The Argus Leader gets the magnifying glass turned on them by KSFY

That was unexpected. I had just rolled into Brookings last night and caught the 10pm KSFY news. The lead story? "How the Argus Leader was standing in the way of the freedom of the press." Check this information from Part 1 of a two part investigation series by the KSFY news team:
The Argus Leader newspaper says it's good business for everyone in print, but some independent publications think they're getting squeezed out. A division of the Argus Leader says they have contracts for distributing free magazines in those racks you've probably seen around town. But the independents say they'll have to pay to use those racks at certain businesses, and they say that's not fair. Under a number of recent agreements there would be only one rack at several stores with the Argus Leader basically acting as a landlord by collecting fees.

The magazines are all over town, and they're free. Publications like Prime, Renter's Guide, the Shopping News and others. 16 independent publications in all are displayed at different businesses. But some say what the Argus Leader is trying to do to these smaller publishers could have huge consequences.

"It may literally bankrupt some publications. Some may survive, but it's doubtful," says Dan Siefken. He runs Vortex Publishing which prints the Renter's Guide, a small free publication. Siefken is part of a group of 14 publishers who've banded together and some are considering a lawsuit because Siefken says if the Argus Leader had its way, he and others would be out of business.

It all started late last year when "News Center Distribution," a service of the Argus Leader, approached several stores and organizations in town asking them to sign an exclusive contract to only display free publication racks owned by the Argus Leader. They would then charge the other publications to place their product on the Argus racks. The rent would be $10 per position, per rack at every contracted location. But if the independent publishers didn't pay the Argus, the threatened to physically take their competitors magazines out of contracted businesses.

"If we didn't participate, therefore we wouldn't have a distribution system, and that would put us out of business," Siefken says, "Therefore they wouldn't have the competition."

We asked the Argus Leader about this issue. They refused to do an on-camera interview, but sent us an email with this quote: "This kind of business exists in most cities across the country the size of Sioux Falls and larger. It is a service that many retailers and others find useful and beneficial, and that is why so many have signed up for it in Sioux Falls and elsewhere. In most cities, however, the service fee is substantially greater than the NCD (News Center Distribution) fee. The NCD fee was intentionally kept low enough to allow small publishers to actually save money in distributing their products by using NCD."
According to a list from the Argus Leader obtained by KSFY News, a number of businesses signed the contract, apparently giving the newspaper these exclusive rights to distribution at their locations. Two buildings on that list are owned by the City of Sioux Falls; the Arena, and Falls Overlook Cafe'.

"To me it's pretty obvious what's going on," says Sioux Falls City Council member Kermit Staggers. He says the Argus is trying to kick out their competition and by doing so at a city owned facility Staggers says the Argus Leader is restricting a constitutional right.

"The First Amendment talks about Freedom of the Press, and what we want to do as a city government is we want to stimulate freedom of press," Staggers says, "We don't want to have any restrictions at all."
Read all of this tale of oppression here. Why wouldn't Argus personnel appear on camera to defend themselves? But take heart. I'm sure we'll see some verbose editorial from the publisher stating how they're right and they are providing the public a service.

My opinion? Let's face it. There's no great and noble deed for the benefit of the public, retailers or small publishers. I think any attempt to describe it as such is laughable.

What do I think this is about? This is about business. Nothing else. They are coming in and have figured out a way to offer their product over others. Shut out the small advertising mags, and the people advertising there are going to want to continue to advertise... So as those magazines disappear, they go to one of the Argus' subsidiary publications or the newspaper itself. And their revenue increases.

Why do you think the Argus has bought up many of the small weekly newspapers around Sioux Falls? Because they see revenue opportunities.

If people don't think that one media outlet should have that much control, or a monopoly, they should talk to their local legislator. If they don't like the Argus, don't patronize them. But like it or not, part of the American free enterprise system is that businesses compete. And it's up to the public voting with their pocketbook to decide if they get to win.

I'm not an economic theorist, so I'll look at this in simplistic terms that I can wrap my arms around. As the public, I think we need to look at three things:
Is the product better?
Is the manner of competition fair?
Are we (the public) best served by allowing this to continue?
If we can answer "yes" to all three, then I'd be hard pressed to answer the question, "why not?" If we can answer "yes" to all three, as odd as it might seem, we should probably be cheering them on.


Scott said…
There's more to this story than what KSFY is reporting. When the publishers of two local magazines received the initial letter, they were shocked to find a handful of some of their best clients among the outlets listed as having signed with the Argus. They began calling these clients, and were told by many that they had never made any agreements with the Argus. Obviously, they're not happy.
I'm not an anti-Argus guy, but this situation is ridiculous. None of these silly inserts that they are filling these oversize racks(City Style, etc.) are worth the paper they're printed on. They all have one thing in common - they're ad-based instead of content-based. Any "article" is present only to supplement an ad. That's fine when presented as an insert, but does anybody ever pick up any of these rags except to see if they know any of the "models"?
Ok, the Thursday entertainment insert includes movie times, but we all know the only reason that was started was to go after the Tempest.
Anonymous said…
I don't see how these free publications can hurt the Argus. As far as City Style magazine goes, it is a waste of paper and time, 3/4 of the people in the area can't afford to live like that. I would like to see at least one issue a year geared toward the low income people that have to shop at thrift stores and discount stores, instead of the exclusive shops in town. I also find it interesting that a month subscription to the Argus costs more than my monthly renter's insurance premium, and the insurance is more important.
nicole said…
I like what you've said, "And it's up to the public voting with their pocketbook to decide if they get to win." This is exactly how I feel about big corporations like Wal-mart. People complain about how much power they have (and I agree) but then they shop there...consumers will keep anything going if they choose to...good point.
Bob Newland said…
Anybody notice the feedback on Napoli's PBS appearance last evening?

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