“Oshigami”: A Long-Standing Practice in Japan’s Newspaper Industry

By Tetsuya Kuroyabu

Japan's newspaper industry has a unique and controversial business practice known as "Oshigami." The term refers to excess copies of newspapers that publishers send to local newspaper shops even though those shops have little or no realistic prospect of selling them.

The practice has existed for decades and is closely connected to the economics of newspaper circulation and advertising.

■What Is Oshigami?

In Japan, newspapers have traditionally been delivered directly to subscribers' homes by local newspaper shops. This system makes it relatively easy for a shop to estimate how many copies it actually needs.

For example, if a newspaper shop has 1,000 subscribers, it needs approximately 1,000 copies each day, along with a small number of additional copies to replace damaged newspapers or meet unexpected demand.

In theory, therefore, a shop with 1,000 subscribers should need only slightly more than 1,000 copies.

In practice, however, a newspaper publisher may supply the shop with 1,200 copies—or, in some cases, as many as 1,500.

After the shop has delivered newspapers to all of its subscribers, hundreds of copies may remain unsold. Nevertheless, the shop may still have to pay the publisher for these excess copies.

These unwanted newspapers are known as "Oshigami."

The practice is particularly significant because it has reportedly continued in Japan's newspaper industry for more than half a century.

■Why Can Newspaper Shops Survive?

This raises an obvious question: If newspaper shops have to pay for large numbers of newspapers they cannot sell, how can they remain in business?

There are two important factors.

First, newspaper publishers may provide financial support to local newspaper shops. Such payments can help offset some of the losses associated with operating the delivery network and handling excess copies.

Second, newspaper shops earn revenue from advertising flyers inserted into newspapers.

These flyers, which advertise supermarkets, real estate, restaurants and other local businesses, are printed separately and distributed together with the daily newspaper. Advertising agencies and businesses pay newspaper shops to insert and distribute them.

This creates an important economic relationship between circulation and advertising revenue. The number of advertising flyers handled by a newspaper shop may be calculated based on the number of newspaper copies supplied to the shop, rather than simply the number of copies actually delivered to paying subscribers.

If Oshigami copies are included in that figure, a newspaper shop may be able to receive advertising-related revenue based on a circulation number that is larger than its actual number of subscribers.

■The Impact on Advertisers

The practice also raises a broader question about the reliability of newspaper circulation figures.

Advertisers generally use circulation data to estimate how many people their advertisements can reach. A newspaper with a circulation of one million copies, for example, would normally be expected to offer advertisers greater exposure than one with a circulation of 800,000.

But if reported circulation includes a substantial number of Oshigami copies that never reach readers, the figure may not accurately reflect the newspaper's real audience.

As a result, advertisers could believe that their advertisements are reaching more households than they actually are. This could lead them to pay advertising rates based on an inflated perception of a newspaper's reach.

■A Structural Problem

Oshigami should therefore be viewed as more than simply the problem of unsold newspapers.

It reflects the complicated relationship among newspaper publishers, local newspaper shops and advertisers. Publishers benefit from maintaining high circulation figures, while newspaper shops depend not only on subscription revenue but also on financial support and advertising-related income.

This structure may help explain why the practice has survived for so many years, even as newspaper circulation has declined and the media industry has undergone dramatic changes.

Ultimately, the issue raises an important question: Should the value of a newspaper's advertising business be based on the number of copies printed and distributed to newspaper shops, or on the number of copies that actually reach readers?

For advertisers, the distinction matters. What appears to be circulation on paper may not always represent a real audience.