Disclaimer: this article should be read as much as a question as a suggestion, as I admit to knowing relatively little about the actual application of newspaper business models. I do know that they are in trouble, and I spend a sizable amount of time being simultaneously annoyed by newspapers and feeling really sorry for them. Oh yeah, and don’t forget this disclaimer.
Hey, newspapers: what if you were to cut loose the (rather large) distribution part of your business? In fact, what if you were to get out of all parts of the business that aren’t directly related to the content of your papers? Seems to me that researching and writing content is what newspaper employees — from beat reporters to execs — know best (though, after having subscribed to the NY Times Sunday edition for the past few weeks, I can’t say that there’s not substantial room for improvement there too). And yet what we pay newspaper companies for covers much more than content.
According to World Press Trends, (via an IFRA report) average distribution costs account for 40-45% of a newspaper’s cover price. So it’s no small slice of a newspaper’s business. From an admittedly meagre 10 minutes of online research, it seems that many newspapers (if not all) are already outsourcing their distribution. That’s probably a good start; I imagine that distribution companies like PCF are better at this stuff than the New York Times itself would be. But that’s not what I’m proposing. I’m proposing that newspapers don’t even contract distributors; they would simply make the product (a newspaper) and let another industry develop around determining where the product needs to go and getting it there.
What if home delivery subscribers and retail nodes like newsstands actually chose their distributor? Instead of the Boston Globe contracting a company to handle all of their distribution (or multiple companies to handle distribution in different regions), the customer could chose one of multiple competing distributors who would charge them the cost of the newspaper plus a delivery cost (of course this would not fundamentally create a net increase in the cost of a newspaper because right now distribution costs are baked into the cover price). There would be no need for a transaction between individuals/seller nodes and the newspapers themselves; the distribution companies could buy the papers from the newspaper companies and then effectively sell them at cost + delivery fees to individuals/seller nodes.
This would have a couple of foreseeable (and maybe some less foreseeable) streamlining effects:
- households, neighborhoods, companies, and seller nodes that subscribed to more than one paper would only require one distribution trip (fictional company, Beah Burger paper Distribution Inc., would be happy to sell you The New York Times, The Boston Globe, and The Philadelphia Inquirer — and the delivery cost on the second and third paper would be severely discounted since we’re already making the trip).
- it’s seems to me that it would be cheaper for newspaper companies to manage transactions with 3, 10, 25, even 200 distribution companies than with the thousands (though ever shrinking) of accounts it maintains with individuals and seller nodes. Fewer account requires less customer service, less transaction infrastructure, etc… both things that newspaper companies are likely not as good at as they are at researching and writing content.
More generally, it would likely benefit consumers by opening up a new competitive layer within the newspaper sales life-cycle. Competition would happen at the level of content production and — more directly than before — at the level of distribution (which, remember, accounts for almost half the cover price). The possibilities are endless, but I’ll throw out some quick business ideas for these new, unhinged distributors:
- If you’re already serving a neighborhood, offer discounts to new customers from that neighborhood (promo codes, perhaps) since you’re already driving out there. If companies want to win new neighborhoods, they will have to compete with these discounts.
- Maybe offer tiered pricing: by-6am delivery costs more than by-9am delivery (delivery companies already do this).
- Allow for custom subscriptions (for instance, maybe I only want to subscribe to Tuesday and Thursday editions because those are the days that I have a train commute and the crossword puzzles aren’t impossible).
It’s conceivable that newspaper companies could offer some of the above themselves, but I don’t think they ever will, because business management doesn’t seem to be their strong suite. Creating content is both what they are best at AND — I think — what they really want to spend their time doing.
Much of this logic could probably be applied to other parts of the business; distribution is only one auxiliary piece of the newspaper business that could conceivably be shed off, but it seems like a good place to start because it is such a big piece. Also, apparently other have already written about outsourcing printing (I couldn’t find the original article) and likely other auxiliary tasks. But I’m not going to dive too deep here because, as I disclaimed, this is as much a question as a suggestion, and I’m not aspiring to become an expert in the field today. Given that, I welcome any comments, critical and otherwise, from those who do know more than I; just don’t beat up on my ideas to violently — I do retain comment moderation authority. Also, I realize I’m probably not the first person to make this question/suggestion, but a quick search on the topic didn’t turn up anything quite so specific or non-theoretical as I intended my post to be, so I felt it would be worth submitting. OK, I think I’ve protected myself enough… sorry, sorry…. I’m done.








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