I was reading this story about how the suddenly now after so long the newspapers are agreeing that their readers find the large formats difficult to handle on public transport or on a plane.

I would have told them 20 years ago. If they had asked me!

Today where every sale counts, I think there are good reasons to go to the smaller tabloid format. That is what the Courier-Mail did in Brisbane. Interestingly Courier-Mail decided to call it compact rather then tabloid as in newspapers tabloid has a bad connotation. It is now used in many good papers in many countries as this article shows.

http://en.wikipedia.org/wiki/Tabloid

When the latest copy of the MPA - Magazine Publishers of Australia came along today that advertising is up by 7%. My first thoughts were cool as it helps the industry.

My next thought was recently a director of a magazine publisher came to see me about getting sales data. He told me that circulation dollars are not worth much. So I asked, “If advertising is so important to you and since advertising dollars depend on circulation, as you can increase circulation by just giving it away, why charge for the magazine?”

He just looked at me, then gave me a strong hint that I should not ask this question and that we should back to the subject.

So while scanning the MPA newsletter as I am a curious person, I would like to get an answer. Since newsagencies rarely deal with un-audited magazines the figures here are perfect for me to get an answer.

The MPA newsletter stated, “Magazines increased ad revenue in 2006 by 3% to $749.2 million.”

Okay, so what is the circulation dollars. So I went to the MPA website where it states “Australians spent an estimated $1.06 billion in 2005 on ABC-audited consumer magazines.” Say about a 3% increase for inflation which every business got but POS Solutions that has not increased its fees in ages. We now have 1.09 billion dollars in 2006. There is a slight increase in magazine sales so say the same so we have about 1.12 billion dollars about in 2006.

The magazine business model in Australia is the magazine publisher gives it to the magazine distributor and the magazine distributor gives it to the newsagent and the newsagent sells it to the public. I don’t know where printing costs come into the equation.

Since everyone in the chain gets a slice. If the magazine distributors are given newsagencies and other retailers 25%, I presume that they are talking about as much. This I don’t know. It is a guess but it sounds about right. The problem here is that they are public companies and these companies do not release their cost of good sold figure.

So as a punt, I would say that circulation sales in 2006 would be about .6 billion dollars to the magazine company. Much probably goes into other indirect costs involved in production and distribution.

Since advertising is giving than about .75 billion dollars a year, I suspect the magazine publisher are correct when they say that they make more from advertising then circulation. It also explains why magazine publisher are interested in the number sold rarely the circulation dollars and rarely bother with newsagents. It also explains why the MPA concentrates so much on advertising dollars and little else. It would also explain their strong interest in the internet.

Now it looks like Coles is being sold. I wonder what will happen about Officeworks. Harvey Norman, Wesfarmers and Woolworths are interested in buying Officeworks.

Wesfarmers is likely to be given access this week to Officeworks figures supplied by Coles note they have to sign an extensive confidentiality agreement. Soon the others will get the figures, I bet it will cause them all to do some real number crunching.

For newsagents, I suspect that Harvey Norman purchase is probably the best. They handle at least half of Officeworks products already. They are not into office stationery selling. Woolworths also will be more of the same. Probably the worst is Wesfarmers. I have dealt with them before and they are an extremely professional company. With their stress on technology, huge stock inventory shops, high volume and low prices they could be a real challenge.

However whoever buys Coles and if they lose out on Officeworks will probably be tempted to try to get back some of this stationery market.

Also, both Harvey Norman and Woolworths are saying if they don’t get Officeworks they are considering starting a rival stationery supply chain.
So it is quite likely in what is already a competitive stationery market at least a few new players will enter.

Newsagents have to work out where they want to position themselves in the market.

I was listening to a politician seriously saying that Australia should follow Ireland and introduce a levy on every plastic shopping bag. Seemingly there it led to people cutting down which plastic bag use by almost 90%. I believe it. I can see in Bunning’s how few people take plastic bags when they have to pay a few cents for it.

I think these people have some good points. I am sure we have all seen these waste plastic bags somewhere having an undeniably negative effect on our environment.

Anyway if you go to supermarkets now and you see these green bags. People often use them in the street to cart everyday stuff. It is giving good PR to some big companies. You can see this one in the picture thought so!

I don't see many newsagents doing anything. So they cannot even argue that they are doing much to help this problem so being good business citizens. Most don't even have a plan B if such a levy appeared soon what are they going to do? So what happens if suddenly we need something besides plastic bags?

Even offering an alternative would look good to many newsagents. For example now what if in your VIP system you give some free VIP points to any client over a certain dollar amount that brings their own bag or offer them extra points for buying a non-disposable bag.

The ABC audits of newspapers and magazines are clearly the measure used in the magazine and newspaper industry. Suppliers, whenever you meet them, almost immediate point to the previous figures and express concern for the coming one. They will often then go on about how the current changes in the audit affect them.

If you want to know what is the first concern of such suppliers look to their ABC audit figures as it will probably tell you.

Yet interestingly, although National newsagent will regularly publish the results, newsagents rarely bother with these figures.

I decided to check it out.

The ABC audit results for 01/July/2005 to 30/June/2006 by category is

So I went over some newsagents databases and came up with my own newsagent comparison. Which is below and if you want more details please click on the picture below.

As you can see the figures look different some by over 200%. Not surprising as there are so many different factors in the ABC audit figures that are irrelevant to retail sales for example subscriptions. Also some magazines may have changed categories in the latest round of changes in the ABC audit methods which may account for why Women’s interest is over while Women’s weeklies is under.

Looking at these figures, I can immediately say certain points. You may want to change your shop fit slightly. The problem is that the two sets of figures are giving different results. For example Men’s lifestyle, if you just took the ABC audit figures it is a good category. Yet look at mine and you would probably say marginal at best.

If these figures are going to be useful to us, we need some industry standard figures. This would not be too hard to do. All you would need is for 30 newsagents to fax a report once a quarter to someone say in the MPA who then spends a morning to add it up.

The printer consumables industry is a rapidly growing market. It is expected to grow at a rate of 12% a year, which represents a growth opportunity.

Today almost every business has one or more printers in the office and probably half the households in Australia have their own printers. Newsagents well positioned to capitalize on this opportunity being both local and having a business-to-consumer focus.

Now over one million homes and businesses have received this flyer in the past 30 days.

Several newsagents have told me how good it was to cut up price lists from woolworths and officeworks showing it next to this pricelist just to show they are competitive. That they are fighting back.

It is also proving very effective as people can see which one they want at home and bring in the flyer having marked the one that they want.

{link removed}

If you look at the current circulation figures for newspapers in Australia, you'll find that they are stable: some did go up and some down slightly. At present newspapers look safe.

Then I was shocked when I read part of an interview with Arthur Sulzberger Jr. He is the publisher of the New York Times, one of the world's most prominent newspapers. Responding to whether the Times will be printed on paper in five years, he stated, "I really don't know whether we'll be printing the Times in five years, and you know what? I don't care either." He then said “……that the New York Times is on a journey and its end will be the day the company decides to stop printing the paper [to make it] 100 percent digital.”

Suddenly, I thought, "Are we in this new equation? So what happens to all our businesses?"

I was not the only one to think this. At a shareholder meeting, he was asked what exactly he meant. He replied:

"We are continuing to invest in our newspapers, for we believe that they will be around for a very long time. This point of view is not about nostalgia or a love of newsprint. Instead, it is rooted in fundamental business realities…..”

All this sounds good, but wait for the end of his statement, which is:

"So let me clear the air on this issue. It is my heartfelt view that newspapers will be around--in print--for a long time. But I also believe that we must be prepared for that judgment to be wrong. My five-year timeframe is about being ready to support our news, advertising and other critical operations on digital revenue alone...whenever that time comes." [Emphasis added]

In other words, his paper is considering the possibility. I wonder whether we should, too?

Here is a fascinating short clip that discusses a future without newspapers. It is a bit over the top, but it is well worth looking at, I can assure you.

Epic 2015 (new updated version)

Click here to launch the movie

Note: In this particular post, I was debating whether or not to publish it. I showed it to Zac Varga from Pos Solutions. He was struck by it, too. He then went to Jenny from Geyers Newsagency, who was stunned too. She convinced us to publish it as she said that "it was really important to place that type of information so people realise how important it is to keep coming up with new initiatives to make our businesses relevant, just in case this became a reality here in Australia in the future!".

It is with great sadness we advise that Maurie Lovell of Lovell’s Shepparton Newsagency passed away on Sunday 4th February 2007.

We at Pos Solutions, extend our sincere and deepest sympathy to Maurie’s wife Shirley, children Gary, Louise, and Wendy and grandchildren Kane, Jake, Rodney and Samual.

We knew him for many years as one of the most progressive leaders in the newsagency industry in technology. He was keenly interested in how the computers work. What made them tick! How they could help the industry and his newsagency better! He was among the first in computerizing just about everything in newsagencies for example the newspaper distribution, cash registers, introducing point of sale, school book, EFTpos and magazine returns. His newsagency always took the lead in development. Much of the systems, you use now were designed in his newsagency.

I noticed in any industry project, he would be there. He was always admired and respected as it was a pleasure working with such a warm man, with a keen sense of humour. He was always and friendly to people and he related to all in a non-judgmental way.

For more details of the family's wishes please see the funeral notice in today's (Tuesday) Herald Sun.