“The imminent destruction of a massive number of small and specialist magazines emerged as the hot button issue at Magazines 2005, the Periodical Publishers’ Association conference at London’s Grosvenor House Hotel last week.”
UK’s Mediaweek previews a decision expected in the next week by the UK Office of Fair Trading.
While we’re not facing decisions by regulators in Australia, operationally the system which has supported the distribution of newspapers and magazines is under more pressure than ever before for a range of reasons (retailers demanding more from the category; publishers competing with other publishers more aggressively; new retailers wanting ‘in’ on the category; and, greater financial pressure on newsagents)
The newspaper and magazine distribution system in Australia has operated like a completed jigsaw for more than 100 years. Now, some pieces of the jigsaw are missing and other pieces from a different picture are being forced in their place. Whereas the total category was the measurement point of profitability, now newsagents (the only part of the chain to carry all titles) expect each title to be profitable and this is not possible.
So, while we’re not experiencing regulatory change such as that coming in the UK, we are experiencing equally unsettling and challenging operational change.
Newsagents want to own magazines as a category in consumerâ€™s minds. They want to achieve this in an economically sustainable way and through relationships with publishers and distributors who treat the channel and its 4,600 business owners as equals.
Most shopping centre newsagents need a sell through rate of 60% to pay for the space and layout.
High Street newsagents need a sell through rate of 45%.
Rural newsagents need 40%.
These sell through rate goals assume titles with a shelf life of no more than 30 days.
Titles performing at less than these sell through rates arenâ€™t paying their way.
Newsagents do not have the capacity to continue funding underperforming product.
The answer is to either cut supply or pay for the service newsagents provide by making space in their stores available for range.