For Newsstand Publishers, What is Plan B?
Go direct to retailers or, perhaps, Amazon.com.
When John Harrington says the sky is falling, itâ€™s time to look up. So, publishers, itâ€™s offical: We need a plan B.
Bo Sacks recently shared a dialog between Harrington and Baird Davis on the state of the newsstand that was chilling. These two industry veterans agreed that publishers have â€śseriously underestimatedâ€ť the possibility of collapse of the newsstand channel; that such a collapse could take place within a year to 18 months; and that unless publishers begin to work togetherâ€”not in a happy-happy â€śletâ€™s all get togetherâ€ť kind of way but in a serious â€śwe need to re-create an entire channel of distributionâ€ť kind of wayâ€”there isnâ€™t much hope of survival.
One thing that was extremely sobering was that I couldnâ€™t really find a way of arguing with their conclusions. What will it take to collapse this industry? At this point, not much. The loss of a single wholesalerâ€”TNGâ€”would do it; and TNG has already told us they have an unsustainable business model. Consider this:
â€˘ A large national distributor recently sent its publishers a list of all the wholesalers that they intend to cut off if certain financial terms arenâ€™t met. The list includedâ€¦pretty much everyone.
â€˘ A second national distributor has indicated to one of the major wholesale groups that their latest financial proposal, if implemented, will result in the termination of their business relationship.
â€˘ Two of the four major national distributors have begun to refuse to cover bad debt liability for their publishers.
None of which is a testimony to a deep and abiding faith in this businessâ€™s sustainability.
Without going into a litany of all the ills, dangers, sorrows and shortcomings of our industryâ€”weâ€™ve all heard lots about themâ€”the need for deep and fundamental change is the point to key off of here. Baird and John did mention a few ways in which publishers could work togetherâ€”co-marketing, embrace SBT, address the mistrust that exist among channel partnersâ€”all of which are good ideas, even important ones. But they are small fish to throw into this sea of troubles.
Baird calls the publishers out on their passivity in the face of this impending collapse. The answer, he suggests, is to look to the seven top newsstand publishers to take a leadership position in representing consumer publishersâ€™ newsstand interests.
Will rest-of-the-line publishers do so? And, when a perception exists that the top publishers have used some of their leverage to maintain short discounts at the expense of specialty publishers; when many publishers are convinced that the top publishers would like nothing more than to see the specialty publishers clear off the racks, leaving them open for the big guys; in such an environment can that mutual trust be established?
If the scenario is to play out, it may have to.
An industry veteran shared with me the following scenario: In the event of channel collapse, the top publishers will go direct to the top five retailers in the country. They are setting up the relationships and the distribution channels now. Every other publisher will have to scramble to follow. But these top publishers arenâ€™t throwing a ring out of the lifeboat just yet.
But we do need to look to setting up new ways of reaching these retailers. Our current channel partners are telling us explicitly, in every way they know how, that they might not be here tomorrow.
Can we live without newsstand? Of course we could survive. But newsstand remains an important, if not indispensable, part of the distribution of consumer publishers large and small. There is no question that a channel collapse would take many publishers down with it.
For most publishers, working independently at this scale, away from the umbrella of their national distributors, is not a possibility. They rely on those national distributors to find the solutions and provide leadership. But many of these publishers have ideas to contribute. For example, one industry watcher suggested, what about a partnership with one of the largest distributors of print product in the country?
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