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

Month: February 2007

Navigating the Media Divide, a must read report from IBM

IBM Institute for Business Value study has published Navigating the Media Divide: Innovating and Enabling New Business Models a report which everyone involved in print media ought to read, newsagents especially.

While IBM makes an excellent case for change within newspaper publishers and other ‘old media’ companies, the case is equally timely and relevant for Australia’s 4,600 small business newsagents. Between 30% and 60% of our retail businesses relies on old media products. The report goes to the heart of the threats they face and how the publishers need to react to remain viable. The summary sets the report up well:

A new media world has arrived. Pioneered by teens and gadget-savvy professionals, it has quickly spread into virtually every consumer segment, and started to encroach on traditional media. The number of unique visitors to MySpace.com has now surpassed the 50 million mark – something akin to the number of U.S. households that tune into the Super Bowl.1 Every day, consumers around the world watch about 100 million videos on YouTube – putting that number in context, the top 15 British primetime television shows combined attract about 100 million viewers, as do the top 4 U.S. shows.2

The report has several recommendations but one speaks directly to newsagencies in my view: Refocus capital investment from traditional business to new models. What this means is changing the design of our stores, bring in new products and services and plan for a life less reliant on the products around which the newsagency channel was created. I see nothing to fear in such fundamental change. Yes it will be challenging. It will also allow us to take control of our businesses, probably for the first time since newsagencies began.

Kudos to IBM for creating this report. While they have commercial reasons, down here at the small business level the report can be an excellent catalyst for change as it’s a view, in part, of our world without the bias of a supplier or a potential supplier.

The report concludes with, in part:

The current clash between traditional and new media is reaching a fevered pitch. Industry incumbents are responding – but perhaps not quickly or completely enough.

My question for newsagents is: Are we responding to the changes we see?

You can download the Executive Summary or the full report.

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Media disruption

The timing of seasonal displays

easter1.JPGHow early should seasonal displays for Easter, Valentines Day, Mothers Day, Fathers Day etc go out? It’s a question newsagents ask often as we bounce from season to season in the first half of the year, especially in the greeting card space.

My view is that the season ought to go out as early as possible, especially if it can be done without taking away from your everyday range. Who knows what needs customers have for buying a card an d getting it in the mail in advance of the season? Further, seasonal displays freshen the retail offering.

Ben Kay, manager of my store at newsXpress Forest Hill disagrees. He reckons retailers go out too early with seasons – Christmas displays in September/October etc. Ben would rather some ‘clean air’ between seasons.

As a consumer I’d like ‘free air’ between the retail seasons. Who doesn’t like normalcy? As a retailer I need to maximise every opportunity – hence the decision to go early with seasons. When Valentines Day came down, Easter went up and it’s selling already which in itself vindicates the decision. We’ve started Easter with this small display and it will grow every few days as we get closer.

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Greeting Cards

Smiggle Australia Post deal locks out newsagents

The deal I mentioned here last month between Australia Post and Smiggle social stationery seems to have blocked independent retailers like newsagents getting Smiggle product into their stores. Two newsagents I know of who were on the road to stocking Smiggle have reportedly been told by the company that Smiggle will not proceed because of “a corporate deal”.

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Uncategorized

Free Brisbane newspaper next month

A contact within News Ltd and two outside have said that the Brisbane edition of MX, News Ltd’s free daily newspaper, should be on the streets by mid March. While there are still distribution issues there seems to be a feeling that they need to get on the streets regardless.

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Uncategorized

Newspaper circulation boost on campus

age-uni-card.JPGUniversity students across Melbourne this week are being offered The Age for 40 weeks for $20.00 which includes home delivery on Saturday and Sunday for the 40 weeks. That’s revenue of 7.1 cents a copy. University schedules being what they are, students will not pick up their copy every week day.

I am curious to know what the folks at The Age will report in their audit numbers. Do audit bureau reported sales include real counts of copies collected or what could be collected over the 40 weeks? Given the on campus management of the collection I suspect the audit number would be the latter.

UPDATE (27/2) I have been contacted by Fairfax and they have confirmed that only actual copies collected on campus are counted in audit figures.

The brochure put in student welcome packs connects with the market using the promotional line: The easiest way to pick up on campus…

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Newsagency challenges

Censorship and blogging

I am sure I am not the only blogger pressured to censor or remove or edit blog entries. If the blog entry is inaccurate or the situation has changed, I’ll update it. Otherwise, it remains published. One of the benefits of blogging is that there is less filtering – stories are able to gain readership which in the old media world would never have seen the light of day. Companies need to understand that you can’t rewrite history by removing a blog entry.

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Uncategorized

Lottery agent’s association wrong on Intralot supermarket pitch

The Lottery Agents Association of Victoria said the State Government was unlikely to approve Intralot’s opportunistic application.

Association CEO Peter Judkins CEO said Mr Fletcher’s petition meant well but even if the unlikely approval was made, changes would not come before mid next year.

This is from a story in the Geelong Advertiser on February 13. Judkins has no idea if the government is likely to approve the bid by Intralot to sell scratch tickets in supermarkets. He is wrong to take pressure off the government as he has through this story. Further on the article…

But the CEO said the association would join Mr Fletcher’s fight, should the approval begin to grow legs.

I’ve not heard from Judkins so I am not sure how he plans to support the petition.

The time for Victorian lottery agents is to act now. We ought to be on the steps of parliament mocking the big fat and rich Coles and Safeway organisations and the risk to communities, responsible gambling and family owned small businesses if they will scratch tickets. Unfortunately, Judkins and his association would have us sit on our hands. I’d rather be a dill and find that Intralot loses than be Judkins and find that Intralot has won because by then it would be too late.

Here’s the Geelong Advertiser article:

geelong-advertiser.JPG

On this same topic of lotteries in Victoria and Itralot, Kenneth Davidson of The Age has written an interesting opinion piece which looks at the Upper House Inquiry into the regulation of gambling in Victoria.

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Lotteries

Knitting and chocolate and newsXpress Forest Hill

I’m going to have to rethink long tail, niche, magazines as a result of this blog post by chocolatetrudi. It seems that Trudi was in my shop browsing and found some titles covering her special area of interest – knitting – and found a magazine she had been chasing for some time.

We pride ourselves on our niche title range and while it does not generate the return on space we would like, feedback like that from Trudi is encouraging.

We’re planning some changes to capture more of this market without the retail costs – more on that another time.

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Uncategorized

Pregnancy magazine twins!

Pregnancy and Baby is an Australian magazine which we get through Network. Pregnancy and Baby is a UK magazine which we get through NDD. Twins! Identical twins!

pregnancy.JPG

This is another example of magazine distributors not respecting newsagents. With almost identical content my customers will be confused by the offering – especially this month with the UK product plastic bagged and with a free book and costing less.

If newsagents controlled, centrally, what titles got access to their network this situation would not happen.

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magazines

Newsagency store design for today

Store design is critical for newsagents as the focus on core products changes as a result of online influences. Too many newsagencies have a design which does not reflect today’s needs.

Here’s a photo of the Relay store at Adelaide airport. Relay is a brand of HDS Retail, the company which also owns the Newslink branded stores.

replay4.JPG

See the full face display of magazines. This works for the top 300 or so titles as they have done with this store – although magazine covers are dark in the fixturing on the wall.

What HDS has done with Relay is, in part, what I mean when I talk here about the need for newsagents to reinvent how they display magazines. The days of a massive range where only the top third of a cover is showing are over. Is the Relay design suitable for a newsagency outside of a major airport? Probably not. However, there are some ideas worth borrowing and finessing to suit a high street situation.

I’m involved in designing a new newsagency store layout at present are our goal is between 1,000 and 1,300 titles but with a third of these displaying full face and the rest displaying half face.

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Newsagency challenges

Newspaper records 52% circulation growth

The Sydney edition of News Ltd’s MX free daily newspaper increased circulation by 52%. The Australian has the story. MX was a huge hit in Melbourne for several years before the launch in Sydney. The 52% increase will encourage News executives who are considering/planning a Brisbane launch as I blogged here a few weeks back.

Free daily newspapers need a certain level of traffic access for little or no cost and my understanding is that there is a question as to whether Brisbane can deliver this.

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Newspapers

Print declining, online video soaring

Read this story from Editors weblog. It quotes Laurent Rich Fine, respected newspaper analyst at Merrill Lynch & Co. This story supports why I see newsagent revenue per home delivered product falling, why publishers want their products in as many retail outlets as possible and, why retail newsagents need to revisit capital investment in print media product. Here’s a taste of the article:

“Interest in news is greater today than it’s ever been,” said Fine. Yet newspaper companies shouldn’t cling to profit margins and models that don’t work anymore. “There’s no way to go back to where the industry has come from,” she added.

So don’t waste time in nostalgic reminiscence, especially as newspapers are experimenting with online features that are proving to draw readers and money.

Fine does believe that large newspapers will continue to strive, as well as local ones. “I think there’s an enormous, unsated appetite for really local news,” she said. Thus the overlying uncertainty concerns midsize metropolitan dailies.

According to her, newspapers can’t operate on the same business model, can’t expect similar profit margins, and should expect their print products to lose in importance.

Newsagents can’t operate on the same business model, can’t expect similar profit margins, and should expect print products to lose in importance.

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Media disruption

State by state differences in lottery offerings

How can it be that the state owned NSW Lotteries can offer lottery retailers free promotional product while Tattersalls in Victoria offers nothing?

In NSW on Feb. 23 and 24 if you buy a 30 game Megapick in draw 2671 you get eight standard Autopick games of Monday and Wednesday free. The seller gets commission on the paid for and free product.

This is a good deal for the consumer and for the lottery agent.

There are similar deals for Powerball, 6 from 38 Pools and instants.

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Lotteries

Comparing newsagencies by crossword titles

I have been working in six different newsagencies in the last few days on magazine layouts and related matters and have been surprised at the differences I am seeing. I expected four of the six newsagencies to have a demographic similar to that of my newsagency based on the ratio of sales of several niche categories to women’s weeklies. That anticipated similarity is not reflected in magazine range. In these four of the six they each had no more than six crossword titles on the shelves. Here’s our crossword category as photographed yesterday:

crosswords.JPG

Okay, we made a decision some time ago to use the crossword category to declare a point of difference. We did this because crossword customers are loyal to a retailer with a good range, they are regular and they buy other products. In fact, crossword titles are among the most efficient magazines – that is, sales with crossword titles have more items and are worth more based on the data I see.

So back to these other four newsagencies. With only a few titles on the shelf the crossword is not a section. You can barely find it. So, these newsagencies need to either get more stock or get out of the category. The challenge is that if they ask for more stock, what other supply situations are they likely to unlock for their businesses? There is huge mistrust among newsagents about the magazine supply model and no wonder based on common behaviour.

It’s easier and probably safer for the four to leave things as they are and concentrate of more successful categories – they are the low-hanging fruit magazine growth opportunities. Taking a tiny category in pursuit of growth takes capital, space and time – three things newsagents scrounge for.

The question I have is: how did this happen? In my mind every newsagency ought to have a strong crossword category because no other retailer will. It’s a significant point of difference we can embrace. So, how did the category fade and in how many stores?

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magazines

WSJ sets stories free

Stories want to be free. Free of newspapers, magazines and websites which restrict access. They want to spread virally and without shackles tying them to the publisher.

The people at Wall Street Journal have made it very easy to embed their video content in other sites such as this blog. Okay, they wrap their ads around the content but that’s okay if the story is worthwhile. Below is a story about online dating sites and social media in general.

Andy Plesser at Beet.tv had this to say about the WSJ move:

This is a very important development. As far as I know, no major newspaper publisher is allowing its videos to be shared this way. I know a big concern is having advertising surrounding the clips appear on sites outside of a media plan.

The WSJ move is clever because it sets their brand and content free while maintaining control over look and feel. It’s further evidence that the story is the thing. By setting stories free like this and enabling them to be shared so freely, WSJ is acknowledging that stories have their own life outside of the newspaper, magazine or website.

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Media disruption

Free magazine receipt pitch

This is the other receipt coupon we’re about to try. This one will print on all other receipts. It promotes our magazine club card and pitches the proposition of a free magazine.

mag-card-receipt.JPG

The beauty of receipt promotions is that they turn a business document into a marketing tool. For Tower Newsagents wanting to use this facility please see Advice Sheet #42.

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magazines

Receipt marketing at point of sale

How’s this for cool receipt marketing? The customer buys printer ink and an offer prints automatically with their receipt. The discount is effectively on the third item purchased. We’re not sure if we will run with 25% or a bit less – we’re still working on that. While we have done receipt marketing before, we are now targeting more carefully. For us it’s free ad real-estate.

receipt.JPG

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marketing

Dumbo Feather, pass…

Dumbo Feather is the kind of title I like to carry as an example of the point of difference between my newsagency and other magazine outlets like supermarkets and the like.  It appeals to a certain cconsumer, one which is hard to attract and maintain in this marketplace.  I like the title a lot.

The challenge for the title is the long on-sale.  For a niche title not easily displayed and located, this is a big challenge indeed.If the publisher wants Dumbo Feather to remain on the maybe they could consider delayed billing and/or funding newsagent costs – but they’re a small operation and unlikely to be able to afford this.

Magazine distributors would know that to continue to distribute a long shelf-life and expensive title which achieves a sub-50% sell through rate to newsagents is unfair because they are guaranteed to be loss making. As newsagents become smarter at identifying these loss making titles, Dumbo Feather and similar titles will be under more pressure.

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magazines

English garden magazines not drought friendly

eng-garden.JPGThere’s something almost offensive about English garden magazines being sold in Australia in the middle of a severe drought. While the magazines are excellent quality, they are pitching a gardener’s dream which is unattainable here. But then so do fashion magazines I guess. And there is nothing wrong with looking. Right now I’d prefer top see more garden titles which are relevant to local circumstances. Australians like to support causes and there’s an opportunity to make sustainable gardening a cause.

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magazines

Web 2.0: teaching the machine, us

If you are wondering what Web 2.0 is or can be and where you sit or may sit within it, a video by Michael Wesch, Assistant Professor of Cultural Anthropology at Kansas State University, is a must see. In a few minutes Wesch takes the viewer further than a two hour powerpoint driven presentation ever could.

Source: Neil Sanderson.

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Media disruption

Newsagent unity offer

The state newsagent associations in New South Wales and Queensland have written to the national ANF with a proposal aimed at resolving the current disunity which is weakening newsagent representation to suppliers and government.

Both sides have faults and both sides need to give some so that newsagents, the only stakeholders who matter in this bitter dispute, benefit from robust, independent and transparent representation.

As I understand it, the ANF has not yet responded to the letter which was sent almost three weeks ago.

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Newsagency challenges

Online classifieds pitch on campus

Here’s the poster for a university campaign we launch for our online classified site, Find It, this week.

sell_your.JPG

We’re looking to connect with people who would use eBay – the Find It pitch is that we’re free. Even when we do charge our prices will be a fraction of the eBay fees and Find It profits stay in Australia.

Newsagents can sign up for free to partner with Find It nd therefore access profit share.

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Online classifieds

PDF magazines take off

pdf-mags.com provides links to pdf (design and art mainly) magazines available online and not in retail. It’s a great resource for designers. In retail, this category is delivering falling sales and it’s understandable. With so many free and low cost online titles now available and the image quality so good, why buy a print edition?

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magazines

Newsagents and the Fairfax half yearly results

Why newsagents need to cut home delivery costs and look for new revenue opportunities.

I’ve had some time to digest the Fairfax half yearly results and comments by some reading this site and what the share some more observations.

Fairfax interests me because it is Australia’s largest locally owned newspaper publisher; their deliberations from recent years have been exposed through the recent book by former CEO Fred Hilmer; and, because of their considerable success at monetising their brand online.

THE AGE
Circulation Monday to Friday is up 4.5%; Saturday down 3% and Sunday up 11%. Circulation income is up 0.3% – interesting compared to the circulation numbers. I’ve mentioned problems with Saturday sales here before for The Age and the Sydney Morning Herald. Over the counter feedback is that the papers are too big for what people want in a weekend paper now. But I’m sure Fairfax have their own more scientific research on this. Whatever the reason, action is needed.

The difference in circulation revenue compared to actual circulation supports my concerns for newsagents who provide home delivery services. The pressure will be on them to take a ‘pay’ cut and deliver for less. They can’t afford to do this yet can’t afford not to, so they will – an economic consequence for newsagents of deregulation

DIGITAL
Revenue is up 43.7% and profit up 41.8%. Take a look at Digital profit contribution over the last three years

While these are exceptional numbers, they are not sufficient to replace the loss of advertising revenue if newspaper sales and ad revenue fall as has happened in the US. Their decision to promote more aggressively into other markets such as Adelaide where they do not publish a daily should boost revenue.

The pressure old media companies such as Fairfax is under was the subject of this story in The Australia last Thursday.

MASTHEAD VALUE
For months I have complained here about Fairfax newspapers, specifically The Age and the Sydney Morning Herald, abusing their masthead with post-it style stuck on ads. The accounts report intangibles representing 123% of net assets. Most of this would be mastheads. So, why what an ad on top of the masthead? The longer term damage is not worth the short-lived thrill from ad revenue.

I am sure that the half year results unlock more valuable information than I have covered here.

Key messages for newsagents are that Fairfax is pushing hard to replace old (newspaper) revenue with new (online) revenue and that while they do this they will be looking to cut costs associated with old media products. Newsagents need to make similar adjustments in their businesses.

It bothers me that newsagents are not being fed current information about these challenges.

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Newsagency challenges