SIC 5994
NEWS DEALERS AND NEWSSTANDS



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.

NAICS Code(s)

451212 (News Dealers and Newsstands)

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. The 1997 Economic Census reported 2,313 active news dealers and newsstand establishments. Sales figures for the same year were $853 million, with 9,770 people employed in this field.

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 of the northeastern seaboard. Most, though, stay open throughout the year. As mentioned, most of the businesses classified in this industry are small single-proprietor establishments. However, 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. The industry is dominated by enterprises with five or fewer employees.

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 of the morning, 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 a p.m. edition. Each delivery requires employees to audit and verify the shipment invoice, remove the unsold prior editions from display, and stock either 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 newspapers, but in cities such as New York or Los Angeles, with many citizens transplanted from other areas of the country or globe, foreign newspapers and magazines were also big sellers. There, the International Herald Tribune, the Times of London, as well as European weeklies such as Paris Match and the German magazine Stern, sold well.

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 seconds longer these machines require.

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.

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 then, 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 — 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.

Current Conditions

The number of news dealers and newsstands has increased only slightly since 1992, when 2,260 newsstands were in operation. The industry is increasingly dominated by larger multi-unit organizations such as Eastern Lobby Shops. These corporate entities have brought modern business methods to what were momand-pop type establishments — cash registers were implemented in order to keep an eye on sales, and computer-aided stock tracking helped keep sufficient copies on the racks. Yet in major urban areas like New York City and Chicago, small one-person operations could still be found on many major thoroughfares.

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 has pushed for regulations that would limit the amount of adults-only material that dealers could sell or display. The mayor's office has also proposed that dealers' license fees be proportional to the value of the property their stands occupy. Under this proposal one dealer's annual fee would increase from $538 to $3,750.

In Philadelphia, which has around 300 street news dealers, a 1999 regulation required that stands be built from durable materials instead of wood. The city developed a standardized stand for this purpose. Some vendors opposed the change, though, because of the $10,000 they would have to pay 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, this 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 instead of by subscription. 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.

Industry Leaders

Although most newsstands are singly-owned establishments, a few companies have a fairly large presence in the industry. Hudson News Company has a large presence in the New York City area. While primarily a magazine distributor, the company also owned and franchised several newsstands and had total sales of $508 million in 1998. Healy News Store, Inc., of Wakefield, Rhode Island, is a small firm that managed to earn $1.2 million in sales with only nine employees in 1998. A company with more of a national presence is Eastern Lobby Shops, which has 120 newsstands around the country.

Further Reading

Bernstein, Elizabeth. "New Magazine Superstore Sells Books as 'Auxiliaries'." Publishers Weekly, 24 November 1997.

Bishop, Todd. "Extra! Extra! Newsstands Redesigned." Philadelphia Business Journal, 3 September 1999.

Darnay, Arsen J., and Gary Alampi, eds. Wholesale and Retail Trade USA. Farmington Hills, MI: Gale Group, 1995.

Garigliano, Jeff. "New York Newsstands in a Two-front Battle." Folio: The Magazine for Magazine Management, June 1998.

"Hudson News Company." Austin, TX: Hoover's. Available from http://www.hoovers.com .

Lowenstein, Joanna. "Q&A: Barnes & Nobles' Richard Lawton — Leader of a Retail Power Shift." Folio: The Magazine for Magazine Management, 1 April 1999.

——. "Rich Jacobsen." Folio: The Magazine for Magazine Management, 15 April 1999.

The Magazine Handbook. New York: Magazine Publishers of America, 1999. Available from http://www.magazine.org .

"Raising Roof Over Newsstand Rates: Council May Revoke Rudy's Right to Hike Charges as Street Furniture Hangs Fire." Crain's New York Business, 24 August 1998.

Strupp, Joe. "Out-of-Town News Blues: Online Newspapers Hit Niche Newsstands Where They Live." Editor & Publisher, 11 September 1999.

Tanner, Lisa. "Read All About It…." Dallas Business Journal, 2 July 1999.

U.S. Bureau of the Census. 1997 Economic Census: Retail Trade, Geographic Area Series. Washington, DC: U. S. Bureau of the Census, 1999.

Ward's Business Directory of U.S. Private and Public Companies 1997. Farmington Hills, MI: Gale Group, 1997.



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