More on the Google magazine and those behind it
The new Google magazine I blogged about a few days ago is from a company with a connection to Derwent Howard, the magazine publisher which collapsed in November 2009 owing a ton of money including, according to The Australian at the time and covered at this blog, around $780,000 to Network Services. A Deed of Company Arrangement was entered into with creditors – providing them with five cents in the dollar.
The link is James (Jim) Flynn. He was a Director of Derwent Howard at the time of the collapse. He is the Director of Media Factory Pty Ltd, the publisher of the Google magazine.
Why would Network Services do business with someone who was a Director of a company which collapsed owing them such a considerable sum?
What does this matter to newsagents? If you look carefully at the Google magazine you will see why. With respect to the journalists who have invested time in creating or Australianising content, this is not a great publication. It looks like they have purchased content from a content factory (such places do exist), attracted some ads and shipped the title out to newsagents to hope for the best.
Jim Flynn is also behind Citrus Media, a publisher of photographic and technology one shots with long shelf lives.
The magazine distribution model is the key element here. Newsagents have been sent stock with no say in receiving a new title or the volume. Many newsagents will carry the titles for the full three months. Depending on the arrangement between network services and media factory, these newsagents could unlock a chunk of cash for media factory.
We received the title last week. We will pay for the stock by February 20. Returns go in the first week of April with the credit not showing on our statement until May. That is three months of cash provided to media factory (depending on their arrangement with Network Services) at no cost to them.
We received 15 copies in one of my stores. If I do what the publisher and distributor want, I would be paying $168.19 by February 20. While not a challenging loan to provide, multiply that by a few thousand newsagents and you can see that as a channel we could be sending several hundred thousand dollars, interest free, to Media Factory. Nice (interest free) cash flow with which they can build their business or do other things.
Of course, my numbers do not account for revenue from sales of the title and it is entirely possible that we will sell copies. I don’t expect any more than one or two copies sold but I could be wrong. My figures also do not account for labour, real estate and theft.
Is the Media Factory / Citrus Media model one where they pump out low cost content knowing that the newsagency magazine distribution model will provide them with cash flow regardless of sales? I don’t have the answer for that. After reading the Google magazine I have my suspicions but I cannot be sure.
Newsagents rely on magazine distributors to manage access to the channel. Whether we like it or not, they are the gatekeepers. Having read the Google magazine I think it is time they reviewed how they discharge their role. Of course I am kidding, they serve their shareholders ahead of newsagents.