Wholesaler-Publisher Controversy May Keep Magazines from Shelves

A controversy surrounding a new technology called SBT (scan-based trading) could potentially keep magazines like Vogue, Time and others off the shelves of Wal-Mart and other retailers beginning next week.

SBT helps eliminate waste in the distribution business. Instead of buying a certain number of issues and then selling them to customers, retailers buy each individual issue as it is sold, writes MIN Online. Under the old system, magazines had to be sold back up the distribution chain if they didn’t sell in stores, but with SBT the process from printer to consumer is much less complicated. The magazines remain on the books as inventory of the wholesaler until it is actually sold.

Anderson News, the nation’s largest wholesaler of magazines, has told its customers, including Time Warner, that it wants those magazines to appear on the publishers’ books rather than on its own. This would give the publisher a greater stake in what happens at the newsstand and more control over how many copies are on newsstands.

Anderson and other wholesalers had to absorb a loss of revenue from not being paid for one month, during the time the retailers switched to SBT. The wholesaler is also trying to recoup that loss by assessing a share of it from publishers.

Time Warner and other publishers have threatened, in response, to stop shipment of their magazines to Anderson, which handles roughly 25 percent of all wholesale magazine distribution in the country.

Today, however, Time Warner and Anderson came to an agreement that may prevent the stoppage in delivery, at least until next week, to give both sides time to negotiate.

Curtis Circulation Company, whose magazines include Elle, Maxim, Forbes and Newsweek, has settled with Anderson and will continue sending magazines uninterrupted.