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

Author: Mark Fletcher

Whispers become a shout as Australian newspapers and magazines write about changes impacting their businesses

2005 started with barely a whisper on the pages of newspapers and magazines about the impact of blogging, podcasting, better mobile devices, 3G and broadband in homes. It was as if the changes being talked about so openly in Asia, Europe and the United States was not relevant to Australia. The whispers gained some volume following Rupert Murdoch’s speech in Washington in April to the American Society of Newspaper Editors. Then, in the last month, it’s as if someone has said it’s okay to talk about this stuff, it’s okay to speculate about our future. The whispers have become a shout.

Most of the capital city dailies have run stories about the impact of the Internet. The Age, the Sydney Morning Herald and the Australian Financial Review have written the most from what I have seen. This month’s Marketing magazine has an excellent if brief round up including an excellent piece by Martyn Thomas about whether newspapers will survive beyond 2040.

While I would have liked newspapers and business magazines to have paid more and earlier attention to the impact on mainstream media of technology and other changes noted above, their coverage now is welcome. I wish newsagents would pay the same attention to the changes going on around them. The old arguments about why people like newspapers over a computer screen are redundant. Newsagents and others ignoring the changes need to either get a new line or develop a business plan to help their business navigate the change.

The changes are inevitable as we can see from elsewhere in the world. What we need to understand and navigate is the impact.

Footnote: Maybe publishers could have frank dialogue with newsagents about what their experts see as the likely impact on the news and information supply chain.


Blogs, Katrina and the pursuit of the truth about what went wrong in New Orleans

No blog better illustrates the power of the blog as a medium than Josh Marshall’s Talking Points Memo blog. Marshall and his readers are helping compile a timeline of the events leading up to, during and after Hurricane Katrina. The timeline is compelling reading. Regardless of your politics it would be impossible to read it and not be outraged at the events and lack thereof.

I expect Marshall is achieving more today through the timeline than the enquiries which will follow. He is doing it without spin, transparently and by interacting with his readers and it is this interaction which interests me the most. Interaction is the oxygen of blogging in the area of news. It is what has been missing in mainstream media and what so many obviously crave. Blogging is ‘hot’ because people want to report what they know, challenge what they read and influence the words of history. Blogging allows that.

While you can turn on any of the cable news channels and see stories of anger and frustration at an inadequate and late response from varying levels of government in the United States to Katrina, non which I have seen have offered the power of the list created by Marshall and his readers. Their document makes the case.

As publishers navigate their way to a more interactive relationship with readers, the newspaper supply chain (newsagents here in Australia) needs to embark on a similar journey. For 130 years we have sold news day in, day out and newspaper publishers have published news. Publishers are changing: readers and becoming colleagues – while that metamorphosis may take some time yet, it will happen. In the case of newsagents we have not even begun to collectively contemplate how we must change. Whereas our businesses were once the key consumer connect in the news ‘conversation’, now we’re an aging relative in an overcrowded photo.

What I want is for my newsagency to connect with people as directly and personally as Josh Marshall does in his blog. I want to help people have a voice on matters which concern them. I want to be relevant in this new world.

Newsagency challenges

It’s time for newsagents to respond to publisher online acquisitions

What was once an understood commercial media landscape has been turned on its ear thanks to faster, better and lower cost mobile devices and mobile coverage; self publishing tools; and a desire for citizens to create content. There are entirely new channels (online communities, podcasts, blogs etc) attracting advertising and this is what’s behind many of the acquisitions by publishers in the last few months. Thinking abut these and, in particular, the News Corporation US$1.7b shopping spree on online businesses, I wondered what Australian newsagents should/could invest in to shore up consumer traffic and therefore revenues. Here’s my (incomplete) shopping list:

  • Australia Post government owned retail network. (I know the government says it’s not for sale – maybe we need lobby for it to be put on the market.)
  • Content download business: music, films etc. from a kiosk in our store
  • WiFi network – providing Wireless access from our shops.
  • Internet service Providers.
  • Online advertising business.
  • Online news network. (We could create this based on our broad geographic spread.)
  • Mobile device retail – create our own brand for a store within a store concept.
  • Hair salon chain.
  • Coffee chain.
  • Build a ‘how to’ business – based around a selection of products we sell (or could sell) and embracing ‘community’ and ‘interaction’. Our stores could be the place people connect rather than all this impersonal online stuff. Games. Jigsaws. Painting.
  • The next juice concept – create the retail traffic generator, it’s cheaper than buying someone else’s success.
  • This list is by no means complete. My point is that we need to be ‘acquiring’ customer traffic and we need to be doing that now. Our future is in our hands. None of our existing suppliers are going to make investments which support our channel unless it suits them commercially. We control our future.

    DISCLOSURE: I own a business developing a new product/service which may lead to a new revenue stream for newsagents.


    Alpha magazine issue #3 not tracking well for News Ltd.


    Alpha #3 has been out a week and early indications from newsagents I speak with is that it is not selling as well as issue #2. While I’m no expert on these things I’d say Alpha is in trouble. Consumers are confused by the low price ($2.00) and by the requirement to buy the local News Ltd Newspaper. Newsagents are bearing the brunt of consumer frustration when they want to purchase the magazine and are told that they have to buy a newspaper as well. There is strong anecdotal evidence supporting my views not only from across my own counter but also from other newsagents.

    Alpha is a great product but it needs urgent surgery to succeed. By the way, ther have an excellent blog for the magazine.

    This is what I wrote a few weeks ago and what I still believe today:

    If I were in charge of Alpha I would increase the cover price to $7.95 – the quality of the product supports such a price; I would include teaser articles some of the features in the News Ltd newspapers with a coupon at the bottom of the article encouraging an Alpha purchase for $5.95 discount.

    This approach does two things. First, it pitches the price of the product where it should be based on quality. Second, rewards the consumer for their interest.

    Okay, since the magazine is published by a newspaper publisher I’d do something else. My third strategy would be to offer a competition entry with purchase of the magazine and I’d promote this on the coupon in the newspaper. Maybe a car giveaway each issue or a holiday or a hit out with a tennis star or a training run with a footy club. Who knows what the prize should be?

    As it stands Alpha will die unless there is a more integrated and considered marketing strategy. Newsagents are working hard but the $2.00 cover price and lack of support for building what is a new niche is making it challenging. I want it to work.

    On a pocket return basis I have Alpha taking 10 pockets at present and the return I anticipate for the month is $55.00. That does not pay the cost of the real-estate. A higher cover price with a lower sell through would be better economically.


    New York Times launches Times Select and answers the argument about free online content from newspaper publishers

    It’s good to see the New York Times charging, from Monday, for access to some content online. Times Select membership will cost US$49.95 a year.

    There is a long running argument about whether access to content online should be free. That newspaper publishers have provided free access online to what is charged for in their physical product has, in my view, devalued newspapers. This move by the Times respects the work of their contributors and the value of their masthead.


    Podcasting, it gets bigger

    Report from ClickZ News about an AOL podcasting initiative. This move by AOL is further proof that exectuives consider there is enough money in podcasting to warrant their embrace.

    In commercial mainstream media terms Australiua is a podcasting backwater. In national broadcaster terms, the ABC has been a pack leader for months.


    Newspaper circulation rorts II

    The crikey.com.au coverage on newspaper circulation tactics has been getting coverage at Andrew Landeryou’s blog. The best way for this to be dealt with is through full and frank disclosure – before it gets too much coverage in the blogosphere – the place your more likely to see accurate coverage on such a topic.


    Newspaper circulation rorts – Fairfax under scrutiny

    crikey.com.au has been running stories about newspaper circulation tactics used by our two major newspaper publishers News Ltd and Fairfax. Fairfax are receiving the most recent attention as a result of the pallet loads of newspapers offered free to people attending sporting events, gymnasiums and the cinema.

    I own a newsagency and make a living selling newspapers. My success is tied to the value of the mastheads. The more newspapers given away the lower the value of them masthead in consumer eyes. This is a practice which ought to stop not only because of the devaluing of circulation figures but also because of the damage it is doing to businesses like mine.

    If the newspaper has a price tag of a dollar then sell it for a dollar. If it is to be free then make it free for everyone.

    This game being played at present is nuts and Australia’s independently owned small business newsagents are suffering as a result.

    Newsagents are angry but will not speak up publicly because of fear of retribution.


    Newspaper sales falling in shopping centre newsagencies, publishers need to act

    Newspaper sales basket penetration 2003-2005, 120 newsagencies. Source: Tower Systems.

    Newspapers are losing their importance to shopping centre newsagents according to our analysis of three years of sales data from 120 newsagencies. This research covers 8 million shopping baskets worth of data.

    The fall could be due to newsagents not promoting newspapers as well as they used to; overall falling newspaper sales; or newspapers now being sold in other outlets such as petrol stations, supermarkets, coffee shops etc.

    No matter what the reason, the figures are concerning. My theory is that shopping centre newsagencies are showing the fall because that’s where the most significant competitor action is. Take my shop at Forest Hill in Victoria for example. We now have newspapers in Big W, Starbucks, Coles and Safeway as well as my own two newsagency outlets.

    Publishers treat their retail outlets differently. Newsagents are full service and provide the best in store display and over the counter support for newspapers. They are a core product. Other outlets offer newspapers as the add on and treat them as such in terms of real-estate and promotional support. Yet newsagents are recognised for their effort by publishers putting product in more and more outlets.

    The publishers are wrong to pursue growth or at least stem circulation falls by putting their products into other outlets.

    Newspaper sales are challenged, there’s no doubt about that. Going into more outlets with a confusing value proposition message (i.e. Starbucks you can get The Age for 50 cents whereas at my newsagents 30 feet away it’s full price) only hurts sales.

    Newspaper publishers ought to reduce outlets and focus on building a mutually valuable relationship with small business newsagents. They could immediately boost sales by offering a reward for consumer loyalty. Newsagents would get behind this. The result would be retail customers purchasing the newspaper more days in the week than at present.

    Publishers have put tremendous effort into chasing home delivery customers over the last 10 to 15 years and neglected loyal retail customers. By association they have neglected retail newsagents. The home delivery marketplace has a high acquisition cost and a high churn whereas retail does not. Over the counter sales are about convenience, comfort and service. A smart publisher would reward newsagents for delivering on these and boosting sales appropriately.

    Newspaper sales growth can be achieved if the publishers engage with newsagents, reward consumer loyalty and reward newsagent success.


    Online lottery sales booming and could hurt independent small business retailers

    In a challenge to independently owned small business newsagents, Tattersalls is leading the way in online lottery sales in Australia (and maybe the world). They have an easy to navigate website and an excellent marketing campaign. This puts their product on computer desktops across the globe. While their website is very clear in explaining where (geographically) Tattersalls is licenced to sell product, it seems easy to get around – unless they check the IP address for country of purchase.

    The Tattersalls promotion of their website is a concern for existing Tattersalls outlets because it is a strong corporate competitor. The growth of online will slow or even decline the goodwill value of Tattersalls outlets. I expect Tattersalls would disagree with this assessment. They would not want their existing network to consider that Tattersalls’ moves online could harm the value of the existing network. But think about it. It must. I accept that Tattersalls online will gain incremental sales. However, they will also pull people off the existing network to an online purchase only situation and that’s where the cost will be to the existing bricks and mortar network. Having said all of that, it’s an appropriate development for Tattersalls and one I would take if I were them.

    Newsagents need to engage with Tattersalls and leverage a portion of revenue. This is justified because of the considerable real-estate given over by newsagents and other Tattersalls outlets in brand promotion. It’s this brand promotion which builds sufficient trust to enable consumers to comfortably purchase online. Tattersalls could not build an online model without such a high profile bricks and mortar network.

    Tattersalls sales in newsagencies are a vital traffic generator. Even though their sold alone percentage is high – 65% in suburban stores – there is evidence that customers who purchase Tattersalls product in a newsagency today are back multiple times in a week to purchase other product. If they stop making the Tattersalls product purchase trips these other visits are at risk and that, in turn, puts the newsagent business model at risk.

    Newsagents need to be discussing these challenges with each other, with Tattersalls and with other retailers who rely on Tattersalls product traffic (publishers, card companies etc).

    The Tattersalls move is but another supply chain related challenge for Australia’s independent small business newsagents.


    News on mobile devices, supply chain challenges for news retailers

    Courtesy of mocnews:

    Report from Kansas City Business Journal that Handmark has signed a deal to bring Associated Press content ot mobile phones.

    Report on mediweek that the International Herald Tribune is launching a new service to provide mobile phone users access to its news.

    A report that Reuters has done a deal with Vodofone to provide access to Reuters video content.

    The tail of the existing news and information supply chain isn’t aware of the changes these and related developments will ultimately have for them. These are primarily small businesses which rely on news and information product traffic to support the sale of others products in store.

    Supply Chain changes

    More on mainstream media embracing an online model

    American Business Media, an association of business media companies, has announced that it will begin broadcasting via its website edited footage of selected events they host.

    The first videocast features Dan Bigman, managing editor of Forbes.com, discussing the effects of online media during ABM’s “B-to-B Meets: e-media, RSS, blogs, et al” on August 3, 2005 at Scholastic International.

    This is another example of mainstream media embracing online.

    New media

    Broadband over Powerline (BPL) commercial trial in Tasmania

    Further to my post here in July about Google investing in a broadband over Powerline (BPL) company comes news that the world’s first large-scale trial of BPL technology began in Tasmania yesterday. BPL technology uses existing power lines and offers Internet access through every electrical power outlet in connected premises. Users plug a modem into the power outlet to connect to the Internet.

    The large scale Tasmanian trial covers fast Internet access, VoIP and video delivery.

    The Aurora website had details of their offering.

    BPL shrinks the traditional supply chain for news and information and makes it more widely accessible. It provides a left field competitor to traditional communications infrastructure suppliers. While BPL has attracted plenty of criticism, the potential for consumers and content providers is enormous.

    Supply Chain changes

    Zinio launches global newsstand for digital magazines

    Zinio Systems, Inc., has announced the launch today of the first global distribution channel for published digital media. Zinio currently offers access to digital magazines from nine countries from its global newsstand website.

    Newsagents in Australia retail plenty of product from overseas and while Zinio does not currently offer the depth newsagents offer, one must expect the online product range to expand with time. A niche publisher will weigh the return of scale out to, say, 4,600 newsagents for sales of, say, 2,000 copies verses an online only supply chain. The online model may generate less sales in the short to medium term but it does not have the same distribution cost. Having said that and based on the most recently published sales data for digital magazines, consumer up take could be expected to quickly surpass newsstand sales in many titles.

    I’d tag this move by Zinio as a tipping point in magazine distribution.

    Newsagents on the one hand don’t want to carry titles which do not pay their way yet was to ‘own’ range in the magazine category. That Zinio global is operational opens a new and lean competitor to the newsagency channel in overseas titles. Take Business Week for example. At Zinio global I can subscribe for around US$27.97 a year. In my retail newsagency I sell Business Week (Asia edition) for $6.60 or $343.20 a year. It may not be the perfect comparison but it makes my point. As a Business Week reader I’d be happy to purchase the digital version. It’s better value. I can access the product where and when I want. There is consistency of supply.

    Zinio’s announcement yesterday has altered the playing field. Magazine distributors and newsagents need to respond. It would be ignorant to dismiss the Zinio move as irrelevant at present. Hindsight will prove such a view wrong.

    I applaud Zinio for their move. It makes sense to their business model and was always to be a key part of their expansion plan. As newsagents we need to educate ourselves about such moves and get about building our businesses with products and services over which we have more control.

    Here are some quotes from the Zinio press release:

    “Our global newsstands open new markets for publishers needing to appeal to consumers around the world,” said Jeff Bruce, president, publishing for Zinio. “Today, magazines are instantly available to global magazine consumers with the convenience of language and currency preference at domestic prices. These benefits and the immediacy of the digital format will boost subscriptions and revenues for publishers.”

    “Zinio is the clear market leader in the U.S. and offers a compelling model for magazine publishers abroad,” said Paul Cheal, Publishing Director, IPC Country and Leisure Media. “The global network offers us the potential to target and convert new readers through Zinio’s international sales channel and delivery platform.”

    The Zinio Global Newsstand Network offers about 400 magazines available through franchise partners in local markets, including Poland, Spain, Denmark, Norway, Sweden, Taiwan, and Thailand. The network also features a UK newsstand with more than 40 magazines from fourteen publishers.


    Micropayments will set stories free

    Few commercial news and information sites sell stories. Instead you pay a fee to access the site for a period. This is, in part, due to the cost of processing the payment. Thanks to the work of PayPal and others that is about to dramatically change.

    Several companies have new technology on the cusp of release which makes handing payments of even cents easy and cost effective. This will enable consumers to purchase a full story for download quickly rather than going through a laborious registration and payment process. This will bring more traffic online and allow writers and publishers to build online revenue. It will more fully unlock the Internet as an alternative channel for selling content on a per story basis. Róbert Párhonyi, Lambert J.M. Nieuwenhuis and Aiko Pras of the University of Twente in the Netherlands have authored an interesting report on the new generation of micro-payment solutions.

    It’s a paradigm shift. Whereas today someone pays me A$1.00 to buys the Herald Sun, in this new world they could take a story on page 3 and pay a few cents for it. But only online.

    New media

    Sensis uses Google AdWords to poach consumer interest in other businesses

    A good report on last night’s ABC TV 7.30 Report about the Telstra owned Sensis, through their Trading Post business, using Google’s AdWords and similar services from other search engines to siphon traffic to their site by posing as relating to businesses NOT advertising at the Trading Post. The 7.30 Report story was primarily about the Trading Post trying to grab traffic destined for Stickybeek, a local free classified advertising site.

    Beyond the apparent appalling behavior by Trading Post management (and by association Sensis and Telstra Management) is the lack of interest shown by the ACCC which bothers me – especially since the Trading Post activity was against a micro business.

    So much for business ethics.

    New media

    eBay buys Skype

    So, eBay has agreed to buy Skype (provider of voice calls over the internet) for between US$2.6 billion and US$4.1 billion.

    This is a whole new business for eBay and with that comes challenges. Sure there will be the benefit of reading an ad and calling the advertiser with the click of a button. But it’s a ton of money to pay for that.

    I’m sure the folks at eBay have a strategy. What it does for sure is it puts eBay back in orbit with the other major online players. The big get bigger and the smaller, well… Now more than even the Net is a size game and executives are tossing truckloads of cash and paper around to get big or remain big. It all looks amazing from where I sit in my small retail newsagency and software company. Interesting reading nevertheless.

    If those of us in the news and information needed a ‘sign’ that our world has changed then this and the recent deals announced by News Corporation are it. We need to be building business models which rely less on over the counter news and information product.

    New media

    Movies on mobile phones – download in seconds – bypasses traditional supply chain

    Porto media, in a joint venture with IBM, is reportedly close to delivering kiosk based rapid download of movies to mobile phone or other portable devices. This makes purchasing TV show episodes and series more accessible and strengthens the focus on mobile device development. The device is the thing. That and fast download access.

    The traditional movie supply chain: theatres, DVD publishers and retailers, free to air TV networks, DVD/video libraries, and cable TV networks are all bypassed in this model.

    The traditional news and information supply chain is where there will be significant impact as content producers get closer to consumers.

    New media