No dodging circ issues

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The time is now for magazine executives and advertisers to own up to the mess the circulation side of the publishing equation has become, and to confront tough questions, such as whether rate bases are artificially inflated (answer: They are).

Sellers of print media space want to change Audit Bureau of Circulations rules that define paid circulation as subscriptions sold for at least 50% of the basic rate. Under pressure to sell subs to meet rate base (the circulation level guaranteed to advertisers), publishers want ABC to count a subscription as paid regardless of price. But they don't want to offer advertisers any other information in return, such as the average price paid for all subscriptions.

What magazines really are doing, it seems clear, is throwing a blanket over the tactics used to pump up circulation. The situation is deteriorating along with the number of orders coming back from sweepstakes mailings; by one account, sweepstakes mailers will produce 70% to 90% fewer subscriptions this year than last.

After the early '90s recession, there was much chatter about the need to restore circulation profitability; consumer magazines, after all, are a two-revenue-stream business. But with ad pages booming, magazines once again forgot about the "other" revenue source. Higher rate bases mean higher ad rates, so circulation numbers are inflated at any cost.

Advertisers are as much to blame as publishers for putting magazines in this situation. Although they talk about circulation quality, advertisers still interpret rate base reductions as signs of weakness. Instead, they should encourage magazines to charge a fair price for their products and let circulation settle at natural levels. Publishers would then be more willing to publish such measures as average price paid and renewal rate. One reader willing to pay full freight and re-up is worth 10 sweepstakes subscribers.

This remedy makes sense but will require a massive overhaul of current business practices. That doesn't mean it's not worth the work. This isn't something magazines should do; it's something they must do.

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