The migration of newsagents to our POS and newspaper home delivery software from other software has been considerable this year.  My sense is that we are in the middle of a long overdue shake up in the newsagency software marketplace.  Eight software suppliers for 4,500 businesses is not viable.  There are signs that at least two are reducing focus on newsagencies.

A software company needs between 300 and 500 users to justify the software development and support infrastructure investment in a channel.  The changes to IT standards this year and next year will drive further churn and intensify the shake out.

Software companies have a considerable suite of changes coming which will require development and roll out investment.  This will intensify pressure on software companies to build market share to fund the necessary development or focus attention elsewhere.

This is a natural process and reflects the maturing of the newsagency channel in terms of use of IT.  Newsagent suppliers and newsagents themselves are more serious about and demanding of technology than ever before.  Both sides want real and constantly improving benefits.  Delivering this is hard work for a small software company.  The businesses with less than 300 newsagent users will struggle.

At Tower Systems because we have the critical mass to support the investment.  This is not out of luck, we have created this position for ourselves.  We have pursued market share.  We went out and bought newsagencies to better understand the needs of newsagents.  We have developed relationships with suppliers so we are at the table discussing standards and representing our 1,500 newsagent partners.

We occasionally hear from a newsagent that they are concerned about our size, they think we may be getting too big. This would only be the case it we abuse our market share.  There is evidence to the contrary:

  • As we have grown we have reduced software support fees.
  • We financially support newsagent associations and through them their members.
  • We support newsagents in financial difficulties.
  • We have advertised the channel on TV and in other places.
  • We develop free marketing collateral for newsagents to use to build stronger businesses.

As newsagents ourselves we experience the value of good software every day.  As software companies pull out of the Australian newsagency channel, newsagents can be confident that Tower Systems will remain committed to helping newsagents build stronger and more valuable businesses.

Newsagents considering buyying software should ask about the number of newsagents using the software under consideration.  They should check this wwith publishers who also have the data.  In the newsagency channel of the future size will matter.

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