Retailers don’t pass ‘go’ and don’t collect £200 when they have no real choice in who they buy their news from, thanks to a cosy system where publishers and wholesalers seem to always turn out to be the winners…
The UK’s news distribution system has a unique distinction: it is the country’s last surviving unregulated monopoly. The use of territorial monopolies for the distribution of newspapers was effectively given the final all-clear by the Office of Fair Trading (OFT) four years ago, and although competition for the supply of magazines exists in theory, in practice there is no choice for the overwhelming majority of retailers.
This system might be acceptable if it worked to the mutual benefit of all the stakeholders, but it doesn’t. What we have is a system designed for the powerful to exploit the weak, enabling publishers to cut terms with impunity, and the wholesalers to impose increasingly disproportionate carriage charges.
Meanwhile, many small retailers cannot even obtain the supplies they need. The NFRN and, to a lesser extent, the Association of Convenience Stores have been campaigning against this situation for 20 years or more, but to no avail. For retailers, the only alternative is to give up selling news.
The OFT realises, as its various reports over the years have indicated, that the system is flawed, but it has been unable to work out what should be done about it, and it has adopted the fall-back position of encouraging self- regulation.
But under the now defunct Joint Industry Group and its successor the Press Distribution Forum (PDF), self-regulation of the newstrade has, for the most part, turned out to be a travesty. The publishers and wholesalers allow each other to do whatever they can get away with, while all that retailers have got out of it is the possibility of limited restitution when serious or persistent service failures occur.
So it is understandable that all three retail associations involved with the newstrade have so far stood aside from the PDF, believing that their concerns will not be taken seriously. Self-regulation is therefore at an impasse.
Maybe discussions are going on behind the scenes to find a way forward. If they are not, they should be, because the newstrade is facing a crisis. Sales of national newspapers are down by around 8% compared with a year ago and newstrade magazine revenues have fallen by a further 9% in the past 12 months. If that were not bad enough, widespread and frequent late deliveries and defective copy allocation systems are making matters worse.
These and other issues – the extent to which carriage charges are undermining retail margins, woefully inadequate trade marketing, the lack of flexibility over terms, and much more – should all be on the industry’s self-regulatory agenda, and all sections of the newstrade should be round the table discussing what can and should be done about them – with no nonsense about talks being subject to ‘Chatham House rules’ of non-disclosure.
This is the least the country’s 50,000 news retailers deserve. It’s scandalous that all they have now is a dormant PDF – its most recently published quarterly report covers the period to September 2011 – and little or no prospect that the OFT will take any more notice of their concerns than it has done previously.
An unregulated monopoly in today’s business environment is intolerable: an unregulated monopoly that doesn’t even function efficiently for its customers is an outrage.