“Oshigami”: The Hidden Business Model Behind Japan’s Newspaper Industry

Here is an important question.

If newspaper stores receive a large number of newspapers they cannot sell, why don’t most of them go out of business?

There are two main reasons.First, newspaper companies give money to newspaper stores to cover part of their losses.Second, there is money from advertising flyers.

In Japan, many advertisements are printed on separate sheets of paper and put inside newspapers. These are called advertising flyers.

Here is the important part.

The number of flyers delivered to a newspaper store is usually based on the number of newspapers delivered to that store — including the extra newspapers that will never be sold.

These extra, unsold newspapers are called oshigami in Japanese.

So, if a store receives more newspapers, it can also receive more advertising flyers. And more flyers can mean more advertising income.

In other words, the losses caused by oshigami can be partly covered in two ways: money from the newspaper company and money from advertising flyers.

But there is another side to this system.

By delivering these extra newspapers, newspaper companies can report a larger circulation — a larger number of newspapers in the market.

A larger circulation makes the newspaper look more valuable to advertisers. The newspaper company can say, “Our newspaper reaches a very large audience.”

And that can make advertising space in the newspaper more valuable.

So the system works like this:

Newspaper companies deliver more newspapers than people actually buy.
The stores receive financial support and additional advertising income.
And the newspaper companies can maintain larger circulation numbers.

This is an important part of the traditional business model of Japan’s newspaper industry.