Direct-pay option drives carr iers to organize

By: Joe Strupp In unusual move, Plain Dealer publisher promotes incentives, including subscription price cut

A new payment option giving subscribers of The Plain Dealer in Cleveland a lower rate if they pay the newspaper directly, instead of individual carriers, has raised objections from a faction of carriers, who claim it reduces their profits. Some of the carriers are so angry that they have organized an association to fight the new plan.
"They are taking over control of our cash flow," said Cheri Fioritto, 38, who has delivered the newspaper for 21 years. "They are dropping the price, and they can drop it to anything they want. There is no guarantee."
But Publisher Alex Machaskee, who said the new program has been in place since July, called it a success that has been well-received by most carriers. "If there is somebody who doesn't like the program, that is their prerogative," he said. "We are offering our subscribers an opportunity to pay directly and there is [a financial] incentive to do that."
The direct-payment option is not unusual in the industry, according to circulation directors at other newspapers. But they said the customer rate usually remains the same whether subscribers are billed by the newspaper or the carrier.
The Plain Dealer's Easy Pay plan allows readers to pay less through direct billing from the newspaper, and also includes incentives, such as local restaurant discount cards for those who participate in the new plan. The program has not been automatically instituted for every customer, but is being offered as an option, Fioritto said.
Currently, carriers act as independent contractors who purchase newspapers from the circulation department and sell them to home subscribers at the carriers' own rate. Fioritto said she pays a dollar eighty-five a week for each customer's newspapers, including Sunday, and sells them at a rate of four dollars and seventeen cents a week, pocketing the difference.
But, under the Easy Pay plan, the newspaper sets the rate, collects the fee, and gives the carrier his or her portion. Since the new option went into effect, carriers said the newspaper has been charging a lower rate, reducing their profit.
Fioritto said the newspaper is charging her customers only three dollars and sixty cents a week, which means a loss to her of 57 cents a week
on each customer who switches to the new plan. If all 300 of Fioritto's customers switched, she would lose 171 dollars a week, or 8,892 dollars a year.
"I'm concerned that we are not going to be able to maintain the same standard of delivery and the routes will no longer be profitable," she said. "We'd like the company to respect us."
Machaskee said he had not reviewed the rates charged by carriers, but said
the newspaper chose to implement the plan based on newsstand prices. "It has helped us to create a one-to-one experience for the subscriber."
Mark Wilfley, circulation director at The Charlotte (N.C.) Observer, said his customers have the option of paying the paper or the carrier, adding that most choose to pay the newspaper directly. "It saves the carrier collection costs," he said. "It has never been an issue."
At Detroit Newspapers, the circulation arm of The Detroit News and Detroit Free Press, Ed Humphrey, senior vice president/circulation, said all of his collection is done by the newspaper, and was surprised that carriers would want the hassle of collection. "In most cases, you would think that carriers would like it," he said.
The Plain Dealer promoted the new option with a four-page house ad Oct. 10 boasting that readers could pay by check or credit card, while also receiving special "Gusto Cards" that gives subscribers up to 35 percent off the tabs at local restaurants.
Some carriers have organized an association to fight the new plan, as well as take on other carrier issues. Shortly after the Easy Pay plan took effect, about 50 of the newspaper's 1,400 independent carriers joined ranks to form the Independent News Carriers Association (INCA) of Northeast Ohio, affiliated with Local 4390 of the Communication Workers of America, AFL-CIO.
Seth Rosen, an INCA spokesman, said the group is trying to discuss the issue with the newspaper and come to some kind of resolution short of a lawsuit. He said federal law bars the union from suing, but added that several individual carriers were considering legal action against the newspaper.
A Plain Dealer subscriber himself, Rosen said the delivery rate in his neighborhood dropped from 15 to thirteen dollars and ninety-five cents a month under the Easy Pay plan. He said some loyal customers are remaining with the old program, but said most likely will switch if they can save money.
"We are trying to keep customers informed and share information with them," Rosen said.
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