Recession Watch: Magazine distribution woes continue

Only the New York Post seems to have picked up on this story, but it’s a biggie. Another major magazine distributor has joined Anderson News in raising its rates to distribute magazine copies to newsstands by seven cents — regardless of whether the magazines sell or not, according to the Post. Publishers have resisted, but now Source Interlink has also increased its fees. Together, the two distributors control half of the US magazine wholesale distribution network:

The remaining big distributors – Jimmy Pattison‘s News Group, based in Atlanta and Vancouver, British Columbia, and New York-based Hudson News – have not sought a fee hike.

But if all magazine distributors follow suit, publishers worry it could sock them with an additional $1 billion a year in expenses at a time when they are contending with plunging advertising revenue and sagging newsstand sales.

Already, publishers predicted Anderson News’ price hike would cost them an additional $200 million a year.

“We’re in for it now,” said one worried publisher after he got the Source Interlink news. “It’s great to say, ‘Screw Anderson,’ but who are we going to get to replace them?”

Like Anderson News, Source Interlink claims it needs the fee hike to survive.

Ya gotta love the Post’s old skool reportage on this. Considering that magazine distribution is an old skool business with lots of ties to people who might appear in Martin Scorsese movies, it’s appropriate. We’re not too hep to the background ourselves, but our guess is that if this is remotely true, and these rate hikes go into effect, the magazine publishing world is going to look a little like central Florida after a Category 4 hurricane.

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