News Dealers and Newsstands

SIC 5994

Companies in this industry

Industry report:

This category covers establishments primarily engaged in the retail sale of newspapers, magazines, and other periodicals. Home delivery of newspapers by other than printers or publishers is classified in SIC 5963: Direct Selling Establishments.

Industry Snapshot

Newsstands and news dealers occupy a nostalgic corner of modern urban history in the United States. A majority of such businesses are located in heavily populated areas, and are owned and operated by a single proprietor. In the mid-2000s, the Hudson News Company, and its Hudson Group, was one major exception, with hundreds of locations in airports and around the New York City area. The industry is dominated by enterprises with five or fewer employees.

That nostalgic history in New York was going through a makeover in the late 2000s. The city began replacing individually owned sidewalk kiosks as a Department of Transportation "coordinated street furniture" contract with Cemusa, which will replace existing newsstands with 330 new structures as well as build 3,500 similarly designed bus-stop shelters and 20 public toilets. Newsstand owners, still able to buy licenses from the city to operate in a particular location, nevertheless fought and lost a court battle over the new structures.

Some news dealers and newsstands are seasonal and shut down in winter months. The small kiosks often lack insulation, and space heaters may not provide enough warmth during the most frigid weeks on the northeastern seaboard. Even the new structures built by Cemusa have been beset by leaks, plus they have had problems getting phone lines installed. Most newsstands do stay open throughout the year. Although most of the businesses classified in this industry are small single-proprietor establishments, larger chain and franchise operations are becoming more common. According to industry watchers, the number of street-based news dealers and newsstands has been steadily dwindling over the past several decades, and the decline has become more rapid with the Internet taking over as a mode of choice to consume the news.

According to the U.S. Census Bureau, in 2008, 1,471 firms operated in this category with industry-wide employment of 7,632 workers for all or part of 2008 who earned wages of more than $1.6 billion in 2008. New York led the nation with 476 establishments, followed by New Jersey with 129 establishments and California with 113 establishments. During 2009 news dealers and newsstands retailing commanded 33.5 percent of the market, while the newsstand category held 49.3 percent of industry share and magazine stand retailers captured 17.1 percent in market share.

Organization and Structure

A typical newsstand derives its profits from volume sales of newspapers and magazines. Ancillary items such as cigarettes and chewing gum also play an important part in its financial success. A typical day for a newsstand operator or dealer begins in the pre-dawn hours, when a distribution service drops off bundles of periodicals that come out on that particular day of the week. Newspaper trucks deliver the morning dailies and may return later with an afternoon or evening edition. Each delivery requires employees to audit and verify the shipment invoice, remove the unsold prior editions from display, and either stock all of the new delivery or store part of it until needed later. Historically, Monday was the busiest day for both deliveries and sales with the arrival of weekly magazines. However, in the 1990s People magazine started delivering on Friday, and the resulting increase in sales prompted many other weekly publications to follow suit.

Morning patrons generally limited their purchase to a single newspaper or periodical. Later lunch hour and afternoon customers lingered over the magazine racks and often made impulse purchases. Many larger newsstands also acted as local bookstores, stocking popular paperbacks and sometimes even hardcover editions. A typical newsstand drew its sales primarily from the sales of daily local newspapers, but in cities such as New York or Los Angeles, with many citizens transplanted from other areas of the country or globe, out-of-state and foreign newspapers and magazines were also big sellers. The International Herald Tribune, the Times of London, and European weeklies such as Paris Match and the German magazine Stern sold well in New York and Los Angeles.

In the late twentieth century, the industry shifted toward more standard business practices as a result of corporate ownership. For example, cash registers appeared at newsstands even though most customers on their way to a job or commuter train did not want to be held up for the few extra seconds these machines required.

A news dealer or newsstand typically made a small profit from every item their establishment sold. A dealer would typically receive a maximum of 20 percent for each daily newspaper sold. Magazines had a higher profit margin because the intense competition between magazine titles and publishing houses resulted in courting the retailer. In addition to the 20 percent sellers received from the sale of each magazine, they would often obtain an additional 10 percent in the form of a retail display allowance. This premium came most often from larger magazine publishing corporations, such as Conde Nast or Time-Warner, as an incentive to keep their magazine titles prominently displayed near the transaction counter. Additional incentives could be paid to the news dealer for positioning a certain magazine overhead above the counter or for allowing poster displays of current issues. Such premiums could become a large part of revenue for major newsstands in New York City, where competition for display space was fierce. The monthly fees could sometimes reach into the thousands of dollars. However, newsstand operators in New York were losing this revenue stream under the Department of Transportation's new structure plan with Cemusa, which is paying the city $1 billion so it can use the structures as billboards.

Background and Development

For much of its history, the newsstand industry has been operated by new immigrants, especially in the decades following World War II. European families originally dominated the business, while Arabic and Asian entrepreneurs entered the field in the 1980s and 1990s. In New York City alone, 1,325 newsstands were in business in 1950, a figure that can be compared with the 2,313 newsstands operating in the entire United States in 1997. By the late 1990s, New York City was home to only 330 street vendors of newspapers and magazines.

While street newsstands continued to be a presence in large metropolitan areas, other forms of newsstands emerged in the late 1990s. One development was the emergence of "superstores" devoted almost entirely to periodicals. Because these stores had more space than a traditional street stand, they could offer a larger selection of titles to their customers, which could be up to 4,000 in some cases. Some firms have also experimented with opening newsstands in shopping malls, areas with the high pedestrian traffic that traditional street vendors have relied on for their business.

In the late twentieth century, street dealers became increasingly restricted by laws regulating all urban street vendors, while a rise in crime has also played a decisive role in their dwindling numbers. A lone owner-operator, having worked up to an 18-hour day, makes an easy robbery target at closing time when he or she heads to the bank with the day's receipts. Small newsstands, like all other stationary objects in a large city, have also been the target of graffiti.

Street newsstands have also faced community pressure to clean up both their appearance and their merchandise in some large cities. In New York City, the mayor's office pushed for regulations that would limit the amount of adults-only material that dealers could sell or display.

In Philadelphia, a 1999 regulation required that stands be built from durable materials instead of wood. The city developed a uniform stand for this purpose. Some vendors opposed the change, however, because they would have to pay $10,000 for the new stands.

Several marketing changes had also put pressure on newsstands and news dealers by the late 1990s. These pressures stemmed from publishers' and distributors' practices and from new outlets for periodicals. While the number of magazine titles published increased at a rate of nearly ten per week in 1998, the larger selection did not bring an increase in single-copy sales. The Audit Bureau of Circulation reported combined sales of approximately 367 million magazines per issue, but only 18 percent were purchased as single copies with the remainder being purchased through subscriptions. Furthermore, only 3 percent of the single-copy sales occurred at newsstands.

There are many reasons for newsstands' small share of this market. Circulation departments began aggressively pursuing subscription customers rather than single-copy readers who purchased magazines at newsstands because retail sellers could return unsold copies for a refund. Other outlets for periodicals have also cut into newsstands' sales. Mass-market bookstores have proliferated, offering extensive magazine sections in an enclosed space for perusing the numerous titles. The rise in cafes and coffee houses in urban areas also had a negative effect on newsstand sales. Many such enterprises began selling magazines and newspapers to attract customers who wanted to sit and read for a while over a cup of coffee. Publishers also began targeting specialty stores as retail outlets for magazines, placing Vegetarian Times at health-food store check-out counters or Rolling Stone in record stores. Technological innovation has also cut into a market that had long been a staple of newsstands: the out-of-town newspaper. With many newspapers available on the Internet, customers have become less inclined to visit a newsstand for a publication that is at least a day old when they can get the news from afar more immediately on their computers.

The number of news dealers and newsstands has decreased through the first decade of the twenty-first century. According to the U.S. Census Bureau, there were 1,635 newsstands in the United States in 2005. New York had the most with 511 in the entire state. New Jersey, Pennsylvania, and California were the only other states with more than 100.

The industry is increasingly dominated by larger multi-unit organizations. These corporate entities have brought modern business methods to what were mom-and-pop type establishments. Cash registers were installed to keep an eye on sales, and computer-aided stock tracking helped keep sufficient copies on the racks. New structures built by Cemusa in New York include lottery machines.

Eleven individual newsstand owners and the New York City Newsstand Operators Association attempted to block the plan to replace old newsstands, but a State Supreme Court judge ruled against them in August 2005. The operators and the association claimed that more than 60 owners would lose their locations because in order to adhere to requirements established by the Americans with Disabilities Act, the size and placement of the new structures would conflict with city requirements on pedestrian flow. The city contended that just one stand would be affected.

About 40 Cemusa-built newsstands were in place by the end of 2007. Owners at particular locations have complained that phone lines were not installed for several weeks, rendering lottery machines useless, and several have complained that leaks were ruining newspapers, magazines, and candy. On top of that, the owners have had difficulty with the locks on the structures, but thieves have not. In the first two months the new stands were in place, two of them had been broken into three times each. Cigarettes, lottery tickets, money, and phone cards were reported stolen. Cemusa issued a written statement that it will "incorporate design improvements into all newsstands as they are installed, and we will continue to inspect each newsstand on a daily basis."

Current Conditions

When the numbers were released by the Newspaper Association of America, it was clear 2009 "�was the worst year the newspaper business has had in decades�," cited from an article in The New York Times in March of 2010. Overall newspaper print total fell 17.7 percent in 2008 plummeting 28.6 percent in 2009. That trend was likely to continue with the ongoing shift from print to digital media.

Over the past two decades, newspaper sales have gone from 1,500 per day to about 200 newspapers per day by 2010. In New York City alone, newsstands have dwindled to 280 in 2008, compared to roughly 1,500 in 1940. In Chicago, there are maybe 50 newsstands at the most. Over the past three years "single copy" magazine sales have fallen an estimated 10 percent a year nationally, according to the Audit Bureau of Circulations.

Industry Leaders

Although most newsstands are singly-owned establishments, a few companies have a fairly large presence in the industry. Hudson News Company, owned by its chairman, Robert Cohen, has a large presence in the New York City area. While primarily a magazine distributor, the company also owned and franchised roughly 500 newsstands in airports and other locations in 2007. Hudson's revenues grew over $200 million from 2003 to 2004, largely due to the acquisition of W.H. Smith's airport locations. Sales in 2007 were estimated at $282.3 million. Private edquity firm Advent International acquired Hudson Group in 2007 and in 2008 merged it with Swiss travel retailer Dufry AG. The company employed 2,000 people in 2009.

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