Wholesalers Increase Distribution Prices

Anderson and Source plan 7-cents-per-copy increases; some balk.

By FOLIO: Staff
01/30/2009

A week after Anderson News in January announced a 7-cents-per copy distribution price increase, Source Interlink also says it will also raise its rates by 7 cents. The two wholesalers account for around 50 percent of the magazine distribution market.

Anerson CEO Charlie Anderson says that all wholesalers were in a money-losing business. “The business has not been profitable and has not been for a very long time. What we are trying to do is give some stability to the channel. Short of that, there will be an implosion in the business.”

This raise represents about a 3.5 percent increase for Anderson. Discussions with Comag resulted in a three percent offer, and separate talks with Time Inc. arrived at 2 percent. The pricing is non-negotiable for either Anderson or Source, with both implementing a February 1 deadline for signed agreements, and plans to drop non-compliers.

Comag’s president, Michael Sullivan, tells the New York Post that his clients have no intention of paying. “As we understand it, Anderson’s proposal is a unilateral effort to shift substantial costs to magazine publishers,” and doesn’t “address the fundamental inefficiencies” of newsstand-distribution.

Part two of Anderson’s program outlines an exit from bearing the costs of scan-based trading. “The last thing we want to do is exit the business, but why should we be in a business that doesn’t give us any return?”

Jay Annis, vice president of single copy sales at Taunton Press, says: “The attempts by both at extracting a 7-cents-per-copy fee for distribution is unfair for any number of reasons, and the method in how they have gone about it is ridiculous.”