NEW CIRCULATION RULES CALLED GOOD COMPROMISE

By: Mark Fitzgerald 'Paid Circulation' Takes On a Whole New Meaning April 1


After eight decades of fiercely defending the proposition that newspaper copies
must sell for at least half of their cover price to qualify as "paid
circulation," the Audit Bureau of Circulations (ABC) on April 1 will start
counting as paid even those copies discounted as deeply as 75% off their basic
prices.

ABC's board of directors gave final approval to the new paid-circulation
definition at its March 10 meeting, ending at least temporarily a debate that
pitted large papers against smaller ones. Smaller papers in general supported
retaining the rule requiring copies to be sold at no more than 50% off their so-
called "basic price," while an increasing number of metro newspaper publishers
would like to see ABC move to an "open pricing" concept that counts as paid
circulation copies that are sold at any price.

ABC's compromise was to lower the paid-circulation threshold to 25% - but
require papers to disclose more details about how their circulation is priced.
Under the new rules, newspapers will report paid circulation in three
categories: "Paid for by individual recipients (sold at 50% or more of basic
price)"; "Paid for by individual recipients (sold at 25% to 50% of basic
price)"; and "Other Paid Circulation."

It's a good compromise, said J. Michael Womack, vice president/distribution for
the 248,144-circulation Indianapolis Star. "I'm of a mind to be sort of
in-between on this," Womack said. "We've spent a lot of time, and ABC has spent
decades, building up the paid criteria as a way to value a paper, so I would be
a little hesitant about going completely to open pricing."

Like other Gannett Co. Inc. papers, the Star has been preparing for the
new pricing definitions. "From an Indy perspective, we certainly see some
opportunities," Womack said. "We're looking at a couple of specific
[circulation] groups, such as Newspaper In Education." The paper, which now has
only a modest program selling copies to hotels at deep discounts, may expand
that area, he added.

ABC's new rules make hotel programs more attractive to newspapers because copies
can now be counted as paid circulation rather than in the less-esteemed "bulk
circulation" category. The trade-off is that newspapers will have to sell copies
at no more than 75% off the basic price, and they must adhere closely to the
existing but often-ignored rule that hotel guests must either specifically
request a newspaper or get an itemized charge on their hotel bill.

The new regulations also require newspapers to disclose where they are selling
copies below 50% of their cover prices. Newspapers must report circulation by
ZIP code if the number of copies sold between 25% and 50% of the basic price
exceeds 20% of the area's total circulation.

A new format for ABC reports also requires papers to disclose far more detail
about circulation than had been mandated. Newspapers reporting subscription
circulation, for example, must disclose the number of "individually ordered/paid
subscriptions, gift subscriptions, association copies, partnership
subscriptions, public place copies, sponsored subscriptions, and grace copies."

The new rules move U.S. newspapers closer to the situation enjoyed by their
counterparts in Canada, where ABC has allowed open pricing for several years.
Despite the discounting opportunities, the great majority of Canadian newspaper
copies still sell at 50% or more of their basic price because publishers want
the circulation revenue.

Changes in Audit Bureau of Circulations policy:

o Allow newspaper copies sold for 25% or more of the basic price to be counted
as paid circulation.
o Permit copies distributed to hotel guests to be counted as paid circulation.
o Require ZIP-code reporting when discounted sales exceed 20% of an area's total
circulation.
o Establish three new categories for reporting paid circulation.



Mark Fitzgerald (mfitzgerald@editorandpublisher.com) is editor at large for E&P.



Copyright 2001, Editor & Publisher.