Author: Mark Fletcher

In his blog at PC World, No More Dead-Tree Newspapers?, Editor in Chief Harry McCracken gets right to the point and says: the classic morning newspaper no longer feels essential. He talks about news online being free versus the high cost for a home delivered newspaper. He also talks about more content in a newspaper than he has time for. He ends posing a question: How has the Web changed how you get your news?

Newsagents and those in the news and information supply chain ought to ask customers that question. It’s time for some unscientific research on flat and falling newspaper circulation.

How’s this for a new way of publishing/distributing/reading magazines?

Also check out this related link.

I’ve put the entire draft distribution newsagent business plan online for comment.

There is no doubt that the current business model of 4,000+ independent newsagents handling the home delivery of newspapers and magazines is ripe for change. With cost pressures from publishers and consumers, newsagents are carrying an increasing loss or cutting corners to break even. The CFA business model is designed to help newsagents pool resources to create a bigger distribution business. In many cases, where the newsagent owns a retail outlet, they will be freed to concentrate more on the retail side of their operation.

My view is that newsagents need to take the initiative and consolidate otherwise publishers and external commercial pressures will force an unpalatable consolidation on the small business owners.

In an effort to provide options for newsagents considering alternative organisational structures, we have prepared a draft business plan called CFA: Circulation Fulfillment Australia. The heart of the plan is that newsagents pool their distribution businesses into a bigger business to achieve economies of scale and to improve competitiveness while retaining current newsagent ownership.

CFA is a business model for a distribution newsagent for the twenty first century.

Owned by newsagents, CFA is a business which amalgamates individual newsagent distribution operations into a more commercial logistics centered consumer fulfillment and marketing organisation, freeing some newsagents to concentrate on their retail businesses and others to exit the day to day operation of a newsagency.

Separation of retail and distribution newsagency businesses in this way allows the individual newsagent to have more resources available for managing and building the retail side of the business while retaining an economic interest in a distribution operation.
The initial partners in CFA gain an added benefit – that of developing this exciting model for the future of newsagencies and newsagents.

CFA provides a structured and viable exit mechanism for newsagents looking to exit the industry. CFA also provides a commercial alternative for newsagents who want to work together and aggregate their individual distribution businesses into something more competitive and valuable.

CFA aims to:

Leverage economies of scale and reduce the per delivery point delivery cost.

Improve the service retail customers receive and therefore sales achieved and the number of locations reached.

Improve the service home delivery customers receive and therefore improve retention and market penetration.

Develop and implement successful home delivery customer recruitment campaigns.

Surpass supplier customer service objectives.

Provide a financially rewarding and lifestyle enhancing alternative for newsagents.

Provide an ownership and management structure appropriate to the today’s commercial climate which enables newsagents to more easily compete.

Eliminate the duplication of effort inherent in the current newsagent system.

Newsagents adopting this business plan will hand their entire distribution business over to CFA in return for an agreed shareholding in the company. At the same time CFA will enter into a five year agreements for the distribution of newspapers and magazines (home delivery and sub agents) in the handed up ‘territories’.
Newsagents not wishing to take up shares in CFA would have the option of receiving payment according to an agreed valuation formula and over an agreed period of time.

CFA will operate the distribution business from a separate specialist location with specialist distribution and marketing staff. From the time of take over, the selling newsagents would have no further involvement with distribution other than as shareholders in CFA.

CFA would employ distribution, marketing and customer service specialists and resource them with state of the art facilities to enable the most efficient and cost effective circulation product distribution operation possible. The product delivered out of the distribution facility would aim to set a new benchmark for the distribution of newspapers and magazines in Australia.

I have a 20 page business plan for anyone interested.

I’ve been negotiating with a major radio station to place a series of commercials in the lead up to launching my newsagency under a new brand. While the cost is high for my type of shop, it’s necessary to get the brand name out in the ether. Listening to the same station today to get a feel for their format I heard an ad for “Post” – promoting Lexmark printers and some stationery deal as well. Their campaign is slicker than I can afford. The deal they have for Lexmark product is better than I can negotiate. The rate they pay for advertising is better (I bet) than I could negotiate. Why? Because of their size. They are the size they are because they are the Post Office and because they have the mail monopoly at the heart of their operation – it’s the life support which keeps them going.

Whereas a business like mine has to survive on its own, the Post Office directly opposite my shop has the mail river of gold keeping it afloat and delivering customers to the mail counter and past their shelves of cards, printers and stationery.

I wish I had access to such an exclusive river of customers.

That my government is in competition with me makes me angry. That the government cannot see the damage this does to their credibility among small business owners is appalling.

The Australian government should sell off each of its government owned retail Post outlets – not to a chain, but individually.

In our work analysing retail newsagent performance we are getting closer to a efficiency rating benchmark for shopping centre, high street, regional and rural newsagencies. The efficiency rating is, in our view, based on the efficiency of the shop. The more items in the basket the greater the efficiency. The more items sold along, the lower the efficiency.

We’ve looked at close to 100 newsagencies now and a key challenge is the diversity of data management disciplines. In some cases discipline is non existent whereas in others everything is measured. In some cases employees are lazy as to even the department a sale is recorded to whereas in others if it doesn’t scan it doesn’t sell.

Another challenge is the view to take of the data given that the dataset is three dimensional. We can view from the perspective of suppliers, products (and/or categories) and time.

For starters we’ve stepped back and are just looking at basket penetration. This measures the percentage of baskets leaving a store carry items from each of the product categories carried in the store. Even at this base level of analysis we are seeing considerable differences between newsagencies and are facing challenges with data management. It’s this area of lack of discipline which is a huge challenge for newsagents moving forward.

So, what is a good level of penetration? Given that a newsagency is about newspapers and magazines first, what is reasonable penetration. I have seen newspaper basket penetration as low as 8% and as high as 55% based on January/March 2005 data. St each of the extremes there are explanations. However, in a business management sense it’s not good business. This analysis is about balance in the retail business.

More soon.

More commentary from the UK about the recent Office of Fair Trading draft ruling on newspaper and magazine distribution.

Roadcasting is technology in prototype stage that allows anyone of have their own radio station, broadcast through wireless enabled devices. Read more at Wired, technology review and Om Malik’s blog.

On the surface roadcasting looks to be more in the radio space and not something related to newspaper and magazine publishing. Wrong! Those lines are blurred and what was once print only content is now becoming available through other media. Hence the possibility that roadcasting might play in the print publishing space as well.

With the wireless innovations we’re hearing about and the roadcasting concept to leverage that technology to greater usefulness while mobile, access to content gets easier and easier. While roadcasting is currently a user driven concept, there is nothing stopping commercial leverage.

The Spokane Spokesman-Review is becoming a poster child for how newspapers might address the impact of technology on their businesses and the citizen journalism movement.

At their website you can read the news stories; read what readers think through at their blog, News is a conversation; access the Daily briefing – a blog of comments, notes etc from the daily news mattering where news decisions are made; and access Ask The Editors, where the editors answer readers’ questions about The Spokesman-Review’s editorial decisions and operations. There is also a series of blogs by columnists and a list of local blogs. Wait, there’s more. There is audio and video content. (See this vision of a semi trailer which hit a house.) And there’s even more. For me this is the cream, this is the perfect example of local engagement. They have been collecting MP3 files from local bands. Their catalogue now has With the catalog now at more than 250. They have gone so far as to launch an internet radio station featuring the local music. Read their story here.

I find myself responding to what the Spokesman-Review is doing on several levels.

As a local consumer: This is a newspaper I want to engage with. They provide access as and when I wish – print, online, RSS. They demonstrate a local commitment which matches my desire for less of a one size fits all world.

As a newsagent: One the one hand I like it because I’m helping the local connection by selling the newspaper in my shop(if I were a newsagent in Spokane that is). But then I see them pushing their brand so much beyond print and I can only engage with the product in the print world. It scares me because the better they get at it and the more the world changes in terms of mobile devices and fast low cost access anywhere, the les my newsagency is part of the supply chain.

As an observer from the other side of the world: The world shrunk some more. Where as I could read stories about other places, the Spokesman-Review website and all of its tentacles take me there on a cohesive yet local way. I can get a real feel for the place and its culture. I can connect. And this is a valuable role of local newspapers in the evolving world.

Australian newspapers could learn from this innovation. While some publishers here are playing in the space, none is embracing citizen journalism, transparency and the new mobility paradigm in the way of the Spokesman-Review.

Given the role newsagents play in distributing and selling newspapers in Australia, it would be appropriate that we are part of these changes here. We could be the access point for music, the face to face community connect between the newspaper and their online content. Newsagents ought to be taking this opportunity to publishers and working on strategies which are mutually beneficial.

The Spokane-Review is not alone in this innovation. Their story is interesting because of the size of their marketplace, their strong local commitment and the wholeness of their innovation. It’s an excellent model to study on changes in news and information publishing.

Here’s a bit about the newspaper from their website: The Spokesman-Review, Spokane’s 106-year-old daily newspaper and the largest news and information provider in the Inland Northwest. Launched in 1894 by Publisher William H. Cowles, The Spokesman-Review has been owned throughout its history by the Cowles family of Spokane.

According to The Readership Institute, the Spokesman-Review achieves circulation of 118,877 Monday-Saturday and 132,489 Sunday.

“Media is shifting from a publisher-centric model to a user-centric model, where a user picks the content from a lot of sources,” said Christopher Alden, a founder of Red Herring magazine and CEO of Rojo Networks, a San Francisco-based maker of an RSS reader. From RSS Feeds Becoming Hot Real Estate For Online Ads an AdWeek.com story at yahoo.com.

This is a story about how publishers and advertisers are aggressively embracing Really Simple Syndication (RSS) to reach consumers. Clever advertising for tech savvy consumers. It’s proving to be very hot for real estate advertising according to the story.

thestreet.com is reporting that Gannett is buying closely PointRoll – a smart online ad marketing firm. Gannett owns TV stations and newspapers including USA Today.

This is just another in a series of significant acquisitions this year by newspaper publishers – investing capital outside their traditional businesses to support their traditional businesses and leverage their brands into the new mobile world. The level and speed of invetsment is proof that the publishing world is changing.

Australian Newsagents and others on the news and information supply chain need to be investing in their businesses. These investments need to be in areas which underpin their value proposition to consumers and their bricks and mortar presence.

Nokia, the Finnish broadcasting company and others have commenced a mobile TV pilot project in Finland. This goes beyond the clips currently available on mobiles. While this project is about testing the mobile technology and consumer use patterns, once completed it will go live internationally. This will drive more rapid mobile technology change and this will, in turn, increase options for publishers.

The line between broadcast media outlets and print outlets will become further blurred as both will use the new consumer access channel. We’re already seeing it now with newspapers podcasting and providing video news services online to augment print coverage of news. (While uptake in Australia has been slow, once one newspaper podcasts others will follow quickly. While newspapers are writing stories about podcasting they are more about the implications for radio. They have not got it yet.)

The existing news and information supply chain needs to have its own strategies for this new world. It needs to support development of content which will use the existing supply chain. We, each of us, ought to be playing in the space to connect with the consumers; we ought to be seeking out content development opportunities; we ought to develop the local connect (like we are doing in my own newsagency with the local news site); we ought to uncover other content we are not currently providing access to and add that to our retail/ distribution mix; we ought to DO SOMETHING.

The inaction on the impact of mobile technology in the news and information supply chain (newsagencies mainly) is at best an economic slump and at worst an economic catastrophe waiting to happen. How we react will be a case study for business schools in decades to come. Currently, the head in the sand approach dooms the channel to failure. Sure the big impact of change is years off, that’s we need to start today. We are already challenged in consumer minds.

On cable last night (Fox 8) was a first run (for Australia) of an episode of The Simpsons where Lisa starts a newspaper to get the truth out against a corrupt media. Others in Springfield follow and soon everyone has their own newspaper. The episode was a commentary on diversity in news outlets and, of course, the blogging phenomenon. This quote from Homer is a gem: “Instead of one big-shot controlling all the media, now there’s a thousand freaks Xeroxing their worthless opinions.”

I caught this forum on CNN last night (repeated today), moderated by Aussie Michael Holmes and featuring a large panel of media commentators and bloggers.

I found Blogging: The Fifth Estate most enjoyable. It was good to see mainstream media talking about blogging and doing so in an intelligent way.

Courtesy of by John Aravosis & friends
at americablog.com here is the schedule:

June 11, SAT
*6am (ALL REGS) 2:30 News Upd/ Blogging: The Fifth Estate, pre-empts World News, Next@CNN (EU/LA) / International Correspondents (AS/SA/NA)
*130pm (EU/LA/NA) 2:30 News Upd/ Inside the Middle East pre-empts World Business This Week $ MASTER
*4pm (EU) 2:30 News Upd/ Global Challenges MAKE-GOOD pre-empts World News $
*5pm (EU/LA) 2:30 News Upd/ Blogging: The Fifth Estate, pre-empts World News, International Correspondents

June 12, SUN
*12am (AS/SA) 2:30 News Upd/ Blogging: The Fifth Estate, pre-empts World News, World Report B
*6am (AS/SA/NA) 2:30 News Upd/ Blogging: The Fifth Estate, pre-empts World News, Talk Asia
*8am (EU/LA/NA) 2:30 News Upd/ Blogging: The Fifth Estate, pre-empts World News, World Report B
*1030am (EU/LA/NA) 2:30 News Upd/ Design 360 MAKE-GOOD pre-empts International Correspondents $
*1130am (EU/LA/NA) 2:30 News Upd/ Inside the Middle East pre-empts Diplomatic License
*1pm (EU/LA/NA) (NO NEWS UPD) Blogging: The Fifth Estate, pre-empts Late Edition 2nd hour
*330pm (EU/NA) 2:30 News Upd/ Business Traveller pre-empts International Correspondents $
*7pm (LA) (NO NEWS UPD) Blogging: The Fifth Estate, pre-empts CNN Today
*830pm (LA) (NO NEWS UPD) Business Traveller pre-empts CNN Today

Here’s a blog entry from someone in the audience at the CNN forum and blogging at the same time.

The BBC reports: Internet search phenomenon Google has overtaken a swathe of venerable rivals to become the world’s biggest media company by stock market value.

Further to my post about the editorial in the Australian Financial Review bagging newsagents as a result of their reaction to reports of newspapers moving into McDonalds. It’s time everyone got back to business.

If newsagents achieve incremental sales beyond the average for a newspaper title then the channel has control. Publishers want sales and the best performing channel will be the channel the publisher focuses on.

Newsagents should react to the AFR editorial and the possibility of newspapers going into McDonalds by pursuing newspaper sales growth in every possible way. This commences with understanding basket penetration, comparing the last three months with the same period a year earlier and learning from the change. Analysing basket penetration will uncover opportunities and show newsagents what where they can focus attention to achieve greater sales from existing foot traffic.

Newsagencies have exceptional foot traffic, we’re the second most visited retail channel in Australia every week. Yet we do not leverage sales which respect the traffic. This is in part because of rules suppliers have imposed on our channel over the year and the refusal of various suppliers to work with each other so that we might present a cohesive retail story. This is where we need to focus attention.

If newsagents achieve significant incremental sales News Corp, Fairfax and other publishers will not need to place product elsewhere. So, not only to they get the professional sell in a newsagency, they achieve the growth they so desperately need.

One reason newsagents become jaded about chasing growth, though, is the margin. Consider a $1.00 newspaper. Of the $1.00 cover price, 13 cents goes in rent, 12 cents in wages, 6 cents in operational overheads and 3 cents in theft. That’s 34 cents. Newsagents make 25 cents commission from selling the $1.00 title. As costs have risen over the years, title prices have, in the main remained static. So, it’s not hard to understand why newsagents are not as motivated to pursue sales growth when the newspapers are a loss leader. Not all newsagents think that way though.

If one could control Australia’s 4,600 newsagents an immediate campaign pursuing newspaper sales growth would be the start in responding to the AFR editorial.

Strong newspaper sales growth in the newsagency channel is the best response possible. It would give newsagents undeniable bargaining strength.

BusinessWeek and Zinio have teamed up to launch the first, and at this stage one time only, online issue of BusinessWeek magazine. This special edition, the IT-100, looks at IT-100 issue looks at the top 100 technology companies worldwide. While you’re checking it out at Zinio take a look at the vast range of magazines available in easy to read digital editions.

The Business 2.0 Blog carries a fascinating entry about a deal announced by Microsoft and TiVo about letting mobile users download time-shifted content. This blog entry lets us see a more mobile future – one which will impact on the distribution of news, information and entertainment. Now if only we had TiVo in Australia.

I like my newspaper to focus on news and to win readers by breaking stories and providing analysis I cannot access elsewhere.

I don’t like my newspaper chasing readers with contests, giveaways and boorish celebrity gotcha pieces.

I understand but don’t like the sudoku craze which newspapers around the world have gleefully embraced. These games are best left to specialist publications.

It’s disappointing to see that even in the online world a publisher is using the sudoku game to attract viewers. Yep, the Cambridge Evening News has launched an online game.

Fred Hilmer, Fairfax CEO, presented a paper at the 58th World Newspaper Congress on Seoul last week. The full text of the speech is available from the company website here. They have also made available the accompanying PowerPoint presentation.

The paper, Building off the Print Franchise, is an interesting journey into an Australian publisher’s perspective of the changing world of news and information. Since the forum was public the paper is not as broad in some areas as I’d like. However, the discussion of growth in online is interesting as is his discussion of the Fairfax focus on building their community newspaper franchise. A quote I like is “Small may not be as beautiful as it once was, but local still is.”

Hilmer’s paper ought to be read by newsagents and anyone else involved in the news and information supply chain – not out of fear or looking for coded information but to understand that there is a strategy. Hilmer’s opening comments put the strategy in perspective as these selected quotes show:

The technological changes we face, such as the internet, may be new but the challenges they represent are, in a profound sense, quite old. The internet may be the latest but it is by no means the last new entrant in the media space.

My main message is that the challenges we face are real and acute, and demand multiple initiatives and responses.

There is no magic bullet—no one answer that works for all parts of our publishing businesses.

Nor is there room for complacency: The challenges of competition, technology and audience fragmentation are not going away. In fact, they seem to be accelerating.

I’d love to have an opportunity to talk with Hilmer and his strategists to discuss “competition, technology and audience fragmentation” in pursuit of mutually beneficial strategies. Our problems are, in the main, their problems and vice versa. They have resources small business newsagents do not have and there must be a way we can tap in and access these resources in a business like and co-operative way.

Last week I downloaded and watched EPIC 2015, an updated version of the previous EPIC flash movie speculating about the future of media, over the coming decade. I didn’t originally post here about EPIC because I wanted to be seen as promoting the views of EPIC.

On one view EPIC makes you (if you’re in the news and information business) reach for valium, gin/vodka/scotch and turn out the lights. Another view makes you aware of one group[‘s view of what might be.

You can get EPIC 2015 here or here. This second site for less tech savvy people – the content is the same.

I like EPIC 2015. It’s creative thinking which opens one’s mind to other possibilities. Of course it could go further. It set me thinking about my businesses by presenting scenarios I had not considered.

If you’re in the new and information business, shut your door, turn off your phone, hide sharp objects and watch EPIC 2015.

For a less optimistic view of the world you could watch EPIC 2014. This was made by the same team last year and cause a stir when released.

Good story by the US PBS Online NewsHour people about changes in delivery of news and information content. At the website you can read the transcript, listen to the audio, watch the video and watch extended interviews. The story itself demonstrates how distribution of news and information is changing.

There is an excellent example of how the Wilmington News Journal is embracing the opportunity technology affords it and moving beyond print in getting news, information and its brand out to consumers.

This is an excellent story by the NewsHour team – one everyone involved in the news and information supply chain ought to read/watch/listen to.

The Australian newspaper supply chain needs to better educate itself about these developments and plan accordingly. While many say that publishers embracing digital will not dramatically impact the printed product, others disagree. Newsagents and others in the supply chain need to develop a strategy so they are playing in this new field as well.

Two days after their editorial writer had an unexpected crack at Australia’s 4,600 independent small business newsagents, the Fairfax’s new chief operating officer, Brian Evans is quoted in an article, If the paper’s too big, sell it in parts, in today’s Fairfax published Sydney Morning Herald.

Talking about opportunities for specialisation in retail of Fairfax newspapers, Evans comments about a role newsagents can play:

“That’s really where the relationship with the newsagent comes into play. If we’re going to supply different products to different people, it’s going to come through the newsagent distribution system.”

Further on he comments:

“We need to have a more dynamic relationship with newsagents,” he said. “That relationship has to be a lot more modern in the way it thinks about things.”

The story about Evans, Fairfax plans for the future and newsagents will take the sting out of the editorial of two days ago. It is a good move and should be welcomed by newsagents. However, the need for the newsagent channel to evolve remains just as it does for publishers to evolve.

Newsagents have excellent foot traffic. Much of this has been built through linear relationships with suppliers. A cohesive marketing and management plan could see incremental sales achieved in all major categories. Rather than newsagents working with a Fairfax rep in isolation, they should be working with Fairfax, News, lotteries and the card suppliers to present a complete retail story so that maximum sales are achieved every visit. This presents a better opportunity than add on sales at McDonalds.

Newsagents not a protected species.

This is the headline from an editorial yesterday’s Australian Financial Review – the national business daily of record. Ignoring the inaccuracies in the editorial, it is disappointing to see a newspaper publisher gunning for a retail and distribution channel they created.

The editorial was in response to reports of concerns by newsagents about the possibility of newspapers going into McDonalds. Of course newspapers are chasing incremental sales. Based on past experience, putting newspapers in new locations won’t achieve incremental sales.

Working with the newsagent channel on leveraging sales out of existing foot traffic might be more successful at generating incremental sales. It’s working in my shop – 10% newspaper sales growth year on year – achieved by understanding the shopping basket and finding cross promotion opportunities.

Newsagents are a child of the publishers. They at our publishers who created the channel are engaging with others without more completely engaging with us is disappointing.