Newspapers turn to the rack in circulation struggle
New York — In newspaper lingo it's called ''the rack.'' This is not a medieval device editors use on reporters or that reporters use on their sources. It's a metal vending machine, used increasingly by newspapers to distribute their product.
Inspired by USA Today's use of 65,000 to 70,000 racks, which currently distribute 84 percent of its 1.1 million daily papers around the United States, other newspapers are turning to the rack to increase sales.
''Yes, there has been more interest in increasing single-copy sales,'' says Joseph Forsee, general manager of the International Circulation Managers Association.
Traditionally, home delivery has been the main way most newspapers are distributed. But ''USA Today has bright racks which draw attention,'' Mr. Forsee noted. ''Other guys are saying, 'Yes, let's put out some of our racks near theirs.' ''
So fierce is the demand for racks, says Robert C. Hendrick, president of Berkley Small Inc., distributor of racks made by the Kaspar Wire Works in Shiner , Texas, that a newspaper has to wait eight to 14 weeks for delivery of a vending machine, depending on the degree of sophistication.
''USA Today hyped the interest in single-copy sales,'' Mr. Hendrick says. He adds, in something of a salesman's style: ''There were a lot of units moving prior to USA Today. It's a great way to sell additional units of a paper.''
Ray F. Mack, an executive consultant to Scripps Howard Newspapers, points out that changes in life style have helped move newspapers in this direction. It is becoming increasingly less common to find a family with a working male who puts on his slippers when he comes home from work and reads the paper. Single-parent families or married working couples often have different newspaper reading habits.
''People want to buy a paper when they want it and on the days of the week they want it,'' Mr. Mack notes. ''If the newspaper is easily accessible, people will buy it, and if not, they won't go out of their way.''
Alan Neuharth, chairman and president of the Gannett Company, publisher of USA Today, was one of the first to capitalize on this trend nationally. USA Today picked out cities it wanted to sell in and eventually installed vending machines in each city overnight. According to an April audit by Price Waterhouse, the accounting firm, 84 percent of USA Today's sales were single copy, while 14 percent were through home delivery.
Mr. Neuharth has reportedly said that the marketing of the paper, if nothing else, has ''woken up'' the industry.
Sometimes, indeed, it may have overly intensified competitive feelings. According to one account, Michael Gartner, editorial chairman of the Des Moines Register, noticed that USA Today placed its boxes in other cities near other newspapers' racks. So Mr. Gartner had some old racks painted up and placed in the worst parts of Des Moines. According to the story, USA Today followed suit. The Register pulled out its racks the next day, leaving USA Today with the less than prime locations. Vincent Spezzano, president of USA Today, says, ''I hadn't heard that one before.'' But, he quickly adds, ''What's wrong with making a newspaper available in every part of every city?'' The Des Moines Register could not be reached for comment.
Not everyone has embraced the use of racks. Kenneth Burenga, vice-president for circulation of the Wall Street Journal, says the popular business daily has made only limited use of machines. Some 85 percent of its sales are subscriptions. Recently, after two years of planning, the Journal has doubled or trebled its use of machines in New York City - but from a very low base.
''People wonder if this was in reaction to USA Today,'' Mr. Burenga says. ''But it definitely was not. We don't react to other papers.''
Distributing newspapers through the streets has its disadvantages as well. A local Washington magazine reports that college students are stealing the USA Today racks and using them to house their television sets.
And maintenance in some areas is costly and difficult. In New York, for example, a USA Today rack on Second Avenue looks as if a truck has backed into it. It has had the same newspaper in its front window for weeks. A sticker on top of the rack offers a $500 reward for anyone providing information about people destroying or vandalizing the machine.
Mr. Spezzano says that ''vandalism has been nothing major. It varies from city to city. Initially people think there's a lot of money in the racks, and they may break them open, but after a while they just become part of the scene.'' In New York City, the graffiti capital of the world, the boxes have so far remained immune.
The machines are expensive. So when vandalism occurs it's a problem. The machines sold by Berkley Small, which is owned by the E. W. Scripps Company, cost from $125 to $600 per machine. According to one source, the USA Today machines cost $325 apiece.
With machines that expensive, profitability is a matter of accounting. ''It depends on how many years you want to amortize the machines,'' says Mr. Mack. USA Today is amortizing them over seven years. Mr. Mack says most circulation people consider three to six sales daily per machine the break-even point for distribution.
''You don't break even in terms of newsprint,'' he says. ''Of course, you don't make money on circulation - but on advertising.''
Newspapers are also faced with the problem of a public trying to ''rip off'' racks by taking more than the one paper they have paid for. So far, no one has been able to design an inexpensive machine that dispenses only one newspaper at a time. According to Mr. Mack, a publisher should try to aim for a loss factor of only 10 to 12 percent. If you get paid for 80 percent of the papers distributed, he says, ''you are doing better than if you sold the newspapers over the counter.''
Then there is the problem of calming public officials who are concerned about the mounting clutter on their sidewalks. When USA Today first began distribution in New York, it bolted a reported 1,800 racks solidly to sidewalks in one night. A spokesman for Mayor Edward Koch says the bolts irritated the mayor. He announced he would propose that newspaper vending machines be charged a licensing fee for taking up space on the city's crowded sidewalks. But USA Today , after meeting with the mayor, agreed merely to chain its boxes to light poles, not bolt them to the sidewalk.
Where local officials have tried to limit or disrupt newspaper circulation efforts, courts have upheld the right of the press to distribute the news. Attempts by local officials to ''throw the racks in jail,'' or fine them, have been thrown out of court as a violation of due process and the First Amendment to the Constitution.
Still, as the trade publication Press Time recently reported, local communities are proposing new regulations, standards, or fees. Such proposals are pending in California, Illinois, Minnesota, Florida, New Hampshire, and New York. According to an official of the American Newspaper Publishers Association, W.T. McGuire, ''Ordinances are popping up like crazy.''