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Grandad, what’s a newspaper? The ACCC on convergence.

The Age publishes a piece today by Graeme Samuel, chairman of the ACCC (Australian Consumer Competition Commission). Samuel yesterday delivered a speech, Granddad, what’s a newspaper?: the next media revolution which is the basis for the article. While considering the government’s recently announced media changes from a regulatory perspective, Samuel discusses, in brief, the considerable changes in how consumers access news and information. This is where I find the speech most interesting.

We don’t hear too much about the coming changes in how we will access news and information in Australia. All media outlets spin the challenges of convergence, disruption – call it what you will – to suit their purposes. Samuel does not have such a conflict. While publishers and broadcasters have management and financial resources necessary to modify their business plans in response to the changes, it’s at the small business end, particularly newsagencies. Where the impact could be greatest due to lack of planning.

Even though it may be outside his brief, I would like Graeme Samuel to deliver his speech to newsagents. It would serve as an important wake up call. The core business of newsagencies is changing. Slowly at present and maybe for a few years yet but change it will. The speed of change will pick up with time. Smart newsagents see this already and are evolving their business models They are merging home delivery territories. Others are morphing their retail businesses to a new level. Those not so smart expect publishers and other suppliers to take their hand if there is to be any change.

The newsagent channel consists of 4,600 retail outlets and around 3,500 distribution points. I’d guess that there are around 60,000 employees – 30% full time and 70% casual. In an average newsagency between 40% and 60% of revenue comes from newspapers and magazines. The infrastructure has a cost which is barely covered by today’s revenue. Any dilution of that will hit hard unless the lost revenue is replaced. This is what most newsagents cannot see. The do not understand the need to grow traffic from non newsagent and magazine seeking consumers.

I am not advocating any form of protection for newsagents. They exist in a deregulated world and are free to make their own decisions. However, with so many unaware of the impact of technological change someone in authority needs to tap them on the shoulder and suggest they look beyond a few steps in front. This is where Samuel could play a role. Given the involvement of the ACCC in the deregulation of the distribution of newspapers in 1999 they would be an appropriate body to educate newsagents.

The ACCC could assist newsagents in one key area: the magazine distribution model has not changed since prior to deregulation. This model sees newsagents provided low volume titles – those outside the top 200 – on inequitable terms. Supermarkets, petrol outlets and convenience stores refuse to carry these titles because they would not deliver an adequate return. The ACCC could look at the economic model in the context of the deregulation it facilitated and determine if the deregulation changes left newsagents with a magazine supply model which is anti competitive for them.

In the meantime one can only hope that newsagent associations and others will promote the Samuel speech to their members.

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Media disruption

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