Month: November 2008

I was contacted last week by the Circulation Manager for Universal Magazines seeking to find out how they could address the concerns I blogged about here. Here is what I wrote to them on October 30:

Titles from your business present a serious problem for newsagents because of the volume and because of the long on-sale.

While I appreciate your preparedness to work with me on resolving the issue at my newsagencies, I am only interested in a whole of newsagent channel resolution. This is critical. As I mentioned, I work with newsagents through Tower, newsXpress and my blog. To look after myself and not the broader community I serve is not an option.

Below is the document to which I referred in our conversation:

In February 2005 I spoke at a breakfast meeting of publishers in Sydney and presented a suggested list of magazine key performance indicators. In cleaning up last night I found the list and thought I’d publish it here for comment.

1. Scale out to reflect title performance in that outlet with proposed supply to be no more than 25% above recent sell through rates except in exceptional circumstances where the additional product is expected to sell due to cover feature or special promotion. With higher scale out to be accepted for an additional fee paid to the newsagent.
2. Offering of a carrying fee for titles which do not meet minimum performance criteria so that the newsagent is paid to carry the title. The carrying fee to cover labour, real-estate and any other fixed costs.
3. Introduction of a penalty payment to newsagents for any issue with a sell through of less than 50% on an escalating scale based on a falling sell through.
4. Newsagent to be able to easily and electronically alter order quantities (i.e. without having to call a call centre and wait on line for too long) and with no maximum number of titles to be adjusted each week or month.
5. Newsagent changed supply figures not to be altered without reference to newsagent unless such change absolutely supported by sales data.
6. No cut of supply below current recorded net sales.
7. No reissue within six months of last issue of a title.
8. Delayed billing of at least 30 days for any new title.
9. Delayed billing to last month of on sale for titles being help in-store for more than 30 days.
10. Returns to be credited within 48 hours of provision of electronic returns data or 7 days of provision of physical returns form.
11. Returns to be called no later than the date of the next issue of the same title going on sale.

Magazine KPIs are mainly needed for titles outside the top 200. Inside the top 200 the supply model is, overall, good – although sometimes I would like to be able to get extra stock more easily. The real problem is the titles which generate around 20% of our revenue. These titles are cash flow negative. The KPIs I suggest above, if adopted, would make them at least cashflow neutral. The cash saved would help us have more resources to reinvest in our businesses.

I provided this to the ANF for their work on magazine performance KPIs at the time.

I am yet to receive a response from Universal Magazines. I have been looking at the numbers for the Universal titles – there is no doubt that I would miss some of their product. However, overall, I would be considerably financially better off given their long on-sale periods and their gross oversupply of some titles.

If they do not understand the financial damage they are wrecking on newsagents then they do not deserve space on our shelves.

I do not want to be taking this public whack at Universal Magazines.  There are far more positive things happening in my newsagency and the channel more generally.  However, since I have access to data from many newsagencies, I can see the extent of channel wide abuse by Universal and this is what prods me to pursue them here.  I owe it to newsagents to use that knowledge to fight for fairer terms from Universal.

They may not come back to me because of this second whack – some publishers are sensitive like that.  If I do take steps to remove their product from my shelves and if enough other newsagents do as well they will sit and talk about changing their approach.