New Age Newsracks p.98

By: George Garneau Not ready for cyberspace, honor boxes are moving
into electronics, data systems and new conveniences sp.

AS NEWSPAPERS RACE headlong into cyberspace, one of their more mundane operations is also going electronic: newsracks.
Soaring newsprint prices are driving sales of electronic coin mechanisms and sophisticated data retrieval systems, vendors say.
Newspapers agree that economics is pushing the pace of change, but they see the broader issue as adapting newsracks to be easier and more convenient. The goal is to increase single-copy sales and profitability by cutting waste.
Either way, a lot is happening to the basic coin-operated newsrack. Racks are being designed to accept $1 bills and $1 coins, to sell papers in drive-through lanes of fast-food restaurants, to open upward for easier access from a wheelchair, to be part of circulation data systems and to compete with other products inside retail stores.
And looking toward a cashless future, when readers may need a pocket full of quarters to buy a Sunday paper, newspapers are also experimenting with racks that let readers pay with a "smart" card carrying "cash" in a tiny computer chip. (See related story on page 65.)
"Newspapers today are trying to merchandise their single-copy sales," said Leon Levitt, the Newspaper Association of America's vice president for circulation. "It's a different world now. Newspapers are in the same boat as soft drinks, candy or snacks. They have to market themselves to get consumers to part with the money."
"Everyone's trying to make honor boxes more user friendly," said Howard Hay, vice president for circulation at the Chicago Tribune and president of NAA's circulation federation.
Though the numbers vary widely by newspaper, the last time NAA checked, in 1993, single-copy sales accounted for 18% of U.S. daily circulation, 23% on Sunday.
Twenty years ago, when you could buy a daily paper for 15?, 35? on Sunday, newsracks weren't the issue they are now that a daily paper can set you back 50? and most Sunday papers cost more than $1.
After a recession in the early 1990s forced a lot of newspapers to jack up circulation prices, a record surge now underway in newsprint prices is forcing another round of increases. As a result, higher single-copy prices, especially on Sunday, are leaving a lot of buyers short of change at the newsrack ? forcing newspapers to make newsracks more flexible.
More broadly, according to Levitt, newspapers are rethinking their strategy on the proper balance between newsracks, which are expensive to buy and service, and in-store sales, for which newspapers collect less per copy.
Still, a major part of marketing single-copy sales centers around newsrack design and operation.

Electronic mechanisms

Though hardly noticeable to single-copy buyers, electronic coin mechanisms, which use several different kinds of sensing techniques to "read" coins, are replacing the levers and wheels and pins used in mechanical mechanisms since coin-operated racks came into use in the 1950s.
Battery-powered electronic mechanisms are easier to adjust when prices rise, which they are doing more frequently lately. With mechanical devices, some price changes require new parts. Electronic mechanisms are also harder to fool with washers or foreign coins and are less prone to jamming.
David Kaspar, vice president for sales of Kaspar Wire Works Inc. in Shiner, Texas, said that up to 40% of sales this year involve electronic mechanisms, compared with maybe 5% a year ago. The main reason, he said, is higher single-copy prices as newspapers pass higher newsprint costs along to readers.
Matt Heck, St. Petersburg Times single-copy manager, said the Times has converted 350 of its 10,000 newsracks to electronic mechanisms because they are more dependable, more sensitive to slugs, and can be adjusted to accept or reject foreign coins.
Dave Nichols, USA Today national director of transportation and distribution, said the paper, which operates a newsrack refurbishing plant in Murphreesboro, Tenn., has developed its own electronic mechanism and is selling it to other newspapers. Revenues from sales are financing USA Today's conversion to electronic mechanisms.
The problem with all electronic mechanisms is that the batteries wear out and weaken in the cold. Although different vendors use different batteries, Kaspar says his company's ordinary nine-volt batteries last more than six months.
On the other hand, electronic mechanisms are the foundation on which to build a database of single-copy sales. They can be upgraded so they can transmit sales data to a hand-held computer.

Tracking sales

With newsprint costing 40% to 60% more this year, each newspaper returned unsold from newsracks costs a lot more.
The need to cut returns is forcing newspapers to consider investing in more sophisticated ? and more expensive ? computerized systems that track, among other things, when newspapers are sold.
Creating a track record of buying at a specific location allows newspapers to better predict how many papers will be sold from a certain newsrack on, for example, a Wednesday when the food section appears. The goal, of course, is to accurately predict sales.
That way, enough papers can be loaded each morning so that each rack sells out at 6 p.m. ? but not before.
Some 10% to 15% of Kaspar's sales include electronic auditing functions, Kaspar said, adding that about 12 newspapers use them.
The company has sold more than 1.5 million racks since it was founded in 1956.
Heck in St. Petersburg said higher newsprint costs had forced the Times to cut the number of returns this year ? by 700,000 daily, 225,000 Sunday ? but the cost has been more sellouts. The problem is that nobody knows if a rack sold out at 10 a.m. or 5 p.m.
As a result, Heck said, "My boss and I have an increasing interest" in buying a data gathering system. "We're looking at it real hard."
Bellatrix Systems Inc., based in Bend, Ore., has 70 customers for data gathering systems, compared with 250 using its electronic mechanisms, said sales vice president Steve Morris.
One of its data system users, the Daily Oklahoman in Oklahoma City, said the system saved nearly $250,000 worth of newsprint last year and estimated $370,000 in savings this year. City circulation manager Ed Norlin credited the system with increasing circulation without increasing sellouts.

Cash is king

Having heard talk in Congress about replacing dollar bills with $1 coins, newspapers and newsrack vendors
are hoping for a new $1 coin. Electronic mechanisms can easily be adjusted to accept a new coin, and Kasper already sells a mechanism that accepts Canada's $1 coin.
Chicago Tribune circulation vice president Howard Hay said newspapers want the $1 coin because it would make buying a newspaper easier.
As single-copy prices continue to rise, newspapers face growing pressure to install expensive dollar-bill mechanisms, which cost $750 to $1,000 each, compared with $250 for racks with mechanical mechanisms.
Also, their batteries run out in three months because handling dollar bills drains more power and they also require secure locations because of their attraction to vandals.
Morris of Bellatrix said dollar-bill mechanisms have not done well for newspapers and are "more trouble that they're worth."
Nevertheless, as a convenience for readers, USA Today developed its own dollar-bill newsracks, incorporating a battery-powered mechanism from Mars Electronics, and in three years has installed 1,000 of them in secure locations around the country.

Convenience

More frequently these days, you can buy a newspaper while waiting to pick up your Egg McMuffin or Breakfast Taco in the drive-through lane of your favorite fast-food joint.
After initial resistance, growing numbers of fast-food restaurants have warmed up to the idea as a convenience for their customers ? and a competitive move to lure them away from convenience stores.
By moving the hinge so the door swings up rather than down toward your car, several newsrack models aredesigned for access from a car.
Similar designs, shortened somewhat, accommodate wheelchair-bound readers.
The door closes slowly downward so as not to spring shut on an unsuspecting buyer's arm.
Journal/Sentinel Inc. in Milwaukee installed a couple of them at an area rehabilitation hospital last year and planned to buy more from K-Jack Engineering Co. Inc. of Gardena, Calif.

In Store

After years of expanding newsrack locations, newspapers are reassessing their single-copy sales strategies, the NAA's Levitt said.
According to rack vendors, there is a new emphasis on in-store marketing.
"We are still selling a lot of coin-operated racks, but there is a lot more interest in in-store locations," Kaspar of Kaspar Wire Works said. "We are seeing that trend for newspapers to get more aggressive on in store locations."
Sales of racks designed for in-store use have gained about 25% over the past few years he said. New and different designs incorporate open plastic bins, wheels for mobility, and room for several different papers.

Security

Theft is a continuing problem that gobbles up an estimated 10% to 20% of all newspapers left in so-called honor boxes. To counter dishonesty, single-vend newsracks began appearing around 25 years ago. They dispense only one copy through a slot, as opposed to honor boxes, which, once you put in the money and open the door, dishonorable people sometimes clean out every paper.
Single-vend machines never achieved wide penetration, however. They cost more, and because the opening needs to be adjusted for newspaper size, they are prone to jamming.
Even though stolen papers cost more now, they count as paid circulation, up to a limit, according to Audit Bureau of Circulation rules, a fact that has not helped to sell of single-vend machines.