I was talking to a few people and was stunning that several did no know what an advertising wrap on a newspaper was. So here is a picture of the Sydney Morning Herald with a wrap. Because it was unusual, it did create a visual interest with some customers.

Several in the industry condemn it, I think they are wrong. Today we have to be practical, what is keeping newspaper prices down is advertising.

Please ask yourself this.

Does it matter if the main news of the day does not appear until page two or three? If I want to read the news, are you not prepared to turn a page if the newspaper is cheaper?

Has anyone got figures to show that the wrap affected SMH sales?

Did not the advertisement create more interest to many new consumers than the main news?

Newspaper industry in Australia now

The official ABC Newspaper circulation has just been released. Sales of metropolitan newspapers in Australia recorded a 1.1 decline. National newspapers fell, the Australian fell 4.2% and The Australian Financial Review dropped 9.7%.

Overall what they show is that Australian newspaper circulation figures are only slightly dropping as you can see from the chart.

Despite what many are saying for most newsagent, it is still a good product.

What is a deep concern is the newspaper companies' revenue are down this year by 9.2% mostly because of fall in advertising. If this advertising drop continues, then newspapers will need to increase the cover price.

While at a newsagent, we discussed magazine sell though rates. Something that I discussed a few times at user meetings. So when I came back to the office I decided to create some reports using our windows program for them to give them a feel of its power. Thinking that others might be interesting too, I decided to blog about it here.

As you can see, there is a significant variation monthly. That is why if you intend to do benchmarking you need about three months figure. With one month, you get these wild variations.

I decided to then see whether it made much difference by supplier. So I took three suppliers and tested them.

You can that there is a significant difference. NDC is certainly doing something right. Maybe the data, our systems supplied them about six months ago for their Sales Based Replenishment program really helped.

I suspect this is the end of the project.

What caused this project that everyone had such hopes from working as someone deeply involved in the project I would put down these points.

Newsagents are not a destination point for music. Newsagents could sell the product but not market it as they do not get these customers.

To help start it newsagents needed help, in what to them was a new market. Yet many newsagents felt frustrated by what they saw was poor communication by Cardplai.

Competitors that people that want such pre-paid music cards go to are retailers that have known expertise and music departments.

The product well newsagents took on a giant. Although the Cardplai website and range of products were good, it was lacking compared to what say iTune offered. iTunes has almost every piece of music you can want. Now it has more than 10 million different tracks.

What the public often want are dubious legal products like US iTunes cards that newsagents cannot sell.

Cardplai prices were good compared to standard prices but often pre-paid cards have huge discounts. BigPond was offering 50% off prepaid music vouchers through Big W and Woolworths for its BigPond Music service, while Apple is selling $50 iTunes vouchers through Big W for only $30 -- a 40% price cut.

Newsagents could not offer to afford on their margins, such discounts. How Big W can is a question, I would like to know?

Cardplai advertising campaign need for launching such a product was nowhere enough. I am sure millions would be needed. iTune which I mentioned above is owned by Apple spends millions in Australia, worldwide its advertising budget was $US486 million in 2008.

It would have been good for newsagents to carve a niche for themselves in this market, and we tried but like so many projects all we can do is learn and move on.

Gordon and Gotch have set up an online shop selling books, magazines, music, movies, TV DVDs and games.

I checked the magazine section. They have some well-known titles there, but nothing Australian. Some of these are at competitive prices.

[Website has been removed]

What I find fascinating is that with our program you are not restrained to just the reports that we provide as you can make your own reports.

I decided to create an example by checking how efficient different magazine suppliers are in their distributions.

So I decided to created a chart with several categories.

The first category was the number of deliveries by supplier. If for example, twenty magazines came at once that would be one delivery. If another ten of the same magazine came the next day that would be another delivery.

I then created another category which I called oversupply. Those were deliveries that had either more than 25% returns or one, whichever was the highest. So if say twenty arrived if the number returned was greater than 25% of 20 = 4 then that would be an oversupplied delivery.

I then created here a special category called NO Sale where a delivery came and nothing was sold.

Finally I created a category where there was not enough in the delivery. That was where the computer estimated that if it had received more in that delivery the newsagency would have sold more.
Then I decided to display them in excel. It makes an interesting report.

Then I graphed them here.

As you can see, there is little difference between magazine suppliers using these categories as they tend to keep place with the number of deliveries.

It is just an example and you can, of course, create your own categories and charts using our software.

The Caxton awards for excellence is given for the best newspaper advertisement in seventeen categories. This one, I thought was amazing and it won several awards.

[Link removed]

I think that newspaper companies and newsagents could do more with these winning advertisements then they are now doing.

I have just come out of a meeting with some newsagents where some of these gloom merchants, just got to us by telling us that newspapers were dead. There are some that just love to push themselves by spreading bad news.

I agree that now it is impossible to predict if, the current economic crisis has reached its nadir. In our industry, the figures are better than most. A key indicator would be Australian newspaper circulation is only slightly down in the past few years as you can see in this chart.

I wish these people would peddle their stories to someone else.

With the recent announcement that kindle is available in Australia, there has been a dramatic increase of interest on the net in Australia. As you can see from the graph of searches in the last 90 days.

It is clear the Australian consumer is interested. This trend will continue once the Australian newspapers and magazine companies decide what reader they will adopt. The favourite, I believe now is the Sony reader.

If this technology spreads there has to be an impact in the industry, for example, the kindle would be useful for those consumers that buy newspapers and magazines for use in public transport.

I was talking to a large magazine distributor and it was brought up that many newsagents still do not have systems. You can see the problem the newsagency industry faces if you look at this chart at the large number in red.

It is a shocker to see how many people still do not have any system in their shops. The lack of consistency in the industry is holding us all back.

Let me give you a personal example. We had a meeting at Telstra about introducing a new product into newsagencies. One of the senior executives in Telstra in the meeting said "Can you guarantee us that all newsagents can handle this product?"

I said, “no because of the nature of the industry.”

So he relied "How can we advertise it as available at newsagents if some cannot handle the product?"

I replied you could advertise that it is available at selected newsagents.

So he replied, "Yes we can get around it but it causes problems."

Then it came up that if Telstra goes with newsagents only, there will be areas where the product is not available.

Now consider what Australia Post representative, could have said at the meeting if asked these questions?

While there is a major difference in the newspaper model in the USA and Australia what happens in the USA often happens here. So I was hoping with the economy picking up that newspaper circulation there would go up. Well in the USA, it did not happen. The latest print circulation in the USA for the top 10 newspapers showed a drop of 10.62 per cent in March-September 2009 compared to the same six-month period in 2008.

{image removed]

In the last year, in the USA newspaper circulation fell 7% on a year on year basis.

Now many people have been PCs in particular laptops to read ebooks for years. On my laptop that I am using now, I have about ten e-books to read. Using its built in Wi-Fi, I download e-books straight into the laptop. I also read newspapers and my technical journals on my laptop.

Here is the one I use is a Sony e-reader. It is small and lightweight.

This laptop technology is not new, I and probably a million Australians use it everyday.

I am not even that sure I am keen to get an e-reader. Although I have never used the kindle, I have used the sony e-reader and was not that impressed.

What I really like about using my laptop is that it is a computer. For example if I have a question, I can highlight a word and do a search on the web.

I doubt that most of us now will give this up for the kindle. Possibly the threat is more the technology which is here now rather then the kindle itself.

That is the good news as this should shelter us from the Amazon kindle for a short time.

This is only a delay as the race is on by Australian newspapers to decide on an e-reader. Their favourite now is the Sony e-reader.

It is an excellent choice for an e-reader. I know a friend who has one. It is a nice stylish unit. It is the size of a standard paperback. I find it well-thought-out. It is cheaper than the kindle. Most important is it open for venders to use. Which is a big plus as no Australian newspaper wants to share profits with Amazon.

I would not be surprised if the sony e-reader is what Australians adopt.

Yesterday I went to a newsagent near Cairns. While having a delightful chat with the newsagent, I happened to notice a giftcard stand sitting uselessly in the back. Where it came from no-one knew but I suspect it was from Bill Express. I was stunned and said why not use it? They replied that it was useless. I told them for no expense they can use it to sell an extensive range of giftcards. As I explained what giftcards were, they became excited about handling them but they did not have the software to do it. So clearly they need a software upgrade from us, then we can turn that stand from junk to an asset.

[Image removed]

It is amazing what just sits uselessly in the back.

The Chairman and CEO of News Limited, John Hartigan made what I thought a well-thought-out speech saying News Limited views about newspapers today and its future. It spells out where they want to go and their vision of the future.

If you want to read the speech, it is available here. {link removed}

My thoughts after reading it were that I agree with him that bloggers and other modern media are no replacement for quality journalism. Quality journalism needs money and professionals. Also, another advantage is that even if the public disagrees with a modern newspaper, they know these newspapers and reporters have a reputation to uphold, if only because they can be sued. Bloggers cannot give that! At best, bloggers are an echo to the existing news system.

He has some interesting points like the public are willing to pay for news. When we had the Victorian bushfires, many more newspapers were sold.

Today most money from news on-line is made by Google and Yahoo who pay nothing to produce it. Online readers generate about 10% of the revenue than a newspaper reader.

I also agree with him in the short-term, Australian newspaper market is strong with circulation only slightly down. Yet unlike him, I see the circulation drop that we have seen in the US and UK and not in Australia as lag, that we often see when developments occur.

He is clearly right that newspapers need to adapt their business models. By extension, so must newsagents. Interesting in his talk, there was not one word in the speech about them.

With all the doom talk about the internet destroying newspapers, the reality is that newspaper sales have held up and despite increasing internet use, substantially more people read newspapers than using the internet.

Newspapers are a good product. Here is the report {Report removed}

I decided to see how distributors overtime are handling a common problem in newsagencies of sending items that just do not sell in a newsagency.

As there is a wealth of information in posbrowser newsagency software, I decided to check this in a newsagency’s database. I put it into excel to create a unique report here.

Decide for yourself how the magazine distributors have gone. I think in 2003 they did a good job but by 2008, they were no better than 1997 in this newsagency.

Oversupply today!

The argument often heard now is that improvements have occurred in the past few years.

Well, I decided to check it. So I took a large newsagent file and ran in our newsagency software a report and then exported it to excel. Here is the chart.

As you can see, the minor titles the magazines are clearly not right unless you are talking about the very large ones circled in red.

This is what a statistician would expect. Say you sell one a week, if this week that person does not show because he missed his train they would be 100% off. Alternatively if you sold a hundred of that magazine, they would be 1% off because of that train. The more you sell, the more accurately they can predict the expected sales.

Overall much work needs doing on the low selling items.

I was doing some work for some new reports for our newsagency software that I saw overseas, I decided to check whether much changed in magazine supplies over the last year.

Here is an excel spreadsheet of what I got.

From these figures what I can see here, little happened about the problem of supply other than possibly network.

I then decided to compare the results with a magazine supplier Lovatt just because they made an effort a few years ago to look into this problem. They decided not to use the magazine distributor but do the distributions themselves.

Well here are their figures
Oversupplied 38.1%
Undersupplied 17.9%
Clearly, in this newsagency, Lovatt's have cut into their sales by undersupplying with little change for the oversupply rate. Possibly they would be better going back to the magazine distributor.

If anything happened about this issue in the last 12 months, it certainly does not show in these figures.

{images here have been removed]

I can tell you that you would not want to be a newsagent in Germany if you did not have smokes and alcohol. In Amsterdam, it is similar but they have some really interesting smokes in newsagencies.

Here are some pictures.

They do not have the range as we do for magazines. Also, their margins are lower.

They have more range in local newspapers. Note even in small towns they sell international newspapers.