A blog on issues affecting Australia's newsagents, media and small business generally. More ...

Month: November 2006

Newspapers and their future – a round table discussion

Eric Beecher, CEO of Crikey, Peter Lynch, Executive Editor, Editorial and Business development at Fairfax and Tony Hale, CEO of The Newspaper Works participated in a round table at the Media and Broadcasting Congress in Sydney yesterday. It was 2 against 1 as Lynch and Hale spun and denied for their masters about the impact of the Internet and mobile technology on newspapers and Beecher draw our attention to the move of advertising revenue away from newspapers and online, that newspapers are bleeding classified revenue and that this is their lifeblood. The audience was clearly with him on this – most were from the online space. While neither Lynch or Hale addressed the classified problem, Hale did counter with “Classifieds are moving online at the speed of a receding glacier”. Hmmm Not the best analogy. Hale talked up free newspapers and Lynch even hinted that Fairfax could play (again) in this space.

Beecher made the point several times that he likes newspapers and good journalism. His core concern is that newspaper publishers are in denial. Based on yesterday’s performance in the round table I’d agree. Lynch and Hale ignored the big issues and would have us believe that it is business as usual. The investments of their parent companies tell a different story. I would have thought that if newspapers were as valued by consumers as Lynch and Hale suggest, then the cover prices ought to reflect the added value. Instead, the cover price is used to restrict revenue share and to ensure consumers don’t have a reason to reconsider their habit.

Ten days ago at the newspaper conference I attended in Vienna I heard from newspaper publishers who would have laughed had they been listening to Lynch and Hale yesterday. In Vienna newspaper publishers were proud to talk about how they are pursuing revenue online and with free models to deliver the revenue necessary to fund good journalism. Many said the product as we know it today has no future.

Newsagents reading this should be concerned about the future of their current business model. Not next year and probably not in 2008, but soon, newspaper sales will fall. Just as publishers rely on classified revenue to fund other parts of their business, newsagents rely on newspapers for traffic, they are central to what a newsagency is. The fall in newspaper sales will bring about changes in the distribution model which will affect our businesses. This is why we need to listen to people like Eric Beecher – his newspaper editorial and management background make him well qualified to observe and comment. We need to be better informed about what lies ahead so that our business plans today can reflect a more truthful view of the future.

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Newspaper marketing

Newspaper publishers poorly represented by their new body

newspaper_works

Newspapers are incredibly profitable enterprises.

Tony Hale, CEO of The Newspaper Works – a coalition of newspaper publishers created earlier this year to talk up newspapers – was speaking earlier today at the Media and Broadcasting Congress in Sydney. In his speech, Hale flippantly and without real context derided respected commentators including Jay Rosen and Michael Porter. An easy target was anyone talking down newspapers. Hale reminded us of Bill Gates’ prediction in the 1990s that newspaper and magazine publishers would close. He relied on Gates being wrong to ‘prove’ that today’s naysayers will also be wrong.

Hale took us through an amazing set of numbers covering circulation, readership and advertising. He left off cover price – I guess because in Australia we have seen below inflation rises. While Hale indicated that circulation growth came primarily from the free commuter dailies, he did not present data to address problem the migration of classifieds online. By not talking about this he ignored the elephant in the room.

Hale will need to lift his game if he is to get advertisers believing that newspapers have as bright a future as he suggests. Making fun of commentators may get some laughs but it will not address the impact of the Internet on the print product. While Australian publishers are dong well with their online models, significant costs in their businesses are tied to print and this will have to be addressed as sales of the print product in its present form decays.

As one who relies on newspapers for traffic and revenue for my businesses and for enjoyment to read, I would prefer Hale to take a smarter and, dare I say, more accurate, approach to talking up the medium – especially when speaking at a conference so focused on new media.

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Newspapers

Newspapers to become bit players in media shake-up?

Graeme Samuel, Chairman of the ACCC, delivered an interesting speech at the Broadcasting and Media Congress this morning looking at the flurry of changes in media ownership. Much of what he discussed was about distribution. He started talking about how it was (is?) with the newspaper landing on the doorstep but quickly moved to the smorgasbord of options we have today. He is right to observe that the “Internet has turned distribution on its ear”. He said Australia will get a faster broadband service. This will increase the pace of change. Toward the end of the speech, Graeme Samuel asked a question which goes to the heart of newsagent concerns – “How relevant will it be to have two major newspaper publishers?” While he was talking in the context of media regulation and ownership changes, my interest was more one of how much the question sounds like game over for newspapers – certainly in terms of diversity and relevance.

It’s another reason newsagents need to plan today for this world where newspapers are not the habit they are today. Newsagents need to sit at the table with newspaper publishers with this perspective of a dramatically changed world and to have business plans which pursue traffic and margin outside the sale of newspapers (and magazines).

As Samuel told the audience this morning, the ACCC has published a discussion paper which provides guidance as to how future cross-media merger proposals might be assessed.

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Media disruption

Irish Echo – the worst newspaper

Irish Echo is the worst newspaper according to many newsagents. We lose money on this every week of the year bar one – the week of St Patrick’s Day. While it is supplied on a sale or return basis, Irish Echo takes up real-estate and requires labour – these are costs to newsagencies. Either newsagents need to be paid a handling fee or they are provided much better terms. The current situation disrespects newsagents.

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Newspapers

BRW mastheads confuse

brw.JPGBRW has two special issues and it’s weekly issue on sale at the moment and it’s confusing customers. In regular magazine fixturing it is impossible to tell the issues apart – hence the confusion among customers.

While full face display fixes this, few newsagents would have the space for a full face display of BRW nor could they justify this based on the cost of retail real-estate. Cover designed at BRW need to take this fixturing into account with future special editions.

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magazines

Ashes cricket pins soft

The folks at the Herald Sun have done a great job making sure newsagents have stock of the Ashes team pins. We were ready with a good process for handling back orders and advance orders. The expected rush didn’t happen. It’s been very well supported in the newspaper so who knows why this one has been soft with consumers. These things are hard to pick.

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Newspaper marketing

The New Yorker archive for sale

The publisher of The New Yorker has released their entire archive, February, 1925 – April, 2006, on a palm-sized portable Hitachi hard drive. 4,000 issues. The cost is US$299. While plenty of magazine content has a shelf life, there are some titles which come to mind which led themselves to similar packaging of archives. Even the weeklies could put together packages of content based on a subject. Of course I would like it if such archive packages were available through newsagents.

Source: meika loofs samorzewski

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magazines

Overweight newspapers make for unsafe work practices according to OH&S study

oh&s.JPGThis is a story you won’t read in the newspapers since it’s about newspapers and unsafe workplace practices resulting from often overweight product.

The findings of an ergonomic assessment into the handling of newspapers by newsagents in South Australia make for concerning reading. According to the report, current work practices are unsafe. Newsagents in South Australia are yet to be given a copy of the report and therefore may not be aware that they and their employees may be engaged in unsafe work practices. The key ergonomic risk factors identified in the report exist, in my view, in Western Australia, New South Wales, Queensland and Victoria in addition to South Australia where the research was undertaken.

The professionally prepared report documents unsafe work practices which stem, in part, from having to handle heavy newspapers. Any newspaper above .6 kilogram in weight is considered to be heavy. Consider this quote from the Executive Summary:

The Results section of this report (page 10) has outlined significant ergonomic risk factors associated with the newspaper delivery tasks. These risk factors are particularly related to dimensions of the weekend papers (Advertiser and Sunday Mail) when combined with the repetition, volume and manual handling aspects of the delivery process. In particular, there are significant risks associated with the delivery/throwing of the larger dimensioned and heavier Saturday Advertiser and Sunday Mail newspapers.

The report makes recommendations in the areas of unloading trucks, feeding wrapping machines, the loading of delivery vehicles, the weight of wrapped newspapers and the safe number of newspapers to be thrown by one person each day. But it all comes back to the weight of the newspaper and specifically, the weight of the Saturday newspaper. Section 5.2 of the report goes to the heart of the issue:

Agreement between the suppliers of the newspapers (i.e. The Advertiser) and the Australian Newsagents’ Federation about the safe task demands for the distribution of the newspapers. The current situation, in my view, is unsafe and modifications to the weight, dimensions and volume of papers distributed per person need to be reduced to provide a safe system of work.There are requirements for the performance of safe work by members of the Australian Newsagents’ Federation as per the Handling Procedures outlined in section 8.5 of the Territorial Distribution Agency Agreement where it states a Distributor must ensure that its employees, contractors and agents engaged in the performance of this Agreement, including, but not limited to, the handling, wrapping, strapping or delivery of Publications:

(a) perform their duties in a manner which does not expose them to any risk to their health, safety and welfare;
(b) do not cause any injury to themselves or to others, and 

There is also, in my opinion, and as outlined in the South Australian Occupational Health, Safety and Welfare Regulations (1995) an obligation for the manufacturers of the newspapers, News Corporation in this case, to provide a product that is safe to handle by the members of the Australian Newsagents’ Federation.

The Australian Newsagents’ Federation, which commissioned the report, received it from David Nery four months ago. I understand from the ANF website that it is currently seeking advice from a QC experienced in the OH&S area.

Workplace practices are not something one ought to spend too long thinking about. Either current practices are safe or they are not. If they are not safe, safe practices ought to be implemented immediately and in an economically sustainable way.

Since the weight of the newspaper is at the heart of the OH&S issue here, newspaper publishers will need to be involved in the solution. They control the weight of the product, the contractual terms under which newsagents operate and the fees newsagents may charge for the home delivery service. The fee will be an issue if, for example, what is currently a single wrap and throw for a Saturday Advertiser becomes two wraps and two throws. The fee is equally an issue if heavy newspapers continue to be thrown in one roll but with fewer throws per person per day as recommended in the report. The Nery report recommends that the average daily newspaper throws per person be reduced, because of newspaper weight, from 400-600 to 200-300. This is not economically viable for newsagents under the current delivery fee structure.

The ANF and newspaper publishers ought to provide newsagents with advice this week on how to immediately address the workplace situation. The Nery report contains some excellent and easy to implement advice in product handling. Publishers ought to also advise newsagents about how they plan to address the issue of overweight newspapers in the future to facilitate safe work practices. The solution begins with appropriately informing those who may be involved in unsafe work practices and advising changes which must be implemented immediately to ensure a safe work environment. Advice must also include an appropriate financial solution – ensuring that newsagents are not financially disadvantaged by oversized newspapers.

If newsagencies were unionised this report would be the subject of strike action. You’d be watching stories on TV current affairs shows of unionists picketing publishers in pursuit of a safer workplace. Newsagencies are not unionised. Most of the heavy work is done by newsagents themselves or by people too happy for the pay to be concerned about a heavy newspaper.

Publishers, newsagents and the ANF collectively have an obligation to urgently ensure that newspaper delivery practices are safe. Life is too short to risk injury because of a heavy newspaper.

For the record, I note that this report was not provided by anyone connected with any newsagent association. I make that point because I expect that there will be an accusation that the report was leaked to me by one of the state newsagent associations to get it into the public domain. My source is not under any confidentiality obligation and has given me this material so that newsagents can be informed of the need to improve work practices to better deal with heavy newspapers.

The report has been prepared by David Nery B.Sc. Hons. (Flinders), M.Sc. (London). He is principal of Nery Ergonomic Services. A search on Google quickly demonstrates his credentials in the area of industrial ergonomics.

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Newsagency challenges

Who needs the Yellow Pages?

head_google_phone.gifCourtesy of Lost Remote is this story by Cory Bergman about a smart new service from Google for the US marketplace. When searching for a business you get to connect with them by phone – easily. The service is free for callers and the businesses. Google is on a win win with this. Who needs the Yellow Pages? Who needs flyers in the letter box promoting local businesses? Who needs local newspaper classifieds?

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Media disruption

Calendars, coupons and building a future

calendar.JPGSales of our exclusive newsXpress calendar are strong. With this calendar offering we cut out a middleman, improved margin, delivered an excellent calendar for a lower price and setup marketing initiatives for 2007 – the calendar includes 24 coupons which customers will bring back to our shop (and other newsXpress outlets) through 2007 to redeem for offers. Being exclusive to newsXpress, means our stores have a valuable point of difference in our calendar offering – rather than relying of suppliers to trim margin, we have, as a unified group, negotiated commercially and with considerable success.

This is a new approach for newsagents – it’s what we MUST do for our future. We need to exert more control over our range, improve margin and branch out into new areas which provide the traffic necessary to deliver a bright future. Our existing suppliers are not going to deliver the growth and margin we need – certainly not with exclusive product. If we don’t want to become general stores we must control more of what we sell. Hence the welcome first steps this month by newsXpress.

Disclosure – I am a shareholder in and Director of newsXpress Pty Ltd

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Calendars

Newspaper masthead violation

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Fairfax shows money is more important than a masthead in Sydney today with this Post-It type ad stuck on the front page of today’s Sydney Morning Herald. The frustration for retail newsagents is that this promotion pushes their customers away, it seeks to convert over-the-counter customers to home delivery customers. How many other channels would see a supplier use its partners to move customers away from them? Such is the lot of a newsagent.

Smart newsagents will remove the Post-It note ads and save their customers doing this at the counter or as they leave the shop.

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Newsagency challenges

Fast 3 Awards reward growth in small business newsagents

fast3.JPGAs I have covered at my Tower Blog, we are close to finalising the Tower Systems 2006 Fast 3 Awards. The Fast 3 are the three fastest growing newsagents using our software. Through the awards we are encouraging newsagents to compete with themselves – to enter they print a report which compares sales over a ten month period in 2006 with the same period in 2005. We measure on unit sales. The three with the most growth win. With over 1,300 newsagents using our software today we are drawing from a considerable entrant pool.

The Fast 3 Awards gets newsagents interacting with their software. They underscore the importance of competing with yourself and reward growth regardless of the size of the business. Entrants are vying for prestige more than a financially rewarding prize as this is more about the process than anything else.

There is no comparable growth focused award for newsagents.

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marketing

The Australia Post soft and fluffy lucky charm

post_toys.JPGThis is the entrance to the Government owned Post Shop opposite my newsagency. To get to the line to buy stamps or post a parcel you first need to navigate the soft toy speed hump. It’s there right in the entrance. I have been thinking about these soft toys and how the executives at Australia Post con the government that they are somehow connected with providing postal services then it dawned on me – they are the their lucky charms. They bring luck to the house in which they live. By luck, I mean on time mail. Buy one of these Australia Post soft toys and your mail will be on time. This means Express Post will arrive the next day!

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Australia Post

New Idea, WHO to publish features on Belinda Emmett tomorrow

new_idea.JPGwho_cover.JPG

WHO, out tomorrow, has a cover story about Belinda Emmett who lost her fight with cancer last weekend. The publishers have announced a donation of 10 cents from every copy to the McGrath Foundation. New Idea is publishing three days early and will be out tomorrow with a Belinda Emmett cover story and 10-page special tribute. Pacific Magazines, New Idea publisher, is donating $15,000 from the New Idea Breast Cancer Fund to the McGrath Foundation. From our newsagency we will be donating 25 cents from each copy of WHO and New Idea we sell to the McGrath Foundation – their focus is in raising funds to fund specialist breast care nurses primarily in rural areas without current access to them.

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magazines

Is Sir Humphrey Appleby working for the Government?

On September 26 I wrote to, among others, Federal Minister for Small Business, Fran Bailey about Australia Post and the unfair advantage their Government-owned Australia Post stores had and how they were specifically targeting small businesses, specifically newsagencies. In my letter I said, in part:

When farmers talk of the impact of droughts the government steps in with assistance. When auto makers talk of the impact of cheap imports the government steps in and helps. When newsagents talk of the impact of Australia Post the government ignores us.

Australia Post is our drought. For many years now it has been draining newsagencies of revenue.

Yesterday, I received this reply from the Minister. While I appreciate the response, it is meaningless. The letter says, in part:

The Australian Government recognises the importance of newsagencies in our communities and is committed to creating a fair trading environment for all small businesses.

It also makes the claim that Australia Post is permitted to:

…carry on any business or activity that is incidental or relates to the supply of postal services.

This morning I have responded with this letter to the Minister. How can the Government consider Music CDs, Chess sets, Radios, Puzzles and Cookbooks to meet the criteria under the Act? Why will the Government not take steps to have the Australia Post breach of its obligations under the Act investigated?

The Government is conflicted beyond its ownership and regulation of Australia Post. As my letter to the Minister today says:

For decades, newsagents were profitable while they had a monopoly on the distribution of newspapers and magazines. In 1999 the Government facilitated the deregulation of the distribution of newspapers and magazines. As we have lost the benefits of exclusive traffic as a result of this deregulation, Australia Post has increased its range of newsagent type lines and thereby very successfully leveraged its continued exclusivity to more effectively compete with us.

I am not calling for a wind-back of newspaper and magazine deregulation. Rather, I am calling for the Government to get out of the business of competing with independent small business.

I was in a Government owned Post Office yesterday and was confronted with a big display of plush product – soft toys. Where in the Act are provisions permitting Australia Post to enter the soft toy space? Their entry into this category this Christmas season will affect sales in my newsagency.

I am disappointed that the Government will not even for a moment contemplate that they are wrong on this and that the actions of their Corporation are harming a small business channel which is vital to the community.

Yes, Sir Humphrey Appleby is alive and well and writing letters for the Government.

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Australia Post

Flyer boosts magazine and scratch ticket sales

magazine-sale-poster-front.jpgmagazine-sale-poster-back.jpgWe sent this flyer out to 20,000 houses around of shopping centre as one part of our pre-Christmas marketing strategy. It was delivered with the local newspaper – ensuring it gets into letterboxes. It’s the first time we have promoted our Magazine Club Card promotion using anything other than our over-the-counter pitch. We had to do something since we closed our second outlet for a month while we moved and built an entirely new store. In addition to these flyers we are creating bolder in-store displays and undertaking several other initiatives to reinforce sales in our main shop.

The scratch ticket promotion on the second page of the brochure is working very well. Sales are up considerably. This is in part due to the flyers but more because our employees know they need to offer the up-sell otherwise we give away a free $1 ticket. There is no doubt that a low an up-sell at a newsagency counter costing no more than loose change works well. We tried this a few months ago with pens and also with chocolates. Each time it worked a treat.

The reason we closed our second shop is so we could make way for our new card and gifts shop. Considering margin and the mix of products in our centre we feel we will be better served with a differently branded card and gift shop on the lower level of the centre rather than a smaller version of our newsagency. There will be a short term loss of magazine and newspaper sales – but this flyer campaign and related activity should address that. The move is about the long term of the business.

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Lotteries

Media disruption forecast in 1931

Thanks to Rob Curley, speaking at the Beyond the Printed Word conference in Vienna last week, I discovered this quote from William Allen White, Pulitzer Prize-winning editor and publisher, in 1931:

“Of course as long as man lives someone will have to fill the herald’s place. Someone will have to do the bellringer’s work. Someone will have to tell the story of the day’s news and the year’s happenings. A reporter is perennial under many names and will persist with humanity. But whether the reporter’s story will be printed in types upon a press, I don’t know. I seriously doubt it. I think most of the machinery now employed in printing the day’s, the week’s, or the month’s doings will be junked by the end of this century and will be as archaic as the bellringer’s bell, or the herald’s trumpet. New methods of communication I think will supercede the old.”

William Allen White, April 21, 1931
in a personal letter to Lyman B. Kellogg

White is right. How we access news and information will change. That it is published will not. This is why the goals of publishers do not match those of their distribution network. We are in different businesses. We must understand that if we, newsagents, are to make our own future. Not today or tomorrow but sometime soon our network will lose its value and, I suspect, be cut loose. We must pursue new customer traffic generating models for the future while ensuring the maximum return from the newspaper generated traffic we enjoy in the meantime.

The best connection I can see with the next generation of news and information distribution is through mobile access recharge. These are transactions of fractional value compared to newspaper sales. Today, we make between 18% and 25% on the sale of a newspaper and 5% on the sale of mobile device recharge. I’d expect the mobile device recharge to fall to 3% within the next year. While recharge generates traffic such customers are not loyal and we cannot therefore rely on them for traffic. So, in reality, mobile recharge is no replacement for newspapers.

Core to our challenge is that our channel was created by publishers. For our entire history we have looked to publishers to lead us by providing new products and partnering with us in their own innovations. This cannot continue given that mobile and other non-print distribution models do not require out network. Hence our need to find our own future.

I’ll have more to say on this at a future time. For now, I wanted to share the prescient quote from William Allen White.

Source: Rob Curley, VP New Products development, Washington Post, Newsweek Interactive.

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Media disruption

New Woman buckles under weight

new_woman.JPGIs this a promotion gone wrong or what? The sunglasses attached to the cover of this month’s New Woman fall off. You put them back on. They fall off again. Soon they crack under the weight of a misplaced shoe or shopping trolley. The only way to hold the sunglasses in place is with some decent tape but the glasses are so heavy they make the magazine lean forward. I love promotions which add value to a product but not when they lead to a negative customer experience. While the sunglasses themselves might be a good idea either they need better glue or they need to make it a counter redemption offer – even though they have a different set of challenges.

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magazines

Online ink and toner sales boost retail store sales

inkfast.JPG

Inkfast, our online ink and toner business, is now fifteen months old and consistently generates more sales than we achieve through the entire stationery department of our retail business. For the last two months we have operated profitably without Google or Yahoo paid advertising campaigns – demonstrating that we have, in the fifteen months, created a sustainable ink and toner business. The benefits for our retail business are: better buying – thanks to Inkfast volume; better time management – it is easier to schedule order fulfillment from an online business than retail sales; spreading the risk – by moving from a pure retail play in stationery to an online/retail mix we are growing the overall category thanks to our new online customers.

While not all newsagents can move online as easy as us – since I also own a software company – they can play through the likes of online auction and classified sites. Given the growth of online sales – reports says it has doubled in the last six months – retailers not online are missing out.

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Newsagency challenges

Christmas starting earlier, card sales up

Newsagents usually see Christmas sales of cards and related items kick in early in ember. This year, based on data from several stores in three different states, Christmas seems to have started earlier. Cards are the best indicator and in my own shop Christmas card sales are up 35% on the same time last year and we are down one outlet (our second shop is closed – moving to a new location and underground a complete re-fit). The newsagencies I have spoken with are early-adopters – they have seen the commercial by the majors and went out early with Christmas to capitalise on the market awareness. Sales results prose the early (for newsagents) move to be worthwhile.

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Greeting Cards
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