Message to the Public

Are your favorite publications missing from the familiar places you typically find them each week/month? Curious why?

STL Distribution, a wholly owned subsidiary of Lee Enterprises, an Iowa based media company, is resorting to a predatory distribution scheme that has the potential to devastate free local publications in our community. STL Distribution (STLD)  distributes The St. Louis Post-Dispatch, The Suburban Journals, and several free niche publications such as The Ladue News, FEAST Magazine, GO!, Rides Magazine, and Your Next Home Magazine.

Representatives of STLD are aggressively pushing a contractual agreement with proprietors of all business persuasions throughout the City to accept payment ($25/mo) in exchange for installing new magazine racks, which they will in turn maintain and control. When a business owner accepts their contract, they are in turn giving STLD the exclusive right to maintain and control which publications are included in the racks and are granting STLD permission to assess a fee of their choosing to any non Lee Enterprises owned publication.

The STLD contract we obtained indicates the following….

“Retailer agrees that the Rack will be exclusive and that Retailer will not allow any other racks or displays for the dissemination of free newspapers or any other type of free publication in any Location identified in the agreement. Retailer agrees that STLD will have sole discretion as to which publications are allowed to be placed in the Rack.”

This scheme was proposed to business owners as recently as the week of August 5th, 2011. It continues.
Contract from STL Distribution to Retailers
Example of proposed Racks

An inside source from the distribution industry, who wishes to remain anonymous, refers to this practice as a “deceptive, hale mary attempt to control or weaken the distribution and advertising margins of free weekly and monthly publications and to deter new competition from emerging.” He adds, “In most cases, business owners are not aware of what they are agreeing to, but by the time they realize it, the damage to the other publications is already done.” Circulation is drastically decreased as competing racks are removed along with all product not under the control of STLD, which may choose to distribute only Lee Enterprises owned publications. The advertising margins of those publications could be drastically weakened if business owners opt to allocate their marketing dollars for the publications that are readily available in their own establishments.

In St. Louis, this distribution scheme could impact Town & Style, ALIVE, Sauce Magazine, Vital Voice, The Healthy Planet, R3 St. Louis, Auto Source, Eleven Magazine, St. Louis Kids, and Gateway Gardener all of which are members of the STL Indie Publications Alliance (STLIndiePA). Additionally, it could affect The West End Word, Kirkwood-Webster Times, Spiritseeker, Pathfinder, Delux, Avid, and weekly publication The Riverfront Times (owned by Village Voice Media). This plan does not affect publications like the STL Post-Dispatch or Suburban Journals, which are offered at cost to readers and distributed through different means.

In light of all of this information, the St. Louis Independent Publications Alliance  was formed to help keep the local publishing voice strong and accessible. We are reaching out to the public for support to prevent this scheme from taking a hold on our market place and preventing the free distribution of information that is afforded to all publishers and media groups by the First Amendment. Make no mistake, members of this alliance are not threatened by the presence of Lee owned competition, which has the same right to distribute news and information. We simply want to equitably coexist, to pursue our passions, to make a living, contribute to the growth of our areas and to share our content with the public without gross interference on the part of Lee Enterprises and the free publications the company owns and distributes.

It’s clear to us that independent distribution is under attack on various fronts. News of the rack scheme comes just months after independent distributors and publishers received word from business owners that magazines and free newspapers were being stolen from locales within hours of their distribution schedule. While, at this time, it’s unclear who is behind the missing publications, the situation is currently being investigated. Some publishers in the alliance reached out to their respective distribution points directly to help curtail this practice and to keep business owners aware of the ways in which their magazines – many of which they advertise in and desire to provide to their customer base – were being mishandled. This practice of taking other entities publications is not only unethical, it is illegal.

We urge business owners, loyal readers & advertisers of the publications referenced above to reject these practices and to voice concern to Lee Enterprises, STL Distribution and those niche weekly and monthly magazines that stand to benefit the most from this scheme. Additionally, we ask for your support. Go here to Support. We urge those that are equally offended to help us spread the word via social networks and through conversations with friends & family members.

Lee Enterprises properties/publications that stand to GAIN from this scheme:

FEAST Magazine
GO! Magazine
Rides Magazine
STL Distribution
The Ladue News
Your Next Home
to name a few….

_________

For reference on similar distribution schemes implemented by media conglomerates and to learn how it has impacted other business owners and the long term viability of independent publications, please visit the following links.

http://www.charlestoncitypaper.com/charleston/evening-post-publishing-seeks-to-monopolize-newspaper-distribution/Content?oid=1110991

http://www.altweeklies.com/aan/gannett-creates-free-paper-distribution-company-in-greenville/Article?oid=145972

http://www.jacksonfreepress.com/goliath.php

About LE Financial Crisis – Lee Enterprises faces delisting from the New York Stock Exchange for the second time, with it’s current stock price hovering near its 52 week low at .71 per share (Aug. 7, 11). According to The Riverfront Times, Lee is saddled with roughly $1 billion in debt — which comes due in April 2012. And shares have tumbled from $35 per share in 2007 to less than a dollar. The company had announced plans to refinance its debt by selling junk bonds earlier this year, but it canceled the deal in May when it became clear there weren’t enough buyers willing to invest. See RFT  for complete story.

Our Twitter handle is @STLIndiePA

Thank you for your support.

Members of the STLIndiePA

7 Responses to “Message to the Public”

  1. kriskleindienst August 30, 2011 at 2:43 am #

    The actions of Lee Enterprises, while perhaps not illegal, are bullying tactics. No community is served when the only available print media (and online versions) are owned by one company.

  2. Anne Fisher September 1, 2011 at 7:48 pm #

    I read the Beacon article and clicked through to the Alliance site and I feel compelled to leave a comment. If you read the Beacon article, the man from St. Louis Distribution states that in order for his business plan to work, he needs these free publications to be his clients and pay to be in those racks. I see why the independent publications are upset about possible increased cost, but I don’t buy the argument that St. Louis Distribution is trying to weaken those publication’s distribution. They are trying to make money selling distribution space to all the indie publications. I don’t know. This seems like a trumped up charge to me. St. Louis Distribution might not understand the economics of small businesses, but I don’t see how it follows that a company trying to attract paying clients would then in turn try to squash those client’s businesses.

    • Admin September 1, 2011 at 8:10 pm #

      Anne,
      Thank you for your comment.
      STLD is not just ANY distribution company, it is a wholly owned subsidiary of Lee Enterprises, a major publisher of free content in STL – i.e The Ladue News, FEAST, Rides, and GO!, all of which are publications in the St. Louis market. We believe, based on their contract, that their business model doesn’t seek to earn profits from Lee’s competitors (The Alliance Members). History has shown that their sole intention is to distribute Lee Enterprise publications and subscription services for major newspapers. See for your self their current clients on their website. None of the indie publications have ever worked with STLD nor do they wish to use STLD. The independent publications have made their intent known and are ultimately of little consequence to the STLD business model and their so called plans for growth…and, this plan certainly alienates them as a fair, equitable and unbiased distribution source.
      According to the contract in play, STLD would not be required to charge Lee publications in those businesses that accept their plan. They could opt to only charge Lee’s competitors, or deny/exclude access to those publications seen as competitors altogether. This is simply not a risk any publication not associated with Lee is willing to take. Even if STLD were to charge their own publications, (FEAST, The Ladue News, GO, Rides and others) the money would just be moved from one dept. / entity to another, ultimately benefiting Lee while weakening the distribution of those publications not in Lee’s portfolio – basically their competition in the STL marketplace.

      None of the non-Lee owned publications want a competitor controlling its distribution in any form, and understandably so. Benefiting the financial bottom line of a competitor is also not an acceptable business practice for non-Lee owned publications.

      Furthermore, we appreciate your response, but given your IP address indicates your comment originated from a Lee Enterprises’ server, we don’t expect you to understand our position on this matter as your business interests are clearly very different from ours.

      STLIndiePA

  3. Common Cents September 6, 2011 at 9:45 pm #

    If the Indie Pubs just refuse to pay STLD then STLD will only being hurting themselves. Simple math shows this business model isn’t going to work, if STLD is seeking say 100 locations, which isn’t that many in the St. Louis market, at $25 per month that’s a $2,500 a month out the door for a company’s whose stock closed at .61 cents. How can a business justify spending $30,000 to be in a location that they were in for FREE when they laid 23 people off at the Suburban Journals and asking employees to take buyouts?

    • Admin September 7, 2011 at 3:53 pm #

      Common Cents,
      Excellent observation. The Alliance Publications will decline the offer from STLD when and if they approach us. They have not approached us as of today, even though we (according to them via KSDK interview 9/6/11) are critical to their biz plan. Additionally, we question the need for an “exclusivity clause” AND right of publication refusal in their contract with the retailers, but that is another post. Just so you know, to our knowledge, many retailers are rejecting the offer from STLDistribution daily.

      Hypothetically, even if we were to pay STLD a “fee” to be on their “new” racks, they would stand to gain a lot more than they would be paying the retailers monthly. Assuming this scenario, they would then have effectively put the other indie distribution companies (the ones we are using) out of business (their current competition) and further weakened the publication competition by enforcing the indie pubs to pay them per location. It is free for everyone now. Keep in mind, many of the indie publications they would be charging are in direct competition with the publications they already distribute and are owned by Lee Enterprises, which by the way owns STLDistribution and publications like- Suburban Journals, Post-Dispatch, Ladue News, FEAST, Go!, and Rides Magazine.

      So why is STLD still trying to get their business model off the ground? Why would a company continue to try if the desired “main source” of their revenue model is not going to participate? The fact is they don’t really need us. What they really need and want, is to control the distribution in St. Louis metro area. A price they obviously are willing to pay given the long-term gain.

      If they, (STLD) control distribution, they control the market. If they control the market, then we, the other publications (The Alliance) will be forced to find new ways to distribute our publications to the public. If we cannot effectively do so, we will eventually lose ad dollars, the lifeblood of any publication. If we lose ad dollars, we might have to close. If we close, YOU the readers are left with one voice in the market. Your favorite publications will be no longer as accessible. Do you really want Lee Enterprise owned publications supplying your only source of information in St. Louis? Is an Iowa based media conglomerate an acceptable delivery vehicle for your local information and choices? If you say no, please sign up under the SUPPORT US section of this blog.

      Note: The Alliance will never use it’s competition to deliver its publications. We don’t have to and the retailers are fine with distributing our publications currently. There is no need to change things.

  4. Alex September 20, 2011 at 5:40 pm #

    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 am willing to spend my money. I hope local businesses 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!”

  5. Michael aka XtremeMikey October 30, 2011 at 5:47 pm #

    As a Reader, Current Distribution Company, Advertising Sales Person for an Independent Publication, and a EX EMPLOYEE of STLD, I would like to share my thoughts, as a Out Of The Box Thinker, and someone who is Passionate, about the STL Independent Publications out there in St. Louis, if I may.

    I would like to start by saying I am sorry to the Admin of this Blog.
    At the beginning stages of this Blog, I had posted a few comments that were based on Mis-Information, Lack of Communication, Lack of Understanding, Frustration, and Emotions. So because of that, I ruined a Burned a Bridge, before it got built. For that I apologize to YOU (STLIdiePA), the readers of your Blog, and the Publications of the St. Louis Publications Alliance.

    I like others, in your Alliance, and other Independent Publications that are not part of the Alliance, ie RFT, believed that STLD and Lee Enterprises couldn’t pull this off. But the real truth of the matter is they can and have already started. I am direct proof of it
    .
    On the night my wife and I were celebrating our 11 Year Anniversary, while having dinner, I had a Client, who advertises, and lets my Publication Distribute there, and is also a Client of Sauce, and Riverfront Times, actually give me his original copy of the Display Rack Agreement, so that I was aware of what was going on, so that I could give, other Independent Publications and Distributors heads up. This particular Restaurant DID NOT AND WILL NOT SIGN THE AGGREEMENT.

    Two Months later, I was given a list of 106 Locations, that have indeed, sign the STLD & Lee Enterprises Display Play Rack Agreement

    And

    Two and a Half Months later, ie this week, and this weekend, I and other Distributors have had to pick up our Racks, at Restaurants such as IHOPs in Clayton, Chesterfield, St. Charles County, and San Sai in Brentwood, because they were either outside on the curb, or in the back of the Restaurant’s storage closet. Put there by the STLD Distribution Manager, and/or the Restaurant.

    This behavior RUINS the relationships; the St. Louis Independent Publications have between the Restaurants, both on a Distribution and Advertising side. Not to mention the cost of the Independent Publication’s loss of Racks.

    If Restaurants lost a couple of customers, and people didn’t pick up Rides, Now Hiring, Your Next Home, Go Magazine, which are publications owned by Lee Enterprises and Distributed by STLD. Plus other Independent Publications like Ladue News, Feast, and Women’s Journal, that have Deal in place with STLD to not only Lease space on STLD Racks, but to be Delivered by STLD Drivers. Maybe, just maybe Restaurants, and Lee Enterprises might have a change of heart.

    I am not suggesting a Boycott of the Restaurants or Vendors, but maybe it’s time let the Public know who is participating in this Rack program, where they can no longer pick up their Favorite Independent Publication, and promote the Restaurants and Vendors where they can.

    Thank You

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