Canadian Magazine Industry News
23 January 2009,    
U.S. wholesalers increase rates; Canada could feel ripple effect

A civil war between wholesalers and publishers erupted in the U.S. this week and the collateral damage is likely to spread North.

Two of the four major U.S. wholesalers, Anderson News and Source Interlink, which combined make up 50% of the American magazine market, have announced 7-cents-per-copy price increases on all copies distributed. Anderson has also announced that it expects publishers to absorb inventory costs on scan-based trading retail accounts. Non-compliers will no longer receive distribution through Anderson.

A story in Folio: quotes these calculations:

John Harrington, publisher of the New Single Copy newsletter, calculated an industry-wide cost of $267 million if seven cents per copy were added to all 3.185 billion copies distributed to retail. Divide that in half, and the one-two punch of Anderson and Source Interlink amounts to an industry cost of $133.5 million.

These cost increases will of course have a financial impact on Canadian magazines that sell on American newsstands.

Glenn Morgan, president of Coast to Coast Newsstand Services Partnership, one of the major national distributors in Canada, says the Feb. 1 deadline set by each wholesaler is unrealistic and unfair. “A lot of publishers already have products already in transit—you can’t turn the tap off that quickly.”

Morgan also suggests the price increases may force Canadian publishers with marginal U.S. profits to pull out of the American market altogether.

The News Group, one of the two major U.S. wholesalers that has not yet announced a price increase, also happens to be the major wholesaler in Canada. “There’s no question in my mind that if there was any concessions made on this [in the U.S.], then the other wholesalers would not be that far behind,” Morgan says. “And yes, it may it spread to Canada.”

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