Newspaper publishers are recognizing consumers are using less cash and are making a move toward accepting plastic at vending machines.
The Wall Street Journal is helping to lead the shift, deploying 190 vending machines with card readers throughout the New York area, mostly at transportation hubs such as commuter rail stations.
Newspaper vending-machine sales represent a small portion of the Journal’s single-copy sales, but the publisher wants to give consumers the convenience of buying a $2 paper without the hassle of carrying eight quarters in their pockets.
“We recognize people want to digest our content when it’s convenient,” says Ian Jackson, vice president for circulation at the Journal and New York Post, both News Corp. publications.
Bellatrix Systems Inc. is the firm behind the vending machines. The Bend, Ore.-based technology company is responsible for inventing the electronic coin totalizer system, which recognizes coins as they are inserted into a newspaper vending machine.
Bellatrix developed a system in which the coin totalizer powers a Payment Card Industry Data Security Standard-compliant magnetic stripe card reader from MagTek Inc., according to Bill Raven, Bellatrix senior vice president of sales and marketing. The newspaper box does not need an outside source to power the totalizer.
When a consumer swipes a credit or debit card, the card is charged the newspaper’s price and the totalizer sends a signal to the door to release the door catch.
The system resets for the next customer when the door is closed.
A delivery person uses an infrared-enabled personal digital assistant to extract encrypted card data from the box each day it is stocked with new papers. The information from the PDA is then transferred at the paper’s distribution center to a secure computer terminal that connects to Bellatrix’s gateway processor, PayPal Inc.
Bellatrix uses PayPal because it is better suited than other processors to handle aggregated microtransactions, Raven says.
PayPal charges 5 cents per transaction plus 5% of the total transaction. It also charges $30 per month to maintain the newspaper’s account.
Bellatrix charges $825 for a newspaper box equipped with a credit card reader. The handheld PDA units cost $750 each, and Bellatrix suggests a minimum of two units. The one-time software price is $5,000.
Alan Mutter, an independent analyst and consultant for new media strategies, believes most publishing companies lack the necessary capital to make an investment in the machines.
“The industry has not been in a hurry to spend money given the shrinkage in advertising,” he says.
Other publishers also are testing the machines but have seen little to no boost in single-copy sales, according to a report in Advertising Age.
The Tribune Co. has deployed some 30 machines in Chicago and Orlando that sell the Chicago Tribune and Orlando Sentinel, respectively. The New York Times Co. has deployed 10 machines in New York.
The ability to accept plastic at the newspaper box might become a necessity even if it fails to contribute much to a publisher’s bottom line.
A conversation Raven had with executives at the Dallas Morning News leads him to believe more newspapers will invest in the technology. They said “it was no longer a want to have credit card machines, it was an absolute necessity,” he noted.
Indeed, News Corp.’s Jackson acknowledges the machines will not change the company’s fortunes right away. “It just acknowledges that our product has reach, and we need to find a way to get it to [consumers],” he says.
News Corp. also plans to test the machines with the New York Post, which costs 50 cents.
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