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

Author: Mark Fletcher

Newsagents discuss buying magazine distributor Gordon & Gotch

There has been considerable discussion amone newsagents in recent weeks that they ought to purchase magazine distributor Gordon and Gotch from PMP.

I am not aware of PMP having any desire to sell Gotch and even if they did have such a desire I would suggest that newsagents taking ownership would be problematic for several reasons:

  • Our ownership of one distributor might present problems in or dealings with others.
  • Newsagents have had sufficient difficulty agreeing on national representation strategies for the last 20 years to suggest that we might have challenges agreeing on strategies for a national distributor.
  • Distribution companies are complex cans of worms which require specialist skills beyond what many newsagents would be used to.
  • Frankly, we’d be out of our depth.
  • If we had the kind of money (or could find it) necessary to purchase Gotch then I suggest that we would achieve a better return being invested in future traffic generators. Magazine sales will continue to ebb and flow. There are many new revenue opportunities that newsagents investment could bring to our channel. This is where I see a bright future.

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    Fairfax falls in love with online classifieds

    Fairfax has announced this morning the purchase of RSVP. Publishers are slower in Australia to purchase online players when you consider all the activity in the US over recent months.

    The deal is important for Fairfax as it shows them to be a buyer, having stalled previously with seek.com.au (if stories on the street are right.

    The big question is what is next? RSVP has to be but a small step.

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    Government owned Australia Post competes more for stationery against independent retailers

    If I offer a discount for stationery in my shop it’s me offering the discount. Off the bottom line. Likewise, if I produce a brochure offering the discount I pay for it myself. And, I have no exclusive product traffic generators I can use to leverage interest in the discount offering.

    Compare that to our government owned Australia Post. They are offering 10% off all stationery purchases between July 1 and August 31 this year for purchases of $50 or more as long as you have one of their brochures.

    Okay, so that’s a fair business practice except that it’s my government competing against me. My shop is directly opposite one of the participating Post offices.

    My real gripe with this promotion is that it is promoted through a colour flyer which is 80% about postal products and that means the monopoly postal side of the business probably paid for the flyer. This is a government commercial enterprise benefiting from its government sanctioned monopoly – to the detriment of independently owned small businesses.

    The Australian Government ought to divest itself of all Australia Post retail outlets to independently owned small businesses.

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    Audited figures for digital magazines highlight an impact for newsagents

    The latest issue of Circulation Management is reporting US ABC audited circulation data for business and consumer titles and there are some interesting results.

    PC Magazine Digital-only subs of 119,771 for 2004 compared to 19,256 in 2003. Total qualified circulation in 2004 was 926,276 compared to 968,274 in 2003. Most of the digital edition growth has been achieved without cannibalising the print edition.

    Cosmo Girl! Digital-only subs of 80,356 for 2004 compared to 41,076 in 2003. Total qualified circulation in 2004 was 1,380,320 compared to 1,365,735 in 2003.

    Barrons Digital-only subs of 1,617 for 2004 compared to 725 in 2003. Total qualified circulation in 2004 was 300,040 compared to 295,706 in 2003.

    Circulation Management lists the TOP 15 titles. I have chose these three to demonstrate diversity of titles and the significant growth achieved between them. There have been a couple of falls but there are reasons for that.

    Remember, this is data from 2004. With the significant enhancements to digital delivery of magazine content this year and stronger competition between the platform players one could reasonably expect digital only circulation to rise. They have been focusing on improving the consumer experience and the results are stunning.

    The growth in Cosmo Girl! is particularly interesting but not that surprising given that it’s from the demographic more attuned to computer and wireless delivery than most.

    Digital delivery is yet another space to watch for newsagents and others in the news and information supply chain – particularly in the fringe subject area, titles outside the top, say, 200. My feeling is that the small and independent publishers will move to the digital model faster than mainstream publishers because of cost savings. For a fraction of today’s real world costs, they can get professionally presented content including paid advertising into subscriber hands.

    While the newsagent distribution model puts titles in front of prospective consumers, it comes with a cost. With newsagents pressuring on returns achieved from their expensive retail real estate, the metric for small publishers could swing with them forsaking eyes for dramatically lower circulation costs.

    Newsagents, publishers and distributors ought to be talking about these issues and navigating their way, co-operatively, though the changes digital delivery and other technology changes are bringing to the channel.

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    The Apple tipping point

    A week on and the Apple support for podcasts through iTunes has dramatically increased the coverage of the technology in mainstream press. There have been many stories over the last few days with predictions of how far this technology will reach including this one from the BBC. A definite tipping point I’d say.

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    Newspaper industry spin on its future

    While some in the newspaper industry are working on future models and even adpoting new technologies in pursuit of new audiences, others continue to spin that all is well. This article has been doing the rounds and has made its way from the Meadiweek in the UK through to Asia.

    While I agree with some of what is written plenty is nonsense and it’s a puff piece to stop or slow consideration of newspapers not having a future.

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    Ah the newspaper, no batteries, no wires, very few outages

    This story in yesterday’s Australian is one to warm the heart of businesses competing with the online space – especially online news and information sources. Network outages like those experienced by Blackberry users for more than 24 hours is enough to have you reaching for a tin can and a piece of string.

    PS A smart marketer would use this to compete with the Motorola advertisement on TV at present.

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    Japan to privatise its Post Office, maybe this will encourage an Australia Post sell off

    So, the Japanese parliament has decided to sell off the country’s post offices and postal service. For the Australian perspective there’s a report in the Sydney Morning Herald. Alternatively there is this report from the Japan Times.

    While the situations between Australia and Japan are dramatically different, I hope that this decision might at least put the Australia Post retail network on the radar as a business to be privatised – but only by selling government owned Post Offices to small businesses or individuals.

    I’ve made no secret of my view that the Federal Government has no role in owning retail businesses which compete with independently owned small businesses like my newsXpress store at Forest Hill in Victoria. Having them competing day in day out on stationery, greeting cards and some services when newsagencies were in those spaces first is offensive. I cannot match the mgiht of Australia Post as I don’t have a posdtal service monopoly to force people into my shop.

    This is why the Government needs to get out of Australia Post retail. They enjoy a foot traffic guarantee and leveage that into other lucrative business.

    So Senator Coonan, look at the Japanese story as it unfolds, count the dollars it unlocks and consider privatising the Australia Post retail network as an ideal way of demonstrating your government’s support for small business.

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    Want to connect with Generation Y? Here’s one way.

    A few geek friends have got together and have started podcasting about technology, mobility and their lives. They two efforts so far are not the best podcasts in the world nor are the most enlightening. However, you get a sense for their connect with this technology. It left me with an understanding of how important the openness and flexibility of podcasting will be to Generation Y. No wonder they’re the early adopters.

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    Digital player market to explode

    Podcastingnews.com is quotes in-stat and claims: The market for both hard disk drive and Flash-based portable audio players is expected to reach more than 104 million units by 2009, up from 27.8 million units in 2004.

    I reckon we’re going to find that number low in hindsight given that phones and all manner of devices will provide these capabilities. The demand for this technology will explode. And decisions such as that by Apple – even though they are being corporate and limited in the podcast access they facilitate – will push the explosion.

    Mobility is the game of this generation and businesses understand that and are responding. Plus businesses can see the economics working. They can make money so it will happen.

    I’m in a business challenged by this since the money I can make from content delivered digitally on mobile devices is fractional compared to my current model. I’m not alone. There are at least 4,600 small independently owned businesses like mine in Australia. We rely on the old world traffic and would kill to get in on the mobile world traffic.

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    How News Ltd and Fairfax could gain incremental sales of newspapers from the Australian newsagent retail channel

    Newspapers seem to be the new Coke, the product that wants to be everywhere. Whereas for over 100 years they were primarily sold in Australia in newsagencies now publishers want their product in fuel outlets, convenience stores, department stores, fast food chains, garden shops and who knows where next – the post office?

    Where will this push outside the newsagent channel created by the publishers end? I don’t know.

    What I suspect is that all this effort to get newspapers into other retail outlets has not generated incremental sales. It has only given consumers reasons not to go to the specialist newsagency outlet where they may have purchased other items which in turn support the economic model of newsagencies.

    Rather than pushing outside the newsagent channel for incremental sales, publishers ought to consider moving back into home and into the channel they created. Make news valuable. Require newsagents to respect the product. Re-educate consumers that newspapers are about news and analysis and not about some contest entry or a free CD or whatever other non news gimmick is used to get the sale.

    Publishers could engage with newsagents and create a win win by:

  • Working with newsagents and other suppliers to leverage newspaper sales from other key traffic generators to newsagencies such as lottery, magazine and greeting card sales. Prime targets here ought to be lotteries, magazines and greeting cards.
  • Building relevant and engaging promotions in co-operation with newsagents, promotions which engage consumers. I’m thinking here about promotions from that I would have expected to see from the 1940s and 1950s. Like a paper plane making promotion. The best plane made from a daily newspaper wins. Or a paper throwing contest leading to a state and even national championship. Get people interacting with the product in practical and community focused ways.
  • Working with newsagents to facilitate greater add on sales of non newspaper product from newspaper customer traffic. This co-operative effort will be rewarded with greater effort for newspapers.
  • Promoting the channel as the full service channel. Newsagents offer put away product, special orders, yesterday’s newspapers today, easy browsing and personal help.
  • Taking a holistic view of the display of newspaper product within a newsagency so it’s not a sore thumb type retail story but more of an integrated product which is relevant in several sections of the store.
  • Developing a loyalty campaign which rewards consumers for repeat newspaper purchases in a newsagency. Newsagents have technology systems which would facilitate such a campaign.
  • Unlocking sales and basket data from newsagencies to understand other opportunities.
  • Rewarding newsagents for incremental sales growth. This would be a far more meaningful measure for nominations for the National Newsagent of the Year Awards. Lottery companies issue a quarterly report ranking all outlets. Outlets push hard to get further up the list, competing with colleagues and with their own business. rewarding success makes success the model. Carrots work better than sticks.
  • Running mentor workshops by newsagents for newsagents. Once publishers see the successful newsagents from the list they could pay them to travel the country sharing sales growth ideas. Newsagents talking with newsagents – it would work a treat.
  • Chasing sales elsewhere may achieve sales in those outlets but sales in newsagencies will suffer.

    It is only in newsagencies that newspapers are considered the traffic generator and it is in this where there is value to be mined for the newsagent and the publisher.

    It wouldn’t be hard to test some of these ideas and others more skilled in this area could come up with. That’s what I would like to see – a serials of trials of strategies for achieving incremental sales in newsagencies. The worst that could happen would be flat sales.

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    Free tabloid in Sydney gets good coverage

    News Ltd is basking in some good press coverage (except from their competitors) today following the launch of MX in Sydney.

    The ABC provides a balanced report online. Australia is years behind the world in offering free commuter tabloids. I’d say this is in part due to our size and in part due to real daily newspaper competition in only two cities. In Europe the free and ultra lost cost fast read space is highly competitive. Publishers overseas seem to enter the space to attract readers their full price would not/could not reach. This provides a more attratcive sell to advertisers and that’s at the heart of the strategy.

    It’s got to be a transient strategy though as mobile listening devices, beyond iPods which we will consider clunky in a few years, will push mobile/commuter access to news to new places.

    MX is not for everyone. I’ve seen the Melbourne edition plenty of times and can’t remember finding anything interesting I would want to read.

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    How increasing outlets is damaging newspaper brands

    I did a spot check yesterday of eight locations selling newspapers in my home town of Melbourne: two newsagencies, two convenience stores, two supermarkets and two petrol outlets. I did this because I sense that we (newsagents) are about to hear that publishers want their products in even more outlets – because they think that is the way to increase sales.

    Here’s what I found from my visits:

  • Newsagents: Product stacked neatly, poster displayed and customers comfortable browsing. In each case the staff behind the counter knew when a particular feature would be in the paper I asked about. (I was sure to visit newsagencies with staff working who would not know me.).
  • Convenience stores: One had product stacked neatly and the second had papers displayed in an untidy way such that customers would dig deep into the stack to find a ‘clean’ copy. No posters on display. In each case I asked what day the TV guide came out and they didn’t know.
  • Supermarkets: Both had product displayed well if a little untidy with inserts on the ground near the stack and thereby leading customers to believe that they would have to dig for ‘clean’ product. No room to browse. No one to ask a product question of – there were people there but when I caught their eye to ask they looked away or became busy. No posters on display.
  • Petrol outlets: One was good, clean and tidy whereas the other was a mess with two titles mixed across two piles. In each case they could not answer simple questions about which day I could get the TV guide feature. No room to browse the newspapers. No posters on display.
  • Four channels visited and four different messages for the newspaper category. If I were brand manager for the newspapers involved I’d be awarding a strike against several of the outlets. The newsagents were consistent and offered added value.

    Sure, you would expect me to say that. I own a newsagency. My software company services 1,300 newsagencies. So I’m connected deeply with that channel. I am also truthful and my integrity is important to me. This was a fair survey and the results I report are accurate. I’m not saying every newsagent is a saint. However, most serve the newspaper brands well and publishers will have to go a long way before they find other retailers who will go to the same effort on their behalf.

    Newspaper publishers could gain more sales by working with the newsagent channel and proactive newsagent than they will get from chasing more outlets where their brand is not managed with consistency. There are newsagents around who have increased single copy sales by 10% and more whereas. The learnings from these businesses should be harnessed by then publishers and used to grow the business across the newsagent channel.

    My sense is that in the non newsagent channels newspapers are there as a shelf filler, the add on sales whereas in newsagencies they are core product and are treated with more respect.

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    Pew centre research a valuable read

    The Pew Research Centre is an independent opinion research group. They study attitudes toward the press, politics and public policy issues. While US based, their research can provide an insight which we can learn from in Australia.

    On June 26, Pew released a new report based on it’s most recent research. Here are some quotes from the report summary which I found most interesting:

    Overall, a third of Americans below age 40 cite the internet as their main source of news, and many of these people are reading newspapers online. Consequently, while people under age 50 remain far less likely to read a print newspaper than are older people, they are turning to local and national newspapers online in fairly significant numbers.

    Convenience is more important than cost in explaining why many Americans are reading the paper online instead of in print. Among those who say they read the web-version of the newspaper, 73% cite convenience, compared with just 8% who do so because it is free.

    The entire report can be found here. While some of the research on political views may not be relevant in Australia, the report is valuable in understanding US consumer trends. The Pew research demonstrates very clearly that consumers views on access to and payment for news and information is changing. It is valuable information for any with a stake in the news and information business.

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    San Francisco Chronicle extends podcast offerings

    The San Francisco chronicle has announced an extension of its podcast offerings. Of the new podcasts, the one which interests me the most is Back Story. In Back Story, according to their website, ” Chronicle editors and writers give listeners a behind-the-scenes look at stories appearing in the paper”.

    This is, in part, what I was looking for in my blog entry yesterday. More than what’s printed. Hearing an interviewee speak adds a new sense to their words. You get the emotion in their voice and for some stories this will be very compelling. Hearing a reporter or editor talk about a story can also provide an emotional context which can help in understanding.

    Given the unique coverage of Australia with newsagencies (4,600 retailers specializing in newspapers and magazines) in every shopping mall and high street shopping situation, newspaper and magazine publishers have an excellent opportunity to use podcasts (in addition to what are developing as traditional uses) in a way not available in most other countries. This could win new readers and freshen the image of existing product. Plus is adds to the relevance of the newsagency channel.

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    The Power of the Apple endorsement of podcasting

    Podcastingnews.com is reporting: “In an interview with the LA Times, KCRW-FM General Manager Ruth Seymour reveals that iTunes exposure increased their downloads in one day from from 3,500 a day to 100,000.”

    That’s exponential growth. And I bet that KCRW-FM is not alone in recording such growth as a result of the Apple steps last week.

    Others will see this and want to be part of the podcast growth story as content creators and content list publishers. This shows there are dollars to be made and that will bring investment which will make podcasting even more mainstream.

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    How newspaper publishers could embrace podcasts in partnership with newsagents in Australia

    Now that podcasting is mainstream (thanks to the blessing this week from Apple – 1,000,000 consumers signed up for podcasts in 48 hours), newspaper publishers in Australia could embrace the technology which is sensitive to the unique newspaper distribution network in Australia.

    In addition to embracing the podcast models of overseas newspapers where stories are available from their websites, they could also create podcasts for playing in newsagencies.

    Given that many of Australia’s 4,600 newsagencies have computers and in store sound systems publishers, in partnership with newsagents could:

  • Publish podcasts which preview background pieces and other timeless items in the next day’s paper. It would be a cinch to download the content and add it to a play list for the day in store. It connects newsagents, consumers and publishers in embracing the technology and provides relevance for the existing channel.
  • Publish podcasts which update stories covered in the newspaper that day.
  • Publish items which promote features in the newspaper that day.
  • Use the newsagencies as a point of feedback. Maybe consumers could record live feedback for newspapers or provide email feedback? Using the newsagency as a public and local face of the newspaper. This local connect is being used well by some US regional newspapers.
  • A good example might be a sound bite from an interview in the newspaper. This adds value to the newsagency visit and makes the story in the newspaper more interesting.

    Each of these podcasts should be short and made for broadcast in a retail environment. They should respect that the publishers are in someone else’s space and therefore not clog them with advertising. The whole idea is to make the product on sale in the store more interesting by providing another dimension to it.

    Podcasting is a means by which stories can be quickly and easily published and with the network of newsagent outlets across the country and publishers working together it could help revitalise the news connect newsagents have with consumers.

    Newsagents consider themselves specialist retailers and it’s time, in this world of so many new and low cost publishing and mobile access options that we embraced the opportunities to demonstrate out specialisation.

    I’d certainly embrace broadcasting podcasts from newspaper publishers in my shop as a means of driving sales.

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    Consumers rush to Apple for podcasts

    PC Pro UK is reporting that Apple has received more than one million podcasts subscriptions in its first two days.

    It’s amazing to me that other than the ABC, and some lesser efforts from Austereo, Australian media companies are yet to enter this space.

    As part of the newspaper supply chain I’m happy. In reality though the publishers are missing an opportunity to push their brand to new consumers.

    It would be good partnership if newspaper publishers could embrace podcasting in partnership with the supply chain.

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    Media ownership laws in play

    Mediaweek is reporting that the US FCC is about to commence its court ordered review of regulations.

    This FCC review will be interesting to watch in the context the consideration being given to Australia’s cross media laws. More is at stake here than control over content. This is a debate about globalisation even though that’s not so obvious at this point.

    At least the US process will involve public consultation.

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    Mobile phone company slaps newspaper supply chain in the face

    The Motorola TV commercial showing in Australia shows a newspaper landing in front of a house and the person holding a mobile phone and reading news on the screen picking up the newspaper and tossing it back.

    I started thinking this was a nasty swipe at newspaper publishers. I soon realised I was wrong. Newspaper publishers are story publishers. Their stories will make it to podcasts, mobile phones and all manner of aggregating devices.

    The Motorola commercial is a slap at the newspaper supply chain (newsagents and newspaper deliverers).

    That’s fair in the commercial world.

    A response might be the big stories and considered analysis which gets away if people rely on their phone for news and information. There is a response. It will be interesting to see if the channel delivers the response.

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    Coonan and the government need to cast a wider net in considering cross media ownership changes.

    While the Federal Government of our fair nation (Australia) continues to wonder about what to do about its out of date cross media ownership laws (read – figures out how to appease the current major players and opinion influencers) the world moves on at a faster and more commercial rate.

    In this place I have already I’ve talked about the Telstra and other trials of television content on phones, newspapers podcasting (alas, not in Australia yet), magazines going online, newspapers producing online evening news TV type bulletins etc etc.

    But it’s when you read a story such as this story from the International Herald Tribune that you can see how much things have changed. We are experiencing convergence at a rapid rate. French mobile phone users will have access to 25 TV channels for around A$28 a month. Commuters will be able to watch rather than read. To retain value in their brand as news aggregator newspaper publishers will want to be on one or more channels.

    I’ll leave those thoughts for another day. What interests me today is the cross media ownership laws and the game the government is playing.

    Given the change in the technology landscape and the opportunity for more players at the low cost end I’d like to see the government ask Australians what they want. Such an inquiry could help develop community interest in creating content by putting the technologies of podcasting and blogging on the table as part of the mix. We need to know what people think about the emerging mobile options and how they consider news delivered via these devices compared to newspapers.

    The changes in regulation can be used by the government for their own political advantage and the commercial gain of their friends or they can be the changes which will benefit Australians. I don’t know if the goals are mutually exclusive. Only talking with the public can shed some light on that.

    We need to make sure that it is easy for competitors to enter a marketplace and that the supply chain is not controlled by a small group of national or multi national companies.

    So, Helen Coonan needs more than newspaper publishers, television network proprietors and radio station proprietors at the table discussing the regulatory changes she is working on. Helen Coonan needs to be talking with podcasters, bloggers, citizen journalists and the public.

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