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Newspaper Distribution Plan Draws Fight from Sauce, Other Indie Publications

Categories: Media, News
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A subsidiary of Lee Enterprises hopes to take over management of freebie publication racks, like this one at Vintage Vinyl in the Delmar Loop.
The publishers of such local indie publications as Sauce, Alive and Vital Voice have long relied on something of a free-for-all distribution system: They plop their papers near the entrances of restaurants and retail shops, and eager readers pick them up.

But this summer, as July turned into August, a company called STL Distribution began circulating proposals that would kill the system as it currently exists in St. Louis. It contacted the businesses where free papers now proliferate, offering to set up its own racks and keep the free-pub areas tidy. The company wasn't even asking to get paid to do it. Just the opposite: It was willing to pay for the privilege!

There was a catch, however, and it was a big one: If the host business signed the deal, STL Distribution would gain absolute authority over which papers could sit in the racks and which couldn't. Papers would have to pay STL Distribution for the right to be on the new rack (essentially, a sub-lease). And, under the terms of the contract, no rival racks could crowd around and compete. In other words, STL Distribution was offering maintenance and money in exchange for total control.

And that freaked out the indies, because STL Distribution is a wholly-owned subsidiary of Lee Enterprises.

That Iowa-based company isn't just owner of the St. Louis Post-Dispatch -- it also publishes its own free publications, including the Ladue News, GO! Magazine and Feast Magazine, the upstart food glossy locked in a war with locally owned Sauce. Fearing a squeeze out of the marketplace, the small publishers banded together to form the Independent Publishers Alliance.

"STL Distribution is resorting to a predatory distribution scheme," the alliance declared on its website in early August. "[It] has the potential to devastate free local publications in our community."

The St. Louis Beacon covered the issue thoroughly on August 29; KSDK Channel 5 followed up on Tuesday, announcing in its headline, "Local Publications May Soon Be Hard to Find."

But Tom Livingston, STL Distribution's president, denies any sinister plot.

"We are not attempting to limit or lock out any competitor," he said in a statement e-mailed to Daily RFT. "To the contrary we need their participation in order for this to be a profitable venture."

So, we asked him, does that mean Sauce -- a direct competitor of Feast -- would be allowed in the racks so long as it was willing to pay for the privilege?

"My answer is without hesitation yes," Livingston replied. "I would welcome Sauce and any other so-called competitors to Lee Enterprise-produced publications to be part of the program."

Then why the exclusive language in the circulated contracts, which would grant STL Distribution "sole discretion" over which papers get rack space?

"The purpose of our having the final say on the publications was so we could turn down pornographic publications or publications that were objectionable to the business owner," Livingston writes.

(For the record, while the Riverfront Times is a free publication, it has not joined the independent publishers alliance. And while Livingston indicated in his email he'd be more than willing to sell space in the new racks to the RFT, we apparently have no interest in doing that, either. Our circulation managers profess to be mostly unconcerned about STL Distribution's plan.)

But some indies worry that pricing would be another way the distributor could, in theory, box out non-Lee publications. For example, it could charge Sauce a much higher rate than Feast. (Even worse for Sauce, it's unclear whether Feast would even have to pay STL Distribution, because both entities are owned by Lee.)

Livingston declined to give hard-and-fast pricing information, explaining that a publication's "sub-lease" will depend on how often it's published, what position it wants on the rack and the number of locations.

He also won't disclose how many locations have signed up so far, stating simply, "We are exactly where we had hoped to be at this time."

Allyson Mace, publisher of Sauce, says she can't find a single location that has accepted the offer. And she herself has no intention of getting involved in the scheme on the publication end. 

"It's not in my business model to pay for something that's free for me now," she says. Mace uses an independent distribution company to deliver her papers. Neither she nor the alliance members wish "to line the pockets" of a competitor, she says.

Mace also resents the fact that STL Distribution didn't come to her or the alliance members directly. (She found out through word-of-mouth.)

"If we're so critical to their success," she says, "then before going out and establishing racks, they should've considered the fact that we may not take their deal."

She concludes: "It's not a good way to start a business relationship."

Livingston counters this way:

It's unfortunate that the language in our retailer agreement was used to draw conclusions about our motives without a single member of the Publishers Alliance contacting me about their concerns and there was no point in me contacting them until I had a sufficient number of retailers signed on. My plan is to begin doing that toward the end of this month.
When we read this statement to Mace, she said with a laugh, "I'm sure he's gonna call me first."

There's been some speculation (admittedly, among non-lawyers) that the plan could raise anti-trust issues. As of now, no lawsuit or complaint has been filed with the U.S. Department of Justice. But Livingston doesn't seem concerned, pointing out that his attorneys believe the business plan does not violate anti-trust statutes.

Mace says while legal action isn't in the offing, "it hasn't been ruled out."
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12 comments
Local_Consumer
Local_Consumer

As a consumer and avid reader of local free publications, I want to share a few thoughts with you...

I don't care what the rack looks like when I go into a local business.  It doesn't affect my experience at that venue.  I do go to certain places above others because I know they have the publications I want to read. 

Though I believe Lee Enterprises has made a very strategic and daring chess move, is it right for St. Louis?!  Paying businesses for the advantage to monopolize the distribution channel and then charging local publishers to use what was previously free to them, seems to be sending the message: "St. Louis, we don't give a crap about you, your local businesses or your right to unprohibited free press... we are only in this to make money!" 

I applaud local businesses for supporting free distribution.  Our local publishers provide jobs.  Is Lee Enterprises willing to hire all of the hard working locals who could potentially lose their jobs because our local publishers were "unintentionally" squeezed out of the market due to new and unplanned distribution costs? Though I have never cared what the "free-pub rack" looks like, you can be assured that I will be taking heed now.  If a business is willing to cut the throat of local free enterprise for a few measly bucks, it is not a place where I will be spending my money.  I hope local business consider this, I am sure I am not the only consumer who feels this way.

"If you don't stand for something you will fall for anything!"

Sarah Bean
Sarah Bean

The scheme is, of course, designed to keep other publications out. Why else would they do this?  Not out of the goodness of their hearts.  I've read some of the most unexpectedly terrific stuff when I have grabbed some local pub before I sat down in a coffee shop or little restaurant.  There is a lot of hidden treasure in Indie pubs, as there is in blogs around the Internet.  We should not allow our  choices it to be sterilized by these heavy-handed shenanigans.   

Developmentworks
Developmentworks

What I dislike most is that an out-of-towner is pitching a scheme that pits our local businesses against our local papers.  By accepting Lee's offer, a shop owner has inadvertantly made life a lot tougher for other community members who create free publications.  I would prefer they launch this scheme in their own backyard ~ Davenport, Iowa.

Lee is NOT doing this to clean up entrances to stores but rather to eliminate competition.  Why is Lee afraid of some healthy competition?  Is this the only way they can guarantee someone will pick up their papers?

Robin Brown Woll
Robin Brown Woll

I would be very disappointed to see any of my retailers buying into a "product" that they aren't in control of -not knowing who will be positioned in / outside their stores.....! I can't believe this is still a conversation....we are too smart and progressive a city to buy into that!

Darkstar
Darkstar

Lee Enterprises is struggling to stay alive. They laid 3 people off  and 3 more took the buyout. Bill McClellan did a column this week on the buyouts. Do you take the buyout now in a bad job market or take the buyout before they shut the paper down? STL Distribution seems to be strong arming places in a last ditch effort to get their free publications out. Why would a cafe, coffee shop or restaurant go for this when more than likely they are buying advertising in Sauce, Alive, The Vital Voice or the RFT? By agreeing to go with STL Distributing they would be narrowing their own targeted consumer base. Will they then buy advertising in Feast?

Brownm21
Brownm21

M&M no offense but if I saw a "fancy" rack at Vintage Vinyl it would be utterly ridiculous. It's up to the business owners to control their space and how it's presented. If there were an issue with racks, we'd just tell the sales rep or the distributor. Businesses can control who they allow in and who they don't. Why would we have a company control that if we don't have any real relationship with them, especially since what they claim to be an issue really isn't one? If we wanted to charge pubs, we would do so, but why would we? They give us stuff for free that customers want. If ever we needed to, we could, but the cost and access would be our choice and to our benefit. And, why is this suddenly about competing magazines? It seems it's more an issue about choice and control an unrestricted access to info. All pubs benefit (indie or otherwise, present or future) from someone standing up and calling attention to this shit  before it takes hold. St. Louis Distribution tried to hatch a plan that isn't going to work for all the right reasons. It's clear what they are trying to do and why. I can't blame the indie pubs for standing up for themselves. It's about time. I'd do the same if there was even a slight possibility that the motives were questionable.

M&M
M&M

What STL Distribution is offering (as far as I can tell) is a fancy, tidydisplay rack and a little bit of a “kickback” to the shop owners.

Sounds to me like the Alliance will need to pool its resources and startoffering the same thing to keep STL Distribution out of the picture.

Yeah, it sucks to pay for something you’re used to getting for free…but Leehas just upped the ante.

Stlouisforstlouis
Stlouisforstlouis

The folks at Lee must have no faith in their people --- or their free papers to fare well in a competitive environment.  

It's like my child entering a foot race and I'm so afraid he'll lose that I develop a scheme to control who's entering the race.  I let my nephew in because I know he can't hurt my kid's chance of winning.  But, I charge the really fast runners a helluva fee to enter the competition.  Or, maybe I'll give the parents of the fast runners a choice.  

a) you don't have to be in the race at all (you're not on the rack) b) you can have a starting spot 500 yards behind my kid (or on the bottom level of the rack) for a tiny fee or c) your kid can start at the start line (or in a prominent place on the rack) for lots of moneyd) I may decide your kid can't run the race just because I say so

But, don't forget, my kid is front and center just because I was "smart" enough to come up with this scheme. Saddest thing is: shouldn't I have faith in my child to run the race and give it his best shot in the first place?  If I worked for a Lee publication I would be offended!  I don't think writers at Lee need their controlling "parent" to handicap the race. My suggestion is that Lee either pack up or get back to the business of doing what are supposed to be doing.  We, St. Louisans, and business owners, can worry about just how tidy our entrances are.  

M&M
M&M

I get all of that.

The issue here is that these shop owners, for years, have let the publications display their products for free.  What Lee has come along and said is, "You're fools. You have a prime location and play an indispensable role in the STL publishing market. You should be getting compensated for that. We will compensate you."

If the mags want to fight Lee on this, they're going to have to band together and come up with their own attractive offer to keep Lee out of the picture.

Stlouisforstlouis
Stlouisforstlouis

I see it differntly.  This is how I see it: 

The folks at Lee must have no faith in their people --- or their free papers to fare well in a competitive environment.  It's like my child entering a foot race and I'm so afraid he'll lose that I develop a scheme to control who's entering the race.  I let my nephew in because I know he can't hurt my kid's chance of winning.  But, I charge the really fast runners a helluva fee to enter the competition.  Or, maybe I'll give the parents of the fast runners a choice.  a) you don't have to be in the race at all (you're not on the rack) b) you can have a starting spot 500 yards behind my kid (or on the bottom level of the rack) for a tiny fee or c) your kid can start at the start line (or in a prominent place on the rack) for lots of moneyd) I may decide your kid can't run the race just because I say soBut, don't forget, my kid is front and center just because I was "smart" enough to come up with this scheme. Saddest thing is: shouldn't I have faith in my child to run the race and give it his best shot in the first place?  If I worked for a Lee publication I would be offended!  I don't think writers at Lee need their controlling "parent" to handicap the race. My suggestion is that Lee either pack up or get back to the business of doing what are supposed to be doing.  We, St. Louisans, and business owners, can worry about just how tidy our entrances are.

Jack Davy
Jack Davy

The shop owners aren't foolish. As business owners themselves they understand cause & effect economics. They know that $25 a month isn't going to offset the increase they would see in advertising in the publications across the board and my guess is that they wouldn't be high on the editorial priority list either. Business owners benefit from having as many affordable advertising options and credible sources of information circulating as possible. It increases the chance that they will be covered in an article that will be seen by large numbers of people at different times of the year.  And, they know the pubs would simply elect to increase subscription services or distribute outside or on the sidewalk in high traffic areas in covered racks like the RFT if they were required to pay a fee that their advertisers couldn't absorb. And, they know if they charged the pubs for something that is offered for free, it wouldn't be free anymore for anyone. If businesses needed new racks all they have to do is ask or come up with a creative solution like Joe Edwards did at Blueberry Hill - brilliant.  STLD (& Lee) hasn't "upped the anty" because no one is buying into their plan.  It's bogus. And, so are the Lee owned pubs that have caused major probs for the STLPD newsroom and employees losing their job because Lee can't understand that cannibalizing your anchor product with copy cat mags doesn't increase revenue, it just moves it around.

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