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

Author: Mark Fletcher

Penthouse goes digital

The South Florida Business Journal has the story. The print edition remains but I wonder how long for. The adult sector is soft in Australia thanks to better quality images online plus excellent searching facilities. The Penthouse move is not unexpected and more evidence of online impacting magazines.

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magazines

Magazine cash flow in newsagencies

I am neck deep in magazine related data from six newsagencies. Remember, Australian newsagencies pride themselves on magazine range as their key point of difference. Whereas other retailers who offer magazines carry up to 100 titles, newsagencies carry over 1,000 titles and often more. This cash flow data shows that the range is killing them. Titles which are profitable can be cash flow negative. Take Cosmos for example, this is a new title released last year. Not one newsagency I have looked at shows the title as cash flow positive. Indeed, Cosmos is cash flow negative in one newsagency to the tune of $500.00 over three months. Cosmos is one over 1,000 titles in this newsagency which is cash flow negative.

Another magazine worth looking at is Australian Woodsmith. Wood bloke love it. It sells well. It’s not cash flow positive in one newsagency. This title costs more than it earns. Should we stop carrying it? Maybe. If we do stop does that make us a me too magazine retailer? Maybe. It depends on how we make the transition.

At the distributor level, in one major suburban newsagency, they are $16,000 cash flow negative over the course of a year from just one magazine distribution company.

Our analysis is taking into account paying for stock, banking sales, paying for real estate used for magazines and paying for labour used for magazines. If anything it shows a conservative result with reality being worse.

Magazine distribution is at crisis point for newsagents and urgent action is necessary on the model if newsagents are to survive in the range game. While newsagents complain about the little money they make on magazines, few actually measure the cash flow implications.

Our new research will provide hard evidence and this will cause significant debate when released next month.

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Uncategorized

Newspaper says online is a decade away from catching newspapers

ONLINE advertising, despite phenomenal growth over the past three years, is at least a decade away from catching up to newspapers, and a further five years from generating the revenues of commercial television.

This is the opening paragraph from a story in The Age (Melbourne, Australia Jan. 21) by Christian Catalano. The story quotes a report by Foad Fadaghi of the industry consultancy Frost & Sullivan .

I guess data can tell any story you require of it.

My concern with this report is that the industry is using it to say, hey, we’re okay, we’re okay. I guess if you repeat the mantra often enough you don’t need to plan for change.

If the report is accurate and balanced then why is News Corp. rushing online, why is Fairfax looking at more online purchases, why has PBL invested strategically in online. Newsagents, the people at the end of the newspaper food chain need to look at what the publishers are doing rather than what they are printing in their paper.

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Newspapers

10 Things Editors Should Do To Grow

Ken Sand’s post, 10 Things Editors Should Do In 2006, (Journal Sentinel, Milwaukee), is an excellent post for Editors and equally excellent for newsagents and other retailers who rely on newspapers for half their foot traffic. We’ve been insulated in Australia from the waves of change which have hit US and European newspapers. I, reluctantly, forecast that insulation will fade in 2006 as new technology offerings impact newspapers and sales are flatter than forecast.

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Newspapers

Star remains a weak magazine launch

I am beginning to doubt the seriousness of the folks behind the recently launched Star magazine. It’s as if the title is marking time until they come up with a better concept. Newsagents receive little in the way of point of sale material, certainly nothing to enable the product to be merchandised beyond being put on the shelf.

Compared to other 2005 launches – Real Living, Notebook and Explode – to name three – Star is flying under the radar.

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magazines

Trading Post upgrade – not good enough

Trading Post has beefed up its online offering with BUY NOW features. It’s still frustrating that you have to register before you can actually do anything. This is a huge turn off. Trading Post needs to decide if it’s an online or over the counter offering. Once it works that out the road forward will be clearer for their business and for consumers.

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Newspapers

Newspaper tries TV classifieds

An interesting move by the San Francisco Chronicle as reported by the Editors Weblog. The newspaper The paper will launch a 30 minute television program, ‘Chronicle Jobs TV’, to run Monday to Wednesday at 5:30 PM. While only time will tell if TV/newspaper classifieds work, I’d suggest that they are doomed. This is like trying to force a square peg into a round hole. It’s also a step sideways. The world is looking for classifieds online in a searchable form so we can look local or look at what specifically interests us. A TV program provides none of this. Sure it might be interesting but innovative it is not. Newspapers need to take bold steps to protect their classified revenue.

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Newspapers

“Papers are so clunky and big”

A good article in the New York Times about Gen Y and how to reach them. Here’s the heart of the problem as covered in the article:

In addition to thumbing his nose at notions of “prime time” by downloading his favorite shows (without commercials), Mr. Hanson almost never buys newspapers or magazines, getting nearly all of his information from the Internet, or from his network of electronic contacts.

“Papers are so clunky and big,” he says. If those words are alarming to old media, they are only the beginning of a larger puzzle for today’s marketers: how to make digital technology their ally as they try to understand and reach an emerging generation.

I could also say that retail stores are old and clunky to this generation. We’re out of date. While the baby boomers may enjoy physical world shopping, Gen Y browse online through formal and informal markets. If retailers want to have a future they need to move their businesses online. We’re experimenting with part of our retail newsagency businesses online. We now transact more online in a month in the selected category than we did through the retail store over the previous two years. What’s odd is that only very few sales are to what I would call traditional newsagency customers.

Newsagents need to re-think their businesses and re-invent their offering so they connect with Gen Y as they become a more valuable piece of the economy.

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Newsagency challenges

Newspaper publishers, change and double standards

Newspaper publishers are responding to the challenges of online competitors and mobile demands of consumers by purchasing competitors and even non competitors playing in the space. Each time this happens it increases the barrier to entry for others. While the publishers are doing this, they, in Australia at least, are forcing their retail and distribution partners, newsagents, to further increase retail outlets – even if they compete directly with newsagent outlets. This to me seems like double standards.

On the one hand publishers want more control over their own business while at the same time diluting the control newsagents have over theirs. Newsagents, unable to effectively collectively bargain, have little ability to resist the demands of newspaper publishers as to where newspapers are sold.

This channel of specialist news and information retailers become less relevant with every new outlet newspapers are put into. In years to come this will be a case study in business schools and the behavior of some newspaper publishers will be under scrutiny.

This issue is on my mind today as newsagents are being told to supply Gloria Jeans coffee outlets. No discussion, just a requirement. No matter whether you have another outlet selling newspapers next door or even if your newsagency is next door. There may be some exceptions but I have not heard of any yet.

I can see the logic of newspapers in Gloria Jeans outlets. However, how many business do you know of where the owver is forced by a supplier to compete with themselves, to dilute their point of difference?

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Newsagency challenges

eBay and the market for used magazines

Following this post I have spent more time looking into magazine product available at eBay Australia. I am surprised at the number of current issue and immediate past issue magazines for sale. The current issue product has to be of questionable sourcing (stolen?) because I cannot fathom how else it could be so heavily discounted.

The immediately past issue stock must be concerning for magazine publishers (it’s concerning to me) because this would impact sales – especially in, say, the craft or any other area where having the latest issue is not always important. Looking at the titles available, I’d suspect that people buy a current issue, copy what they want (for a craft or cooking magazine) and then sell the original on eBay and get back, say, 60% to 80% of their purchase price.

From what I can see, enough of this stock moves for people to keep loading eBay with magazine product. But then maybe there is no accounting for what people buy. (Maybe I could sell past draw date lottery tickets and attach a note as to the dream I had for the winnings if I had won. eBay sells wackier stuff than that!)
I guess there is no law against it. However, the structure of the eBay marketplace and the speed with which recent stock gets on eBay suggests that some rules may be being bent.

My retail business relies on magazines for around 30% of its revenue. That eBay is so strongly in this space and I didn’t know it is embarrassing to me.

I’d like to see some media attention to what’s selling on eBay and it’s impact on legitimate businesses like mine.

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Newsagency challenges

Strong January for newspapers

January data, for the month so far, in my newsagency is showing year on year sales growth for daily newspapers (The Age, Herald Sun, The Australian, Australian Financial Review) of 16%. During the same period I am seeing the Trading Post down 15%. The conclusion I draw from that is that, yes, print classifieds are dying rapidly whereas print news, in my part of the world, is strong. The strong sales are due, in part, to people not traveling this holiday period.

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Newspapers

Mary Mary starts the year

The holidays are over and magazines are back in business. This week’s New Idea and Woamn’s Day have Princess Mary covers again. There is no doubt she is the new Diana. My sense is that Mary on both covers will push sales of both products – more so than single copy sales. That is people who would usually buy one of the titles will buy the two. More Mary covers please!

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magazines

Sony Reader

Go here and you can see images and specifications for the Sony Reader referred to in my last post. It’s a sexy looking device … one which Sony hopes will take off for books like the iPod did for music.

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Media disruption

The Guardian on e-books

The world of publishing stands on the cusp of the greatest innovation since Gutenberg. With cheap, portable electronic readers just around the corner, what is the future of the printed book?

So opens E-read all about it at Guardian Unlimited. It’s an excellent article about where e-book technology is at today and where it is likely to be in the near term. Fascinating reading – especially in the context of recent e-paper developments and other technologies challenging the more traditional news and information distribution model.

Booksellers have to be looking at what has happened to music and is happening now to books. Manufacturers (publishers) need to cut costs out of the supply chain to stay competitive and that’s what is at the heart of this technology. Middlemen like retailers are an overhead to be avoided.

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Media disruption

eBay and current issue magazines

Check out eBay Australia and item 7001746442. This is a current issue magazine which newsagents received a few days ago. It has a sell price of $9.95 in our stores. The eBay seller listed the product at a starting price of $4.95 and it’s currently being bid at $10.00 plus postage.

I am curious as to how this seller, located in South Australia, is able to offer a current issue magazine for less than the newsagent pays at wholesale; how they are able to get their hands on current issue magazine stock; and, whether they have more than one copy of this magazine for sale.

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Newsagency challenges

Australia Post and Valentine’s Day

Valentine’s Day has traditionally been a season ‘owned’ by newsagents, card shops, chocolate shops and florists. Sure it’s commercial. But it’s also about love and romance. I was surprised to see that the government owned Australia Post is getting in on Valentine’s Day with a promotion. The details are on their website. While there’s no law against it, I don’t need the Federal Government muscling in on a promotion previously owned mainly by independently owned small businesses like mine.

The other aspect of this promotion which irks me is that it is in conjunction with That’s Life magazine. Australia Post does not sell That’s Life in its corporate stores. Magazines are only sold in newsagencies which are Licenced Post Offices. So what gives? I know Australia Post wants magazines for its stores. Is this indicative of a move in that direction or am I jumping at shadows? regardless, I don’t see how Australia Post can justify this activity in the context of the Act under which they operate.

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Newsagency challenges

MySpace, MSN and back to school blogs

Do a Technorati search for newsagents and all manner of things come up. Unfortunately, close to home I found two blog entries from the last 24 hours bagging newsagents.

Melissa, 37, Brisbane Australia tells us, in part: For two days we couldn’t find any A4 64 page books. That was fun. Visiting K-mart, Big W, Woolworths and Sollies.. to find they had massive stocks of everything else .. except the 35 cent books they had on sale…. The newsagents however are willing to sell them too me for almost $3 each. We will keep walking!

Then I find an entry from De-Anne, 14, Brisbane Australia which says, in part: “omg yeterday was ssoooooo boring i went school book shopping for my brother. we had to go all the way into the city cause no stupid newsagents had the books he needed. normally we get them through the school but when mum went to hand it in they wouldn’t accept it, (long story)”

What is annoying is that Melissa is wrong and De-Anne is inarticulate. Newsagents are matching Big-W, K-Mart etc on price on most school items. I cannot find exercise books of the sort described for ten times the price at newsagencies. With De-Anne I’d suggest they were looking for something more specialist which a newsagent would only order in as a special order.

While I respect the right of people to blog whatever they like, including junk like this in a Technorati search is unfortunate because you have to wade through a fair chunk of MSN and MySpace hosted crap to get to the better quality material.

On another level, newsagents are being bagged out here unfairly. However, they will not respond. If this were Coca Cola, Pepsi, General Motors, McDonalds or some other major corporation they would be on to these two bloggers in an attempt to get a more accurate spin. Newsagents, being small business and independent will not respond and these blog entries only serve to further pitch that we’re not relevant and we’re expensive.

Even though each of our 4,600 newsagencies in independent we need to respond corporately to blog entries like these and get our spin out there. We are not expensive. We have an excellent range. Customers purchasing Back To School product from newsagencies are doing more for the economy than buying from K-Mart or Big W.

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Newsagency challenges

Debate on the future of newspapers

Jeff Jarvis today at his blog, BuzzMachine, deconstructs the newspaper, section by section. He post is an excellent contribution to the debate about the future of newspapers. While it’s written from a US perspective, here in Australia the newspaper sections are the same and the challenges very similar but I suspect our newspaper publishers do not feel the pressure being felt in the US. We are insulated by the size of our marketplace and the lack of true head to head competition. That is not a reason to ignore Jarvis’ opinion or the opinion of other equally eloquent and knowledgeable commentators such as Tim Porter.

In Jarvis’ own words: The point of this exercise is to peel away the layers of the onion that a newspaper no longer needs so it can get to the core of what it really is, what it does best, what it must be to survive and prosper. You can pose the question one of two ways: What do we kill to save money, or what do we kill so we can shift resources to more important things? Whichever, you can’t stay the same and certainly can’t develop new features until you cut the fat and flesh.

Jarvis argues that publishers need to drive newspaper readers online and to reconfigure their print product in terms of content so it is more relevant and cost model so it is a sustainable medium. Once you read the whole blog entry be sure to read the comments.

I wish we were having this conversation about Australian newspapers and that the conversation included newsagents. While News Ltd is in the final weeks of completing its review of newspaper distribution in Australia I’d prefer they put this project aside and engage in a robust review of the future of their newspaper products. Such a review should also include newsagents – the 4,600 small business operators created solely to distribute and retail, newspapers.

The games on competitions, DVDs, CDs, Calendars, Wrapping Paper and every other device being used to gain single copy sales does nothing to address the core issue of relevance which is central to the Jarvis analysis. As one who sells the product and relies of newspaper sales for a key part of traffic to my store, I crave a more relevant product. It goes to the heart of the future of my business and the relevance o the retail channel to which I belong.

Editor and Publisher is also reporting on the Jarvis post.

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Newspapers

The News / Sensis battle

So, News Corp. and Sensis (Yellow Pages – Telstra) are to duke it out for directory business in Australia. These business partners (in Foxtel pay TV) are going head to head according to reports out this morning. Both rely heavily on their print businesses for revenue. Their customers are more wedded to their print product and, at the moment, so are consumers. But that will change. By taking on Sensis, News is speeding up the migration of directory related business online.

The not unexpected move by News demonstrates that News sees an end to classified revenue from newspapers. It also presents a face of competition while maintaining the status quo on advertising costs. I do not expect News to aggressively pursue Sensis on advertising rates and doing so would not make sense. News wants premium advertising rates as much as Sensis. Only an outsider could upset the directory and online classified business. Remember air travel up until the arrival of Virgin Blue. Despite all the bluster about competition, in terms of ticket prices travelers did not see it. I’d suggest the same will be true here with News and Sensis and directory business. Neither company has the slim operating costs necessary to genuinely bring the cost of directory and classified advertising down significantly.

More generally on the move, News is doing here in Australia what it has been doing globally for the last year – making sure its brand has the necessary presence and access points in the mobile online world.

Reports about the move: The Australian (A News Corp. newspaper)

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Media disruption

Controlling in store media

We have three LCD screens running advertisements in our shop. Many newsagents have at least one. Newsagents do not control this media.

To control the key message I want my customers to see we have installed a huge LCD display (in portrait mode) to display content we create. We’ll feature new magazine arrivals by day and focus on promoting higher margin products which represent a point of difference for us.

Here’s how the unit looks with three of the current ads showing.

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While it’s not new for retailers of all sizes to use LCD displays at the counter to promote products, few use a display as large as ours. Already we’re getting customer reaction.

It’s important for retailers to control as much of their leased area as possible and while it’s a low cost to give space to suppliers to fill with their displays, it’s not necessarily good economics. Hence our desire for control of the medium. We spent $2,000 and while we could easily make that selling the space to suppliers, we will make more if we control content 100% and focus on our shop.

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Uncategorized

Holiday shopping and magazines

The data is from a small sample (6 newsagencies) but from what I’m seeing the disruption in sales through the holiday period is least felt in specialist magazines (woodworking, model, warships etc) and in women’s magazines. That women’s magazines remain a powerhouse for newsagencies is no surprise yet our channel’s weak embrace of women’s magazines is. Newsagents could do more to embrace the category. At the moment they are part of the mosh pit of magazines whereas they could be treated as the jewel in the crow they are through special location; co-location; or other in store features. With new titles due this year newsagents run the risk of more women’s weeklies going moving outside the channel. In my own store any magazine promotion I run kick women’s weeklies magazines higher than all other categories.

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magazines

Podcasts are go! … in Malaysia

The Star newspaper in Malaysia proudly promoted its new daily podcasts on page one of its print edition yesterday. While the podcasts are actually coming from a sister radio station, they are badged as from the newspaper and this boosts the promotion of their brand beyond print and connects them with a younger audience. On the podcasts link page you can subscribe and download previous podcasts. Back in July 2005 I wrote this entry in this place about how podcasting could be used to build the retail newspaper product and help newsagents improve in store marketing. The suggestions are still valuable today. In the meantime it’s great to see The Star in Malaysia embracing the podcast medium.

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Podcasting