Jocelyn Y. Stewart has written a heart-warming piece in The Los Angeles Times about newspaper carriers and experiences she recalls about her dad who was a newspaper carrier in the US for 25 years. Newsagents, distribution newsagents especially, will enjoy what Jocelyn has written.
The Australian Newsagents’ Federation (ANF) issued a bulletin last night about the meeting in Adelaide on Friday organised by two proactive newsagents to discuss the new News Limited contracts. Click here to see a copy.
The ANF bulletin does not reasonably represent the debate around the representation of newsagents on the new contracts. The state ANF representative talked with pride about the good relationship between the ANF and News Limited. He said that the increase in delivery fees for country newsagents was a good outcome negotiated by the ANF.
Several newsagents challenged the ANF view of the increased delivery fees. They asked if the ANF had put various scenarios in the negotiations – including what happens when someone moves from a two day delivery to a heavily discounted seven day delivery. The ANF acknowledged that it had not explored this in the negotiations. The anger in the room was palpable.
While around two thirds of newsagents indicated they were ANF members, the vote which should have been taken is whether the newsagents at the meeting were happy with the ANF handling of the negotiations. I am told that a close to unanimous vote of NO would have been delivered.
This is a problem for the ANF. SA newsagents are most unhappy and demonstrated this by organising their own meeting and attending in unprecedented numbers. This unhappiness goes back to early ANF endorsement of the home delivery customer migration project – a News Limited initiative which seeks to shift management of home delivery accounts from newsagents to News Limited – risking traffic in retail newsagencies and driving a reduction in home delivery penetration. The ANF endorsed migration without consultation with the newsagents set to be affected.
The ANF bulletin reiterates that they have authorisation to negotiate on behalf of newsagents. Any properly consitiuted body can achieve authorisation. The key for newsagents is that they are represented by people who listen to their situation and negotiate robustly on their behalf.
Click here to see my report of the meeting of SA newsagents last Friday.
Click here to see a copy of the notice issued late Thursday night by Advertiser Newspapers in South Australia announcing a highly conditional 20 cent to 50 cent per customer per week newspaper delivery fee increase. This announcement was the next step by News in a protracted dispute over the new contracts and the News Ltd migration project which seens to take control of customers won by newsagents through local marketing efforts.
The offer expires at the same time by which SA newsagents are required to have submitted signed new agreements with News.
More than 170 newsagents met in Adelaide yesterday to discuss the new contracts from News Limited. Over the course of three hours a many views were shared. These ranged from information on problems with the News Ltd migration project (were News takes control of the newspaper customer from the newsagent) to the threat of total loss of newspaper sales should a newsagent refuse to sign the contracts.
The meeting was attended and addressed by three politicians: John Darley – Independent Member Upper House SA; Steve Georganas MP Federal Member for Hindmarsh; Robert Brokenshire MLC – Family First Member Upper House SA. They committed to helping newsagents achieve an equitable outcome and expressed their support for small business – not just lip service but practical support. Nick Xenophon, while not in attendance, had a representative there to indicate his personal interest in this matter.
The most significant contribution at the meeting came from Professor Frank Zumbo from the University of NSW. Frank outlined several go forward options for newsagents based on his reading of the proposed contracts. He also provided useful commentary on legal avenues as well as an understanding of the challenges of various options open to newsagents. Frank’s options were discussed by the meeting and plans made to make progress on these.
News Ltd sought to take some sting out of the meeting by announcing a deal late Thursday which they had brokered with the ANF. This deal offered SA country newsagents an increase in delivery fees if they met certain stringent conditions. Unfortunately, the deal could see some newsagents worse off if their customers move from a two day a week delivery to a heavily discounted seven day a week delivery. The mood of the room was one of cynicism and disappointment with the deal and that newsagents had not been robustly represented in the eleventh hour talks.
Three larger postal boxes in the corner of the room showed what newsagents can do – they contained proof that customers did not want their details handed over to News Ltd.
Kudos to the two newsagents who independently organised the meeting. This shows what newsagents can do when they work together.
I am grateful for the opportunity to participate in the meeting. It highlighted to me the extent of the negative impact of the new contracts and migration on the family businesses represented. It also demonstrated that newsagents are prepared to unify around this issue.
I am not reporting here in any detail on the meeting as this would provide News Ltd visibility of the options under consideration.
South Australian newsagents meet today to discuss the new News Limited contracts. This important newsagent organised meeting starts at 2pm at the Education Development Centre, Milner Street Hindmarsh. I’d encourage every newsagent in South Australia to attend. This is the best opportunity to discuss the new contracts and be better informed leading to making a decision about your next steps.
I’ve been invited to the meeting and will post an update here of what I am able.
Newsagents are valuable to publishers for their newspaper home delivery service. This service is unique on a range of fronts which are worth newsagents contemplating as they discuss how to respond to the contracts proposed by News Limited. Here are some of the many unique points offered by newsagents:
Newspaper publishers who sell home delivery as a premium service ought to consider these and the many other points of the benefits of the newsagent home delivery model before taking further steps to break it up.
Check out the report in the Guardian about a visit made to a newsagent in London by News Corp. CEO Rupert Murdoch.
Newsagents in Australia, especially those with distribution and retaiol contracts, would be thrilled to an an opportunity to speak directly with Rupert Murdoch right now given the new contracts from News Ltd they must make a decision about.
Newsagents in Douth Australia have an opportunity to discuss the contracts at a meeting starting at 2PM this Friday. Click here for a copy of the flyer announcing the meeting and detailing concerns expressed by newsagents in relation to the contracts.
Newsagents in South Australian have organised for themselves a meeting this Friday, December 18 between 2pm and 5pm, to discuss the News Ltd distribution and retail contracts. Click here for a copy of the flyer announcing the meeting and detailing concerns expressed by newsagents in relation to the contracts.
Speaking at this important meeting, in addition to newsagents, will be:
Newsagents in other states ought to consider attending this meeting. While the South Australian situation is different to the Eastern States, many consider it to be the trial location for a new distribution model.
News Ltd has had some time to work through its various state based publishing businesses to develop the new contracts and to consider what the future of newspaper distribution may look like. Newsagents have not had such an opportunity. Hence the importance of this newsagent well organised meeting. I hope that News Ltd does not make any moves to block the meeting.
Many newsagents attending have already been deeply engaged in this matter thanks to the newsagent-led action in SA. They are handing out questionnaires to customers, talking with members of parliament, gaining media coverage and talking with fellow newsagents. The meeting is likely to provide an update on this considerable ground level work.
I am grateful to the organisers for passing on details so that I may promote the meeting at this blog. I am hoping to be there as well.
You can read some more about activity by newsagents in SA on this by clicking here.
The ANF has sent out an email to newsagents this afternoon about the News Limited contracts. The QNF and NANA has this information out to newsagentsin their states more than two weeks ago. Others communicated similar advice at arou d the same time. Tthe ANF has come to the table late and from what I can see is not offering anything new to the advice provided already by others.
Mark Day in his column in The Australian this morning weighs in on the debate between Google and News Corp. and that Google wants to be seen as a Digital newsagent. What interests me in Day’s piece is not so much his take on the Google / Publisher debate but his acknowledgement of two sides to the debate.
Logic suggests each side needs the other and in due course a compromise agreement will be reached.
Maybe he could talk with his employers about the debate raging among Australian newsagents about the take it or leave it contracts offered by News Limited. News is currently not demonstrating an appetite for compromise.
One example of the changed publisher / newsagent relationship is that newsagents have gone from a model where the publisher carries the financial cost of heavily discount newspaper home delivery to one now in South Australia where newsagents share the cost of the publisher controlled discounts. Newsagents have no real capacity in their model to leverage this in a way which helps fund the steep discount.
While logic would suggest a compromise, both sides need to have an appetite for compromise. Thousands of family run businesses are hoping for a change of heart within News Limited.
PaidContent is reporting that News Corp, Conde Nast, Meredith, Hearst and Time Inc. will announce next week the formation of a new company to fund the development of a digital newsstand. While mooted for some time, plans appear to be coming together.
Australian newsagents need to add this to the mix when considering the new newspaper distribution and retail contracts from News Limited.
Until now, publishers have left others to handle digital delivery – contrary of the models used for paper based products. This new consortiums publishers seeking to get control back of the farm. The challenge is the lead time. They need to keep current partners happy while they develop new channels and until they assess the impact of these new channels on the old.
NANA, the association represening newsagents in NSW and the ACT, has suggested that newsagents refrain from signing the new newspaper distribution contracts from News Limited. Read the full NANA statement here.
We are, if you like, a virtual newsagent.
This is Matt Brittin, head of Google in the UK speaking before the Culture Media and Sport Select Committee of the British House of Commons. The Register has the story.
As I have been blogging here for five years, disruption to the print model is our biggest challenge. The News Limited contracts and other more day to day year to year issues are bumps caused by this disruption.
Rupert Murdoch, CEO of News Corporation, appeared before the US Federal Trade Commission’s Workshop: From Town Crier to Bloggers: How Will Journalism Survive the Internet Age? on Tuesday. His speech contains information which could be of interest to newsagents facing a decision as to whether to accept the new News Limited contracts.
Here is some of what Rupert Murdoch had to say to the FTC:
First up, on the trust between consumer and a newspaper:
From the beginning, newspapers have prospered for one reason: the trust that comes from representing their readers’ interests and giving them the news that’s important to them. That means covering the communities where they live … exposing government or business corruption … and standing up to the rich and powerful.
And on the future of newspapers:
The same is true with newspapers. More and more, our readers are using different technologies to access our papers during different parts of the day. For example, they might read some of their Wall Street Journal on their blackberries while commuting into the office … read it on the computer when they arrive … and read it on a larger and clearer e-reader wherever they may be.
Later, he adds:
I have often made the point about newspapers this way: by reminding people that we are in the news business, not the dead tree business. In other words, what makes a newspaper is its content and brand – not necessarily the form in which it is delivered.
He outlines the principles for the new world:
- Let news organizations innovate to give their customers the news they want, when they want it, and how they want it.
- Ask consumers to pay for the products they consume. Let aggregators desist – and start employing their own journalists.
- And ask the government to use its powers to ensure the most innovative companies are free to reach new customers instead of looking for ways to prop up failures or intervene in a constitutionally sensitive business sector.
I’d make several observations on this. Newsagents are distressed at the challenge of their individual small businesses negotiating with a global corporation on a contract which many see as the reason for their existence. News Limited has denied newsagents the opportunity to charge consumers fairly for the services they provide. Successive Governments in Australia have ignored calls by newsagents to give them genuine freedom in structuring their businesses around newspaper distribution in ways which are appropriate to their communities.
Looking at Rupert Murdoch’s speech more broadly, News Corp. is rightly positioning itself for the next generation channel. This will not be print, certainly not to the extent that it has been in the past. It is therefore, in my view, open to newsagents to decide the timing of their move out of newspaper print distribution . The contract on offer today is two years (one year in South Australia) for a reason. Newsagents need to understand that and not expect anything beyond this period.
Australian Newsagents ought to study this and other speeches by Rupert Murdoch and add them into the mix when considering what to do about the contracts.
I have heard from several newsagents this week who are distressed about the News Limited contracts. It is the all or nothing approach which is causing the most stress.
In two situations put to me the newsagents would like to keep the retail business but discard the small loss making home delivery business. They say that no amount of representation has been able to achieve an outcome which suits. This means they either take everything and lose money or take nothing and hope to negotiate sub agent terms which would mean a break even situation on newspapers.
One understands that emotions are heightened when you consider that for many long term newsagents this is the most fundamental change they have faced in decades. For the first time they are wondering whether to walk away from a core offer which for years has defined their business and their place in the town.
News Limited has been clear in its contract documentation that it is reviewing all aspects of newspaper distribution. This must also include financial modelling on the future of the medium itself.
While publishers struggle with objective assessment of new digital delivery platforms of news – see this article at Pittsburgh live – other observers note that digital delivery of news is growing.
Publishers and others look at devices like the Amazon Kindle from the perspective of a newspaper. This is like looking at an iPod from the perspective of a CD of music. Today, people buy single songs. In the future, we will buy individual articles by topic, by author or by category.
Technology will be the single biggest disruptive influence on the future of newspaper distribution in Australia. Maybe not this year or next, but certainly in my lifetime. This is what we must plan for. This is why we must diversify.
The Independent Weekly has a report this morning of the moves by South Australian newsagents in relation to the new contracts fron News Limited and the migration program. The migration program is about moving management of customer accounst from newsagents to News.
It is interesting to read of the ANF involvement since the ANF was approached by News before they started the migration program and game the program a green light. This is what encouraged News to move forard as I understand it.
In Queensland alone, more than 50 newsagents have abandoned their distribution runs and in some parts of Brisbane people can no longer get a newspaper delivered to their homes.The sustainability of newspaper distribution is one of the core issues we need to deal with and will be at the heart of the broader review of the overall system.
No-one can guarantee the future of any business, and it would be misleading if we were to attempt to do so. We don’t yet know what changes will be needed as a result of our review of the system.
The way consumers access and consume media is rapidly changing, along with shopping habits. These changing consumer demands are forcing us to review the way we conduct our entire business from how news is produced, the design and content of our newspapers to where and how readers access them.
We are also aware that while some newsagents continue to be successful, in too many parts of Australia, the current system of newspaper distribution is inefficient and not working as well as it should for newsagents, publishers or consumers. It’s getting more difficult for us to get our papers delivered to our readers.
The 2010 Agreements mark the first stage of a full review … to address the challenges facing the newspaper industry.
Our review will look at what’s necessary for the long-term sustainability of newspaper distribution. Working together may give us the best outcome but, regardless of the review’s outcome, we all need to accept change and adapt.
These quotes are selected from material sent with the newspaper distribution and retail contracts received by more than 2,000 newsagents from News Limited around two weeks ago.
Newsagents have another four weeks in which to make a decision as to whether to accept the new contracts.
I have read contracts sent to newsagents in various states. I have talked with many newsagents about the contracts. I have also been fortunate enough to have a discussion with senior management at News about the contracts.
I am not sure what I would do if I received one of these contracts. Having sold my distribution business three years ago and converted my shop to a sub agent relationship for newspapers, I do not have a direct contractual relationship with News Limited.
While the contracts have come as a shock to many newsagents, they should not be a shock to newsagent leadership or longer term newsagents. From the release of the current contracts ten years ago, newsagents were on notice that new contracts would come. We have also been on notice for years that the newspaper distribution model is under scrutiny. There have been countless studies, reviews, workshops and discussions – all driven by publishers, none, to my knowledge, driven by newsagent representatives.. The change, flagged in these new contracts, is that News has committed to making a decision within two years and that the signs in the contract paperwork are not encouraging.
New newsagents, those who entered the channel in the last three years, are disadvantaged by the new contracts. They have paid a multiple of net earnings which will take longer than the two years to recover. They bought into what was probably pitched as a stable, protected even, business. Now, they find that they have a business with two years, maybe longer, but only two years in which to bank.
The new contracts mean that goodwill paid for a newsagency will fall – probably immediately if a purchaser undertakes thorough due diligence.
Any newsagent with bank funding also faces an impact. Once the banks assess the contracts their lending terms and ratios for newsagents are bound to change since the existing sort of open ended contract provided the banks with a measure of security against which they would lend. I’d expect to see the debt to equity ratio to be reduced and loans for newsagencies harder to achieve.
When the contracts first hit, my initial hope was that no newsagent would sign them and that this act would bring News to the negotiating table. The reality is that News is not ready to negotiate a longer than two year contract because they don’t know what the newspaper distribution model looks like for them in two years. Some newsagents are saying that News knows and that they don’t have the guts to move against newsagents right now. Only time will tell if they are right. I suspect that News, corporately, does not know what the model will be – hence the two year period and the clarity in the contract documentation about what they will do over the next two years to assess the best model for their business.
I applaud News for putting in writing that in too many parts of Australia, the current system of newspaper distribution is inefficient and not working as well as it should for newsagents, publishers or consumers.
The problems for newsagents with the current newspaper distribution model are:
As I have written here and elsewhere over the last five years, newsagents ought to lobby government for an independent review of the distribution of newspapers and magazines. This was deregulated by the Howard Government in 1999 and it would be appropriate for a review of this policy to be undertaken – the ten year anniversary would be a good opportunity. Such a review ought to look at the costs of each step and what the impact has been over the years on each step. Only an independent study will provide evidence necessary for a balanced discussion on the future of newspaper distribution.
The real issue is what the future of newspapers looks like. Know that and you will have the start of a plan for distribution newsagents.
I doubt that anyone, consumers, economists, share analysis, newspaper publishers or newsagents expects newspaper distribution to grow considerably. We are at best in a flat market and at worst in a declining market. The consideration of the future of newspaper distribution needs to be considered in the context of a pragmatic assessment of the medium and the environmental and economic costs associated with it.
The two years offered by News is two years. This is why, after much thought, I would probably sign the contract, get my two years and work hard to reengineer the business to considerably reduce reliance on newspaper related revenue in the two years. Now is not the time to try and negotiate considerably different terms. That time was in 1999 when the ANF leadership negotiating on behalf of all newsagents, failed them.
The way I see it, the two years gives me something and to many newsagents this will be better than nothing. Although, I acknowledge, that for some newsagents nothing is better than a negative something.
Yes, these are complex issues. My opinion is merely that. I don’t know if I am right. Newsagents will not know if they are right. For many, this will be a tough four weeks navigating to a resolution.
VANA and the ANF have invited newsagents to send feedback on the News Limited newspaper distribution and retail contracts so that they may collate this feedback and forward it to the ACCC.
The time for active association engagement was two years ago, a year ago, hell even six months ago. The associations should have funded a professional study covering newspaper home delivery and distribution best practice as well as assessing the future viability of newspaper home delivery. Professional research from a world perspective could have seen the associations develop a proposal for News on the front foot rather than being left to react now.
Maybe I am missing something but I am unsure as to what is in the contracts which would concern the ACCC. I would be more interested in a Government funded inquiry from the perspective of a deregulation policy review – no such review has been undertaken since the government instituted deregulation of the late 1990s.
US newspaper publisher Hearst is using a new online strategy to drive newspaper subscription acquisition in response to soft newsstand sales. While we are not experiencing the same decline in over the counter sales for newspapers here, I would like to see publishers engage with retail only newsagents on a subscription acquisition strategy. This would be preferable to them turning their back on our network altogether.
I have several opportunities for retail-only newsagents and publishers to directly work together on acquiring home delivery subscription customers. Here are some subscription ideas I’d be happy to trial:
I note, these thoughts are in addition the ideas I have previously published on driving over the counter sales.
Newsagents need to cast a wide net when looking at how to respond to the new newspaper distribution contracts sent out last week. The contracts are too complex and the ramifications too considerable (personally and network-wide) for newsagents to make a decision without thorough research and discussion.
While others are looking at the contracts from a legal and strategy perspective, I have been hunting around online to find out how newspaper distribution contracts are handled elsewhere and have found some interesting US recent history: here, here, here and here.
Not directly related but interesting nevertheless. The question about what makes someone an employee versus a contractor is interesting in the US context of newspaper carriers. This made me think about the level of control Australian newsagents have to operate a newspaper distribution business. That’s a blog post for another day.
By the way, in my searching, I also came across a Fairfax Q&A from June 1999.
In one world, News Corp. is waging a fierce battle with Google and others about paid content. In the Australian newsagency world, News Limited refuses to charge a cover price which fairly represents the cost of manufacturing, distributing and retailing the product (and thereby inhibits a fair return the sale of said product in newsagencies) and refuses to permit newsagents to charge a home delivery fee which at least matches the cost of providing the service – condemning many to lose money on the service.
It would be good if the media reporting the News Corp. battle with Google would pick up on what appears to be double standards. I’d welcome a debate about fairness and business practices. Just as News deserves to extract a fair price for its endeavours, Australian newsagents deserve fair compensation for their efforts.
Some media outlets not connected with newspaper distribution are looking at the challenges for newsagents, their families and their employees in the new contracts issues by News Limited last week. I am aware of several feelers being put out for interviews. It will be interesting to see how the story is reported.
For years now, newsagents have been waiting for new newspaper distribution contracts. News Limited has finally delivered theirs this week.
Having refused to negotiate terms with newsagent associations, newsagents are having to make their own assessment. I have received a bunch of contracts over the last 24 hours and will go through these in the next week.
Looking at a contract last night for the first time, it is clear that we are transitioning the newspaper distribution model. It makes me ask what initiatives have newsagent associations taken to develop a new model? I stand to be corrected but I suspect not much.
A smart association would have funded an international study on newspaper distribution, a study from all angles – publishers, wholesalers (in the UK), newsagents, delivery drivers (newspaper carriers in the US) and consumers – and had the various newspaper distribution systems professionally assessed.
The resulting report would have ensured that newsagents today would be better informed about the likely future of the model from a publisher perspective as well as the best model for newsagents themselves. Newsagents could have contributed to the shape of the future as enshrined in the contracts – the quality of the research and analysis would have driven this.
Instead, associations have left publishers to take the lead and the best they can do now is respond – as newsagent associations have done, poorly, for decades.
It is not too late for newsagents to have a say in the future of newspaper distribution. The new contracts provide a few years for newsagent funded and owned research on what the future of newspaper distribution looks like. Newsagents will only take this step and ownership of their future if they want a say in this.
In a practical newsagency sense, I am disconnected since I sold by distribution business three years ago. However, my software company, Tower Systems serves 1,600 Australian newsagents and is committed to dhelping newsagents improve distribution efficiencyand returns.
I’d be interested in seeing more copies of News Limited contracts so I can assess for myself their offer to newsagents. Fax: 03 9524 8099. Email: mark@towersystems.com.au. I’ll maintain confidentiality.
UPDATE (17:29 6/11): Thanks to everyone who has sent through contracts. I have a good selection to look over.