Pay an extra 7 cents a copy, or else, U.S. magazine distributor says

We haven't heard yet that Canadian wholesalers will follow suit, but one of the biggest in the U.S., Anderson News, has issued an ultimatum to publishers -- pay a surcharge of 7 cents a copy or we'll stop handling you. According to a column by Keith Kelly in the New York Post, CEO Charles Anderson asked, and answered, the question:

"Why should we continue in a business where we are not making any money?"

He gave publishers until February 1 to agree to the new charges.

Apparently, Anderson says the increase, which would add 3.5% to most magazines' distribution costs -- will translate into $200 million more in revenue for Anderson News. It could translate into up to $12 million in extra costs to teetering American Media and up to $15 million to a title like People. Anderson also wants publishers to shoulder the $70 million burden of handing unsold copies that are returned by some major retailers such as Wal-Mart.While most retailers still work on the relatively primitive sale-or-return basis, larger retail chains use scan-based tracking and only pay for copies that are scanned at checkouts and the unsold copies are returned. Essentially, Anderson is trying to shift the costs of returns to publishers.

Michael Sullivan, president of Comag, a national wholesaler that is jointly owned by Hearst Corp. and Condé Nast, said his clients have no intention of paying.

"As we understand it, Anderson's proposal is a unilateral effort to shift substantial costs to magazine publishers and does nothing to address the fundamental inefficiencies in the newsstand-distribution channel."