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A possible way for growth within the newspaper industry is by adopting a new business model in franchising sub-station outlets (of around 10,000 subscribers) into profit centers. They could let these centers operate under certain conditions that would allow the franchise to add local advertisments from businesses within their areas to the newspaper before delivery. They could also serve as a test market for national firms who wish to test their product in a controlled region. The budgets of small businesses are limited and with the current rate for first class postage at 41 cents an ounce, plus mail prep fees, it become cost prohibitive for many to advertise their product. If a profit center could offer to deliver a flyer for approximately 20 cents each, this could tally an additional income of $2,000.00 per day ($730,000.00 per year) or more dependant upon the location. Each center would require enough business within their area to make this work. A newspaper with 250,000 circulation would require 25 profit centers which could produce additional revenue providing that newspaper with the much needed boost to attract new investors. I am optimistic that if you let franchise operators have an interest in the new business model, one could be assured they will work to increase the subscriber base with novel ways. PRELIMINARY PROPOSAL (Revised May 20, 2008) Proposed franchise type operation for newspapers that use independent dealer organizations who hire carriers for delivery of the product. For discussion purposes, a newspaper can be considered into 3 functional parts: 1. News gathering operation (Pre-press) Numbers 1 & 2 have kept up to date with cell phones, computers and modern presses, whereas #3 has not kept up with technology and business concepts. Newspapers circulation is declining because the traditional printed product is losing its appeal in the competition with other new media and the cost to produce such a product daily increases as new methods and technologies appear. No matter how the industry improves the pre-press operation or speeds up both the press and production operations, the current final preparation of completes for delivery - and the delivery step itself - is going to force management to yell "Uncle!" Stepper, Inc. has developed technology to automate the delivery cycle but to do this, a new business model must be put into place. The main goal of the new model is to reverse circulation decline and to increase circulation by re-inventing the final product. The second goal is to elevate the delivery force into a higher responsible position within the newspaper chain. They are in a better position to be in contact with the customer and cater to their needs within a limited concept. By providing the delivery force with a motive to increase circulation and a reason for the subscriber to want the newspaper product for more than just the print alone by what the franchisee can offer. For example: Also if the franchisee could take over the collection of the newspaper charge and include in the charge of the magazine cost. The franchisee, if given the right, could use his subscriber list where he promotes (on a limited basis) his resale items, such as magazines or flyers for local merchants, with a rental fee being paid the newspaper company for using the newspaper as a vehicle to deliver the those items. In addition to greater numbers of smaller markets, automation opens up new advertising possibilities. The sensory aspects — taste, feel and smell — of product advertising can be offered to both small and larger advertisers who want to test market a product by sending samples to a controlled area. The newspaper industry must change its traditional preparation and delivery methods via new technology in order to keep pace with new techniques in the front end and middle stage of the cycle. What's happening now is like purchasing a new high-powered truck...and using a pair of draft horses to pull it. 2. How could the cost of automation be justified? Which side pays for it, the newspaper side or the delivery side? In reality, both sides will benefit from reduced ergonomic load and time required to prepare papers for delivery. 3. Can a newspaper grow by expanding the focus of activities that generate advertising revenue? Can the newspaper set aside its overwhelming reliance on the Sunday edition in order to include its daily product as well? In fact, every day of the week should produce its share of the revenue. Otherwise, the staff must scramble to make a single day of advertising revenue pay all the costs of a seven-day operation. Comments? (See BIG STUFF® News issues 3, 4 and 7.) Warren Hannon |
