Mediaweek in the UK reports that newsagents are set to lose millions of pounds in revenue a year thanks to a decision by News International to revise its base cover price.
Rupert Murdoch’s News International is to hit retailers’ tills to the tune of more than £12m a year as it looks to clamp down on the cover-price margin of its market-leading brand, The Sun.
The cover price used to be 35p. It was lowered to 30p in a promotion but newsagents and other independent retailers were compensated at the base rate of 35p. This is about to change, making newsagents and other independent retailers a partner to the discounting by the publisher.
This means multiple and independent retailers’ margins will be hit by an extra 1.16p for every copy of the paper, which has a circulation of around three million, sold in England, Wales and Northern Ireland.
Since July 2008, retailers have received a retail margin of 8.12p on The Sun’s cover price of 35p, after News International introduced a price promotion on its cover price from 35p to 30p.
Steve denham, UK newsagent and blogger writes about this. he makes a lot of sense.
Newsagents are not isolated from the effects of the storm that is blowing through the newspaper industry. Shouting and screaming about how this is damaging our businesses will not effect the outcome.
I expect we will see plenty of moves in the future by publishers as they try and rein in costs related to print product. Yes, in Australia too. Advertising is not back to where it once was, circulation is flat – some growth, but flat in terms of single copy sales from what I see.
We can engage in skirmishes as these changes play out or we can invest our energy in focusing on our own future. This is what smart newsagents are doing – investing on new traffic and new money. It is one reason we are realigning space in my own newsagencies to maintain good newspaper and magazine sales while freeing space for higher margin better point of difference product.
This is a threat to our industry that newsagents can do something about (similar to the ANF Corporate Express deal you blogged about earlier today).
Reducing cover price in the UK will set a precedent to allow reduced cover prices here in Australia; it is a trial which News Limited will expand into Australia if it achieves the required goal in the UK.
There are newsagents who dismiss the relevance of newspapers (in their own business). These newsagents have diversified and molded their offering to that of their customers needs. Over 50 newsagents in Queensland have walked away from their delivery runs and are concentrating on their retail businesses.
Not all newsagents are able to do this.
Too many newsagents in Australia depend on their home delivery and retail newspaper sales as a prime area of their business.
Newsagents need to write to their member of parliament and to the ACCC and let them know that these contracts are unfair and inequitable. If the newsagent is forced to sign the News Limited contracts as is the newspaper home delivery service is at risk of disappearing.
The News Limited contracts must be questioned by newsagents. Sure there is not much change from the previous contracts but the question should be asked – were the previous contracts good contracts?
Valuable businesses will disappear overnight if News Limited is allowed to reduce cover price/commissions/delivery fees midway through the contract period.
Newsagents should question why they are being asked to enter into a contract which can be altered unilaterally during its term. All information should be laid out on the table so that newsagents can make an informed choice as to whether or not they will sign their contracts.
……..Sign here by December 18th and News Limited will let you know what your cover prices and your delivery fees and commissions will be……… at a later date……………
Who does business this way? Should you allow this to happen? Is the product so good that you are willing to sign a one-sided contract?
• How many retailers would persist in stocking a non-exclusive product, not experiencing sales growth and not strong enough in its own offering [see next point] to sustain a price rise for 8 years?
The Courier Mail’s cover price for Monday to Friday editions has remained the same since 2001. The 25cents newsagents earn per paper sold in 2009 is not anything near the worth of the 25cents per paper earned back in 2001.
• Is News Limited’s confidence in the value of News Limited newspapers declining?
This is the message News Limited send out by continually pushing cheaper subscriptions; looking for readership at any price. This message will be reinforced if News Limited follow the UK footsteps and reduce cover price.
• Does News Limited really need to charge for their newspapers?
• Does a higher circulation figure equal higher advertising dollars?
• In the future will News Limited put a paper on every lawn, on every retail counter, at all public venues and charge nothing – just to claim higher circulation?
When an item has no value it is not valued.
Higher circulation does not mean higher readership.
Qld newsagents have today received advice from Hank Spier with regard to their contracts and have been kept up-to-date with advances made in QNF & NANA’s consultations with the ACCC.
Last Tuesday at the QNF AGM resolutions were passed to amend our constitution to allow the QNF to accept members from interstate. The QNF constantly receive requests from go ahead newsagents languishing in other smaller states who wish to be represented by an Association which has only this industries future at heart.
Ann Nugent
Well done Ann for sticking up for us
Ann,
This is why I asked at this blog many monhs ago: why do we need a contract?
The best way for every newsagent to find their business feet is to be completely free. Yes, there are risks, but trying that is better than servitude.
Mark,
The simple answer is no contracts no distribution through newsagencies. No Distribution through newsagencies means heaps and heaps go broke!
This is why we need contracts.
What the question should be is ‘What sort of contracts” do we need to become a meaningful and profitable newsagent?