Independent News Collective

Overview - The INK Business Concept

INK plans to achieve economies of scale by taking over aspects of its members publishing activities, freeing them up to do what they are best at: reporting the news as they see it.

Most INK members publish only one title, but in the modern publishing environment this is not a recipe for success. Many INK members are trapped in a cycle of low resources, low sales and low advertising revenues. The INK plan will increase revenues and save on publishing costs, allowing members to improve their magazines and starting a benign cycle of improvement and growth.

Unlike conventional publishing companies, INK would not own its member's titles and would have no influence in their content. This is the model followed in the music business, for instance, where a label has a contract with a band but has no influence on the band's songs.

INK's business strategy has been to recognise that alternative publishing has a very poor financial image, and that we need to test our plans empirically before we can credibly appeal for funds. INK has been growing organically in the years since it was launched.

Now that we have a track record we can look at ways to accelerate our growth by accessing greater financial resources. As a first step we need to pay for a full time worker for a year, primarily to expand the number of INK distribution outlets. Other tasks are: fundraising, PR mailouts, organising an INK conference, attending conferences and festivals, micro leaflet distribution, and helping members make savings on print bills.

Possible Sources of Finance

1. Charities, arts bodies, public funding.

Nowadays charities, arts bodies etc are highly reluctant to support ongoing projects, preferring to put seed money into something which can be independent as soon as possible. As INK projects are designed to be self-financing, this criterion fits well.

There are obstacles. State or charity money has legal constraints on political content, enforced by legal advisors. This is why publications funded in this way are usually very bland and do not sell well. There is also a widespread antipathy to the media - most people do not differentiate between the corporate media, the local press and the alternative press. As a company that facilitates publishing rather than a magazine itself, INK may be able to overcome some of these problems.

2. Soft loans and business angels.

There are many people nowadays who have a lot of money, perhaps as a result of the property boom or a successful small business. Many INK titles are funded by soft loans from such people, who know they risk losing their money but at least would like reassurance that it is being used sensibly. Such investors are motivated by support for INK members' views and are likely to be encouraged by a viable plan which is based on a track record.

3. Conventional venture finance.

City-based equity finance, though politically liberal nowadays, requires very detailed data and seeks a rate of return of around 30% pa. We sky high fees from City advisors, it is hard to get interest in proposed loans of less than a few million pounds.

4. Business to business finance.

This is said to be the commonest growth route for very small businesses. Basically it means credit, loans, or even a partial or complete buyout from other companies in the industry. Because they know the industry and they know us, they can assess prospects with more confidence.

5. Finance from within INK.

We could ask members to come up with say one to five thousand pounds each. If successful, this would make a total war chest of perhaps a fifty to a hundred thousand pounds.

The INK Business Profile

From the business point of view INK can be seen as a publishing services company which services, but does not own titles. The basic argument for INK's viability is this. Almost without exception commercially successful publications are produced by publishers which have at least five, more often 20 plus titles in their stable. This is because of economies of scale on the

publishing side: print buying, ad sales, distribution, subscription marketing etc.

INK titles are somehow surviving under this enormous handicap of isolation, so the expansion of INK can only release a huge synergy and generate a lot of money.

INK's track record of projects can be seen as the components of a publishing services business.

1. Subscription marketing. By industry standards, the INK leaflet has been hugely successful. As a rule marketers can expect to write off income from a new sub to marketing costs, only benefiting from the renewal. For most titles the INK leaflet does much better than this. However it has not been so successful when put into non-INK titles.

2. Distribution to non-newsagent outlets. Eg wholefood shops, bookshops, etc. See the INK paper on distribution. This is potentially far more lucrative than expanding the leaflet project.

3. Newsagent distribution. For any large scale retail sales, newsagent access is probably essential. The earlier project was aborted (see distribution paper) basically because the current set up (eg `Smiths and Menzies`) is geared to the needs of mass selling titles only. However, we DID establish that INK titles will sell in suitable newsagents. We now propose a different system outside the wholesale cartel, with copies directly mailed to selected newsagents and paid for through credit card accounts.

4. General publishing services. Print buying, ad sales, PR, marketing are all essential functions of publishing which members may be unable to do effectively.

Conclusions

Clearly a conventional detailed and researched business plan is not appropriate for INK at this stage. We could not spend the sort of money that big investors would want to lend us and the work involved would be a project of its own. Our research base for the plan would have to be the evidence from our existing projects, which would not convince anyone outside the industry.

I recommend that the next stage of INK's expansion should be the hiring of an energetic full timer with a track record in sales or marketing on a six month contract with the task of expanding INK distribution outlets and chasing sources of grants ie fundraising.

The funding can be discussed in the context of the INK Distribution proposal which Peter McCaig and Steve Mulford are working on currently

Ian Henshall

Chair of INK