured his left arm delivering heavy Sunday Telegraph newspapers. With time off work, physiotherapy and other expenses associated with this workplace injury, the cost will be considerable.
With the Sunday Telegraph and other newspapers often weighing more than that recommended in the ANF commissioned Nery report of 2006, there is a question for News Limited to answer about the occupational health and safety challenges they present with their overweight newspapers.
Newsagents can’t split the Sunday Telegraph into two pieces. News is not paying for two deliveries anyway.
Newsagents are an agent for News, operating as a contractor under the control of News. News sets the price, terms, conditions and controls the weight of the product.
While I am no lawyer, I’d expect News to have some, if not full, responsibility for the OH&S situation where its products are concerned.
I’d be interested to hear if other newsagents or newsagency employees have sustained injuries delivering heavy newspapers.
Click here to read what I have written over the years about the Nery report and overweight newspapers.
While I was not at the forum at the ANF Conference in Melbourne this week which featured John Hartigan CEO of News and Greg Hywood CEO of Fairfax, I have heard from several people who were there.
The key message on the future of print and an impact on distribution appears to have been: we will do what is appropriate for our publishing businesses in dealing with change in print media. Feel that rationalisation of distribution is needed. That there will be no compensation for newsagents. Newsagents: you are on your own inn terms of your own businesses.
Some of us have been saying this for quite a while. We need to act in our best interests. What is galling is the restrictions applied by some News Limited outposts on newsagents who do try and act in their interests.
John Hartigan in his opening comments talked about recently being in the US and seeing Apple TV and noted that it is not in Australia. Um, it’s been here for three years.
Kudos to Hartigan and Hywood for fronting the conference.
News Chairman and CEO John Hartigan and Fairfax CEO Greg Hywood are set to speak at the national conference of the Australian Newsagents’ Federation tomorrow. They will also answer some questions in what is certain to be an important session for newsagents.
Both News and Fairfax are working through considerable changes to newspaper home delivery, having undertaken more than a year of consultation. Rumours about changes to newspaper distribution dominate discussions among newsagents, including discussions so far at the conference. Hartigan and Hywood will each speak briefly and take questions in a moderated session.
Hopefully the session tomorrow will provide some guidance for distribution newsagents seeking clarity on the future of this important part of their businesses. The ANF should be proud of getting both to this conference.
Unfortunately I will be overseas and unable to be at this important session.
Fairfax has granted Victorian newsagents a delivery fee increase from September 5. The increase is 4.5% for subscription deliveries and up to 66.7% for newsagent direct (i.e. not subscription) deliveries. Given the continued heavy push by Fairfax for subscription deliveries, the 4.5% increase is what newsagents will see for much of their delivery business.
In a genuine open and competitive marketplace, publishers would not control the fee newsagents can charge. Publishers only want a deregulated marketplace for the bits which interest them.
Buried in the recent draft report, Economic Structure and Performance of the Australian Retail Industry, by the Productivity Commission is a call on retailers to improve productivity.
Newsagents can improve productivity and cut wages, cut waste, reduce theft and drive better business decisions.
Hang on, think about that last sentence. Don’t move on until you go back, read it again and think about how you would feel if you really did achieve these benefits in your newsagency.
Seriously. I mean it. Read the sentence again. Here it is…
Newsagents can improve productivity and cut wages, cut waste, reduce theft and drive better business decisions.
Too many newsagents do not have these as goals. Too often they blame others when they realise that they want and need the benefits embedded in the goals.
So, here are some productivity gain ideas and opportunities for newsagents:
I know of a newsagent who has just successfully cut $34,000 from their annual wages bill by switching software systems (yes, to my Tower Systems) and implementing our time focused approach to magazine management. There are plenty of other examples like this one.
I am confident that every newsagency business in Australia can improve productivity. Yes, it’s a challenge. The benefits are substantial: reduced wages, reduced waste, reduced theft and better quality and more valuable business decisions.
Imagine how powerful our newsagency channel would be if we all did these simple things. I do. I imagine a strong, growing and productive newsagency channel leading small business retailers and powering ahead against the reports of tough times.
We can do this. We can improve productivity – individually and as a channel. We have the tools. All we need is the will.
I have been sharing specific advice with newsagents using the Tower Systems newsagency software – I have written a 2,300 article with specific business building tips and I share this with newsagents who ask. Email me at mark@towersystems.com.au if you would like a copy.
As I noted earlier, these are some ideas. Share yours with your fellow newsagents.
Desperate times, as they say, call for desperate measures. Fairfax, the publisher of The Age newspaper, has engaged with the livingsocial deals site to offer twenty weeks of The Age on Saturday and Sunday for just $29. that’s a 70% discount. This is nuts – a premium home delivery service for a fraction of the over the counter price. Talk about undercutting the retail channel and devaluing the premium home delivery service.
As of this morning, 1,268 people have signed up for this deal.
What happened to The Age being a quality product. Discounting it by 70% makes the purchase about price more than content. And what about the premium home delivery service. At $29 for twenty weeks this is loss making for the publisher, and some distribution newsagents I suspect.
This feels to me like a desperate move. It’s disappointing to see.
My local Fitness First gym has just installed a display unit offering free copies of the Herald Sun newspaper. It has replaced a unit which offered free copies of The Age which had been in place in the same location for the last four months.
It seems to me that there has been a significant increase in availability of free newspapers: at gyms, sporting events, coffee shops, outdoor events and even supermarkets.
Until recently I thought that free newspapers would be the local ‘community’ newspaper and commuter newspapers like mX, a slim and fluffy ‘news’ paper which is distributed in several Australian capital cities Monday through Friday. What we now regularly see goes beyond the mX model. More and more we are seeing free copies of the main game, the regular newspaper available which shoppers used to pay for. Plus we are seeing weekend paid for newspaper, free.
While publishers may say that these giveaways are designed to promote the titles through sampling, I don’t see this. A four month long sample of The Age at Fitness First gyms is a long sample.
I am concerned that the publishers are inching closer to a completely free model. If this is not the case then why are they educating shoppers to not pay for their newspaper? Why are they engaging in campaigns which invite shoppers to not get their daily newspaper from their newsagency?
I like the home delivery campaign which has been appearing in The Australian newspaper recently. It promotes the habit of newspaper home delivery and it promotes print as opposed to a digital edition. Using the front door of a home as the anchor image for the ad is terrific. Yes, this is a very nice campaign. kudos to those responsible.
I am sure that distribution newsagents would be happy to see News limited promoting home deliver of The Australian in this way.
My only (small) gripe is the promotion of a discount off the cover price for what is actually a premium service. I wish that publishers would understand that subscribers will pay more for a premium service. There is no need for such steep discounting.
News Limited businesses The Herald and Weekly Times and The Geelong Advertiser this week announced agreement to permit a 5% increase in newspaper home delivery fees for their products.
While any increase is better than none, this paltry increase is socially irresponsible in my view.
How this situation can exist is appalling. This massive multi-billion dollar corporation which derives the bulk of its revenue from advertising controls the entire income stream newsagents earn from newspapers (cover price and delivery fee).
Newsagency distribution businesses, as commercial enterprises, ought to be able to set their own fees and through this control business performance levers. The current situation, where there is no control over revenue and only limited control over costs leaves newsagents to continue to perform as indentured slaves.
The introduction of the Modern Award has significantly increased costs for newsagents. Fuel prices have risen yet News Limited knowingly agreed to a newspaper home delivery fee increase which does not permit newsagents to pass on even these basic operating cost increases.
This right wing organisation which invests thousands of gallons of ink in deriding Julie Gillard and pretty much all Labor politicians as harming Australia and the Australian economy is killing the newsagent operated newspaper home delivery business with this tight-arse decision.
If the company was true to its right wing core it would not approach newspaper home delivery in the socialist way it does today. It would agree to a genuinely free market approach: a fair fee for a good service. Newsagents know that customers would pay. They also know that the market itself would set the price.
News Limited is hurting small business newsagents and their families and employees. They are reducing newsagents to working for less than a basic wage.
But you won’t read about this socially irresponsible behaviour in the News Limited press.
How dare they sit in their high-rise offices and decide what is fair for the newsagent in the trenches managing the delivery of newspapers?
Maybe that is harsh. Probably so. I hope it has got attention.
I sold my newspaper distribution business years ago because I saw no upside in newspaper home delivery for a business my size.
The number of newsagents giving away or walking away from their home delivery businesses has increased. This is a message publishers are yet to grasp. But maybe they have and maybe that is why the percentage fee increase is less than necessary to keep ahead with costs.
I’d love the people in News Limited who were responsible for this decision to front an open forum where they can present the merits of the decision and submit themselves to debate. I would be there for sure!
Newsagents need to put food on the table for their families and the families of employees. The decision by News Limited leaves newsagents financially worse off than a year ago. This is not just. It is socially irresponsible.
At newsagency industry events and in meetings when questioned by newsagents and newsagent representatives, newspaper publisher representatives say that the iPad and similar devices represent a new channel through which they can drive incremental business. They say that print is here to stay and that this is why they need newsagents as their distribution partners.
I can understand why publishers say this. The last thing they want is a revolt in the low cost and reliable distribution channel run by newsagents. They need this channel for at least some years yet, maybe longer for who really knows how the mobile device and sexy newspaper app marketplace will play out. We are in a game without knowing how far in, certainly not far enough to predict where it will turn.
What is frustrating is the disconnect which appears sometimes between what newspaper publishers say and what they do.
Imagine how newsagents felt yesterday when they say the wraparound covering The Sunday Age lauding the arrival of the iPad App for The Age. I am guessing The Sun Herald from Fairfax in Sydney ran a similar promotion.
The pitch was simple.
The iPad edition brings Melbourne’s best journalism to your fingertips. Doesn’t the print edition do that too?
The Age on the iPad is RICHER, DEEPER, MORE INFORMED. Yes, I can see that. Is the implication to the print reader – migrate?
Then there is this: Combining the convenience of digital with the in-depth features and analysis of print, the Age iPad App offers a reading experience that’s second to none. Ok, better than print but built using the print writers I have come to trust. The message remains – migrate.
I was left wondering how long the headline of Enjoy the best of both worlds will apply.
The approach being taken by Fairfax makes sense. They need to leverage their regular print to drive traffic of the iPad App. They need to do this and risk losing print readers. It makes sense. Except that they have continually told newsagents that it is business as usual, digital platforms will not affect print and yes please continue to invest in your distribution businesses.
Life is not that simple for newspaper publishers. None us know where this will end up. Given this, publishers ought to stop telling newsagents that it will be business as usual. They ought to let their investment in digital platforms and their promotion of these on the pages of their print product speak for itself.
Based on calls and emails I have received, newsagents are angry at what to them appears to be a sacrifice of the print product in favour of print with the wraparound for The Sunday Age yesterday. News Limited is not much better.
Newsagents need to look carefully at their businesses and consider thoroughly every investment. Now is the time to carefully and thoughtfully diversify, to bring on new traffic generating categories and to connect with your local community in a new and long-term focused way.
There are excellent opportunities for newsagents – restrictions from some of our suppliers notwithstanding.
I am not concerned or surprised about moves like the Fairfax iPad Apps. I am concerned, however, that many newsagents do not see the changes happening around them.