A Bad Decision

As a result of a decision by Australia Post this week, more magazines are going to die. Aus Post decided to lift the rates of their Print Post and Parcel services, and as a result, the cost of posting out subscription copies of magazines is about to rise. In a tougher economic environment, many mags have come to rely on their subscription profits to keep themselves afloat.

We find this decision by Australia Post to be baffling. We can appreciate that they too are under cost pressures and that a price rise, like with any business, is calculated to maximise profits. That is a legitimate objective for Aus Post who are not a charity but have a commercial mandate. However, what is so surprising in this move is that Aus Post has gone on record as wanting to push magazine subscriptions as a strategic priority. In other words, subscription volumes are of real importance to them. You don’t have to be a rocket scientist to realise that higher prices lead to lower volumes.

We feel for our publisher friends. It could be argued that this price rise is a good thing for mag nation and other mag retailers, as subscriptions represent repeat sales that will never make their way into one of our stores. Yet, we feel that too many players in the magazine industry have taken self interested short term perspectives for too long. Yep, thems a fighting words.

If publishers can’t survive, then we will have nothing left to retail. Lets stop denying that this entire industry is under threat. If all the industry players jostle each other for position to see who can get a bigger share of the pie, then who is being vigilant about the pie rapidly shrinking. A big slice of nothing is still nothing. Retailers, publisher, distributors and the service providers such as Aus Post should all be working together in times like this. Yes…and pigs might fly.

The Print Post product is actually one that has frustrated us at mag nation for quite a while. It offers subsidised postal rates for print publications where they send 100 or more OF THE SAME product. This is intended to incentivise publishers to send out magazines via Aus Post. Yet, we have questioned why it should apply to the same product and not across aggregated magazine product. We send out more magazines to subscribers than many small publishers, but they are magazine titles from the long distribution tail. The ones and twos add up however, and all in all, we provide more business to Aus Post than many publishers. Why shouldn’t we get incentivised in the same way, which in turn would lower the cost to you and push volumes even more? Apparently the higher powers at Post are looking into this for us. I am not holding my breath

Oops. See what I have done. Slipped into a self interested rant about our own profitability. Its very easy to do…

To all our publisher friends, we know you are hurting. Your various industry bodies are campaigning and lobbying Aus Post to change their minds (there are even whispers of involving the ACCC), but we all know that this price rise won’t be reversed. The ultimate victim in all of this will be the consumer. Only an idiot would deny that mainstream print is under severe pressure, and this decision by Australia Post has just increased that pressure. Subscription prices will rise, and in an elastic market, volumes will drop in higher proportions. Certain mags will die, and you, the consumer will see much less choice on the shelves.

This entry was posted on Thursday, June 18th, 2009 at 9:49 pm and is filed under Magazine Industry. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.