Many Papers Use Third-Party Sponsored Sales -- Because They're Legal

By: Jay Schiller Why did The New York Times conduct an in-depth analysis of ?other paid" circulation months after much research, including strong work by a Deutsche Bank analyst, had appeared in several publications (including E&P)?

There is not a newspaper in the country that doesn?t rely on some sort of circulation gimmick to bolster its numbers. Like everything else, it?s a matter of degree.

For example, I know of one large metro that is putting out almost three times as many Sunday ?other paid? copies (according to Audit Bureau of Circulations? September 30, 2004, FAS-FAX numbers) as it did three years ago. And if you look at this newspaper?s Sunday copies individually paid at more than 50% for the same period, you'll see that it has dropped around 49,000 copies, or more than 3%. For its daily averages, this newspaper shows an even larger decline.

Yet by increasing both its ?other paid? circulation and the number of copies discounted more than 50%, this newspaper was actually able to show a slight overall increase on its daily average over a three-year period.

Among all the newspapers highlighted by the Times article, including The Miami Herald, The Denver Post, The Wall Street Journal, The San Jose Mercury News, and The Boston Globe, it barely mentioned this rascally rabbit -- which is, of course, The New York Times itself. Unlike Newsday, whose reporters continue to be its own harshest circ critics, the Times took hard shots at the rest of the industry while downplaying its own struggles.

You can?t blame any of the newspapers (including the Times) that use ?other paid? and deep discounting to bolster declining circulation averages. If anything, the ABC rules encourage -- nearly require -- newspapers to pump up their numbers through a path of least resistance, a.k.a. ?other paid.? With advertising revenues dependent on "paid" ABC numbers, for most circulation directors it would be career suicide not to pump up the volume.

In some cases, ?other circulation? can be a good thing that benefits advertisers. The best any newspaper can hope to do when it comes to distribution is reaching 100% of the households in the areas its advertisers want to target. While you can always find someone who doesn?t want to get the local newspaper, even for free, most households welcome free delivery.

Yet the Times this week used one disgruntled non-subscriber who was unhappy about receiving free delivery of a daily newspaper to cast aspersions on all third-party home-delivery sponsored copies. The Times reporters would have been well-served talking to any of the tens of thousands recipients of free newspapers in Denver, for example, who welcome their arrival as opposed to seeking out the inevitable exception to the rule.

Perhaps the biggest problem when it comes to reporting third-party home delivery is how skewed and non-representative the averages can be. For example, let's say an advertiser sponsors 520,000 copies to non-subscribers for one Sunday. If the newspaper doesn?t put out any other third-party home-delivery copies during the publisher cycle, the 520,000 copies end up being reported as a six-month average of 20,000 Sunday copies. At some point ABC might consider modifying its reporting format to better reflect these one-shot trials. Better disclosure of third-party home-delivery copies will enhance its value to advertisers.

Kudos to the Newsday editorial staff for not pulling any punches when it came to reporting its own circulation manipulations. The New York Times, on the other hand, damned the industry for circulation practices it also engages in, even if it is far from the worst practitioner. ?Other? in ?other circulation? is defined as additional, extra, and supplementary. Unless ABC changes its rules, it's also defined as legal.