Andrew Randall wrote an article on National Newsagent article Magazine Myth Buster which I will make a few observations.
The first is that he states is a rhetorical point.
“It is in the interest of no business to print, pack and distribute magazines and then have the majority of the supply returned.”
I would disagree with this comment; it is often in the interest for several players in the magazine industry, and it is far from being a rhetorical point.
The principal point to remember is a magazine company printing and distribution is only one of many costs of producing a magazine. Most of its revenue is from advertisers, who pay by sales. This includes the consequential damage from over supply such as extra shoplifting and accountancy errors, which is somewhere depending on the newsagency between .5% to 8%, counts as sales!
Then there are the magazine printers, who are paid to print copies of the magazines. They are paid more to print more. This often happens as one of the main problems of oversupply is because much of the cost of printing is setup. Once setup the more printed, the cheaper the unit price. However because of labour charges the setup is getting dearer then the run. As a result, runs are not getting tighter as suggested. What is happening is that some of the smaller magazines are being dropped. Once printed the excess leaves the industry with an awful problem.
Another big player in the industry is the magazine distributors. Often they are paid to deliver the magazine and then to pick it back up. The more they deliver and pick up the more they are paid plus they pick up cashflow as newsagents pay for the magazine delivered and only are credited when the items are processed for returns.
Next, I have doubts that his thoughts that things are getting much better is correct. I checked magazines gross margins on purchases (GMROP) for three newsagencies one in the city, one in the suburbs and one in the country. Five years ago in 2006 for the first quarters were 43.1%, 34.1% and 43.9%. Today the same newsagencies GMROP is 42.9%, 33.9% and 44.2%. I do not see much improvement, do you from these figures?
Finally, I agree with him the dumping theory is not relevant for the Australian published titles. However, let ask what about the overseas published titles that make up a significant percentage of magazine sales? What happens when a large number of unsold British magazines turn up in Australia, I suspect the same as five years ago they get dumped on Australian newsagents.