It looks as if ABC problems surrounding "sponsored" and check-swap subs is expanding beyond circulation audit bureaus. Now the federal government is getting involved, too.

Newsday, March 11: Circulation probe spreads to magazines

There's no need to panic at this point, but it's probably one more reminder that all the non-revenue circulation sources we use should be looked at with a more critical eye. Placing magazines in waiting rooms and on airplanes is a very valid way to build readership and find new subscribers. And advertisers may be happy to reach those "public place" readers, too. But let's just call it what it is!

Posted by Rebecca Sterner at 11:50 AM | Link   

 
If you want a quick reminder of the rules that are causing ripples of trouble throughout the magazine industry, you need to pay attention to these two things:

1. Make sure your magazines are properly classified.

It seems that sponsorship rules are causing the most trouble. ABC is proposing a clearer definition of what a sponsor can be. Any "agency" that sells subscriptions directly to consumers cannot be a sponsor.

Here is the “rule” ABC wants to follow:

The Board reaffirmed its position that publications and subsidiaries of the publications business operations are not eligible purchasers of consumer magazines. Frequent application of this rule include the inability for a publisher of multiple publications to present a transaction for paid sponsored copies being purchased from one publication for another publication. In addition, an agent, or a third party subscription selling organization may not purchase qualified paid sponsored copies of a publication. Organizations, which are qualified sponsored purchases, shall be those, which can present that an arms length relationship, exist between the purchaser (sponsored) and the publication. Where there is question as to the relationship, those involved should contact ABC auditing department for further discussion.

Organizations that provide service to the reception room industry, transportation market, lodging, and other programs that have similar characteristics would be considered eligible purchasers provided those organizations are not divisions of the publisher or a subscription selling organization (agent). These copies will qualify as paid circulation provided all rules governing the qualification of sponsored sales are met.

For qualification of sponsored sales, the purchaser must pay a qualifying price for each subscription purchased. For consumer magazines, this qualifying price is one cent per subscriptions.

2. Make sure payments for your subscriptions fall into the time period ABC has specified, or you may find some surprise deductions during your audit!

There is no change in this rule, as far as I know. However, now that ABC is looking for back-up in the form of checks from agencies, etc. the 7-month rule is getting reinforced in new ways. Payment for the subscription must be received within the credit payment period as established in Rule F 8.14 Credit Subscriptions, that being 7 months after start of service for subscriptions sold in North America and 9 months after start of service for those sold outside of North America.

Publishers are starting to put pressure on agencies like in-flight services, who have been traditionally slow to pay -- and finding that they may be left "holding the bag." If payments are not received in the time frame, deductions will probably be made by ABC.

Posted by Rebecca Sterner at 9:53 AM | Link