Month: March 2007

I’m reading Dealing with Darwin; How Great Companies Innovate at Every Phase of their Evolution by Geoffrey Moore. It’s an excellent book. I’m finding myself going back over sections and pondering the relevance with the newsagency channel.

My biggest take away so far is that incremental innovation is not enough. Incremental innovation is what our industry has prided itself in. You know, the nice protect the status quo kind of innovation. Genuine innovation requires that us to be bold or get out of the game. We need breakaway products and or services with a compelling value proposition.

Innovation needs to come from us. It needs to focus on transferring resources from declining areas of our businesses to areas of growth. This is exactly what newspaper publishers are doing right now.

The challenge for newsagents is for them (us) to understand that we are the barrier to innovation – our commitment to traditions of the channel, our rejection of change, and, our belief that our suppliers must be the drivers of change through our channel.

There are innovators in the newsagency channel but not enough to impact the entire channel. This is where the ˜Darwin” in the title plays – survival of the fittest.

Newsagents – read the book. It’s excellent!

Good on you Roy Greenslade for sticking up for newsagents.

…they offer services to the public that supermarkets do not. Most importantly, in spite of the difficulties of attracting people to do it, many of them still deliver papers to your door. Most of them are also easy to reach on foot for casual buyers. Again, that’s a big plus compared to supermarkets. Finally, and I know some will disagree with me, the vast majority care about papers, ensuring that they have sufficient supplies, that they are displayed properly and that the colour magazines are inserted.

We need some Australian journalists to stick up for newsagents publicly.

Menzies Distribution experienced tough trading conditions with underlying operating profit down 23% to £23.7m, mainly as a result a rapidly changing marketplace, particularly in monthly magazines and partworks.

A quote from the preliminary results released on Tuesday by newspaper and magazine distribution business John Menzies plc. The results provide an insight into newspaper and magazine sales in the UK. Further on in the results is the following:

We are seeing structural changes in the magazine sector. As broadband penetration increases and on-line content becomes more sophisticated, consumers are spending more time on the internet and less time on printed media. We believe this contributed significantly to a 7% drop in lfl sales of monthly magazines. Partwork sales, which peaked in 2004, have now returned to 2002 sales levels. In 2006 lfl partwork sales fell
by 35%. Although gross profit from weekly magazine sales was flat, lfl sales rose by 3% as some consumers moved from monthly to weekly titles.

Newspapers volumes continued their steady decline but this reduction was offset by a number of price increases, particularly on Sunday titles.

Australian newsagents are fortunate to have access to this information from the UK and similar insights from the US. The trends reflected in the results are not isolated to those countries. We will experience them here, if not in 2007 then in 2008.

Publishers and distributors cannot continue to deny to newsagents that retail sales of newspapers and magazines are challenged. I see the situation as presenting an opportunity. While publishers seem to want to address the challenge by putting their product in every possible retail outlet, my feeling is they would be better served by reducing retail outlets and supporting specialists like newsagents.

Mutual support between newsagents and publishers for newspapers and magazines could buffer the impact the Internet has on newspaper and magazine sales in Australia.

I hope that leaders representing both sides pursue this opportunity.

The State of the News Media 2007 report by the Project for Excellence in Journalism makes for compelling reading. While it provides a thorough analysis of all news media, the chapter on newspapers will be of particular interest. The Editors Weblog has published a neat summary of the report including this insight into free newspapers:

“A question for the future may be whether mainstream papers will consider doing away with paid circulation — giving papers away — or charge only for the convenience of home delivery,” says the report. According to it, these free models might actually be beneficial, since they could boost circulation and cut costs in the circulation and distribution work force.

With successful free daily newspapers in Melbourne and Sydney and the recent launch of mX in Brisbane it is timely for us to ask about the future of these products and their likely impact on paid sales.

Newsagents rely on paid newspaper traffic every day. This is why they (we) must research and understand overseas trends. While publisher representatives tell us that Australia is not the US or Europe, we do know that trends offshore will impact decisions here eventually. The more newsagents research these trends and consider their implication the better informed their capital decisions will be.

Unlike newspaper distribution in any other country, the Australian newspaper distribution model is deeply entrenched with publishers, thousands of families rely on publishers to make decisions mindful of the history and capital investment by newsagents it often dictated by the publishers.