Take a look at the Financial review figures from the current ABC figures for newspapers.

{chart removed]

On this list, Fairfax did the worst despite their giveaway deals which I discussed here.

Despite our growing population, we saw a 2% drop. What is also disturbing is a recent study of newsagents showed a drop of 4% in newspapers. Part of this is probably deliberate as many newsagents are changing their emphasis to other products, many did not even bother to renew their News Corp contracts. Another part could be the decline in tobacco, cigarette sales and newspapers are often linked. I think we are seeing all of that and more here.

Still, from a newsagent view, a newspaper is a very good product. They take up little room, margins are reasonable, and they bring many to the shop.

For over a decade, consumers have been reading newspapers free on the net. More people are reading the newspapers and fewer are buying it.

One possible answer newspaper sees are paywall. These paywalls make people pay before they can read newspapers online. In the early days on the net, these were tried and slowly dropped. Now many newspaper companies want to try again.

If the rumours are correct, soon some of the larger Australian newspapers will be putting up paywalls.

I confess being sceptical that these *paywalls* will work for newspapers.

Here are some preliminary figures from the USA. Newsday in 2009, weekday circulation was 377,500 making it the 11th-highest in the United States.

The newspaper paid $4 million to set up a paywall. On October 22, 2009 it went up. Since the paywall gone up, there has been a 41.5% drop in site traffic. Over that period, they have gained 35 subscribers paying $5 a week{Link removed].

At present, the only financial model that works for mass newspapers is print.

VANA have what should be a very good meeting coming up with

Andrew Hockley-General Manager: Sales & Marketing and Stephen Kaye-Circulation Director from The Herald & Weekly Times

talking on HWT publications, their future plans and the process of newsagency involvement.

It should be a topic of great to many newsagents.

It will be on

Tuesday - 16th February 2010

If you have any topics or issues you would like asked or you want to know more details please contact Alicia Carmichael on
Telephone: 03 9482 2911

I suspect the questions from newsagents will be more interesting than the talk.

Since I wrote about the new computers coming out now with the improved screen.

If you are unsure what they look like, here is a demonstration by Microsoft on these new computers that are being released now. That are called tablet or slate computers.

This is a magazine displayed on one of these new computers.

{links were removed}

One of the big highlights now are e-readers. More than forty companies now have e-readers all promising competition to the Amazon Kindle and the Sony e-reader. Clearly a flood of e-readers is on the way to Australia. Going by past experience Australian being rapid absorbers will take them much quicker than the US.

Much of the interest in the e-reader is because many newspaper and magazine companies are looking to the e-reader like the Messiah that is going to save them from the internet. Once their readers get e-reader, these readers will take out subscriptions then they will have revenue without the expense of publishing and the cost the intermediary (the newsagent).

I do not think it will happen. The real competitor to an e-reader is a computer. Essentially an e-reader is a limited computer with an improved screen for reading. As these improved screens get generally released, almost every computer will be an e-reader. These computers will be able to access free material just like now.

So I believe the problem of ebooks is much bigger and more immediate then most.

Our understanding is that now 30% of newsagents have signed the new agreement which is in line with an ANF survey done a short time ago. This survey said that only 30% would accept it AS IS.

What is wrong is the ACCC have created this unfair David and Goliath conflict by allowing newsagents to bargain collectively only voluntary on a state level. This makes it a pointless exercise, to include the newsagents’ state organisations. It also forces the ANF to stay out.

As there is no monopoly now, what the ACCC should have done is forced publishers and distributors to deal with these state bodies for those newsagents that nominate their state organisations as their agent to negotiate on their behalf.

Still, the state organisations are doing the best they can for their members. VANA newsletter detailing their concerns about these contracts.

For those of you that have not signed and returned your agreements, VANA advice is to contact News Corp to discuss any issues you have.

From my discussions with newsagents that have given up these contracts, the long-term effect to the business is greater than you might think. I know a person who sold his territory to another newsagent on the understanding that he would continue to get the publications at 25%. That newsagency was soon taken over by another newsagency and that one refused to honour this contract with this new subagent saying they could do it for nothing. Now the new subagent is at 12.5%.

I read the following story, in a press release by a gaming company Amuso, {link removed}. It appears that News Ltd may include online gaming in its websites attempts to charge customers for reading its news stories. Although I do not think that micropayments will work for news, this idea I think may work. As it makes payments voluntary.

News Ltd is to introduce gaming as the next part of its strategy to extract money from users of its news websites, with the launch of a pay-to-play trivia game on its Daily Telegraph website. Daily Telegraph Trivia will be a flash-based game embedded on the Telegraph site. Users will be charged in the region of $1.50 to play. The platform is being provided by the London-based company Amuso, which has an existing relationship with fellow News Corp company MySpace. Users will either be able to play for free or pay to enter games against other players with the entry fees pooled as a prize. Amuso already powers gaming across the world, so there will be an immediate pool of opponents. The contestants are able to communicate with one another via live chat during the game and invite friends to play too. Topics include general knowledge, entertainment, celebrity, music and movies. The technology is a simple, embeddable Flash widget, making it easy to roll out to other News Ltd sites if it makes good money for the Tele’s site. However, a spokesman for News Digital Media told Mumbrella: “At this stage it is just a Daily Telegraph initiative.” Barak Rabinowitz, the CEO of Amuso, said: “Having experienced great international success with companies such as MTV and MySpace, we are very excited to be launching into the Australian market with dailytelegraph.com.au.” Michael Robinson News Digital Media’s CEO of media, said ”Our users will now be able to take advantage of world-class gaming technology.” Amuso is bankrolled by Mangrove Capital Partners, one of the founding investors in Skype. The move is the latest by News Corp as the company seeks to widen the revenue streams for its news-based sites beyond advertising. Boss Rupert Murdoch has been signalling for more than a year that he intends for the company to start generating significant revenues from its online news sites. In the UK, News Corp is further down the path with Times Online set to charge users for 24 hour access and the Sun newspaper the biggest short haul travel firm in the UK.

Although the Australian newspaper circulation stood up well compared with its overseas counterparts, it did record a slight fall in the September quarter of 1.7%. The question arose how relevant it to a newsagent as several said that they did not feel it.

So one Victorian newsagent that claimed not to feel it, we decided to check their newsagency’s figures using our benchmarking project and compare it to the ABC figures for July to September quarter. The benchmarking result for their newsagency when we examined their information was this.

{image removed]

As you can see, it did not follow it exactly but the trend is similar. What we think happened is as newspaper sale's slight drop (1.1%) was not enough for a person to notice anecdotally. Another would be that his main newspapers had a price-rise so much of the sales drop was hidden by the price rise.

I am not allowed to release the ABC circulation figures so I pulled this public chart from an article that admit-ably negative towards the Melbourne Age. Check how your newspapers go compared to the national figures.

[Removed]

What I noticed looking at these figures is that overall newspaper circulation has dropped more for number two newspapers in a region. The era of a one-newspaper city in many places will possibly be a reality in Australia.

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.