Assessing auditing changes

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Recent auditing rule actions adopted by the Audit Bureau of Circulations caused BusinessWeek to miss the paid circulation rate base it guarantees to advertisers and have other business titles scrambling to determine the possible impact on their paid circulation numbers.

Meanwhile, publishers are studying the effect of rule changes passed by ABC competitor BPA Worldwide in May. (Controlled circulation is unaffected by the changes, both auditing companies said.)

The ABC reporting changes for sponsored sales, which took effect in July, disqualify as paid any circulation derived from EBSCO Consumer Magazine Services, a subscription agent, or InFlight Newspapers & Magazines, a sponsor.

BusinessWeek missed its rate base, which is set at 970,000, by an average of 4.5% for the 12 months ended June 30, 2004, and is preparing another revision to circulation figures that it has already filed with ABC for the 12-month period that ended this June. The revised figures for the most recent period are expected to affect less than 1% of BusinessWeek’s paid circulation, a spokeswoman for the newsweekly said.

Other general business titles said they expect little or no impact as a result of the rule changes, although they are examining their numbers to make sure they are in compliance.

B-to-b trade magazines were mostly unaffected by the rule changes, although the issue is one that publishers are closely watching.

“Ziff’s trade titles are not affected whatsoever,” said Randy Zane, a Ziff Davis spokesman. Gloria Adams, VP-audience development at Pennwell Corp., said, “As far as we know, we are OK.”

Two Pennwell titles, Oil & Gas Journal and Power Engineering , are audited by the ABC, and the circ numbers are not affected by the changes, Adams said.

Nick Cavnar, VP-circulation and database development at Hanley Wood, said the publisher has only one title (Pool and Spa News ) that is audited by ABC and, as the magazine does not have any sponsored sales, it is therefore unaffected by the rule changes.

However, Hanley Wood has two titles (Concrete Construction and Masonry Construction ) that are audited by BPA, and Cavnar said he is concerned about recent BPA rule changes related to paid subscriptions.

BPA has stricter rules than ABC for counting sponsored sales as paid circulation. In 2000, as part of a redefinition of what constitutes paid circulation, the BPA board of directors passed rules that required disclosure of all sponsored, partnership, club/membership and loyalty point subscriptions.

In May, BPA’s board voted to make the rules even more stringent, requiring publishers to define the nature of subscription sponsors and the audiences reached in documentable terms.

Other BPA rule changes include a new sponsored reporting breakout on the first page of the circulation report, the prohibition of monetary compensation to the sponsor for a subscription or single-copy sponsored transaction, the exclusion of subscription agents as sponsors, a new category breaking out “public place” sponsored subscriptions and the exclusion of sponsored copies in the calculation of average subscription price.

“One concern among publishers is not to lose sight of the fact that there are real sponsored programs that are a valid way to sell subscriptions,” said Cavnar. “The concern is to protect the status of true sponsored subscription programs,” he added.

“It is an awful challenge,” said BPA President Glenn Hansen. “How do you prove what is a legitimate versus an illegitimate sponsor?” According to the BPA’s new rules, a sponsorship is not valid if the sponsor is paid for the subscription.

“But how do I know if the publisher gave them a free page? Unless I get in and audit their financial records, I have no way of knowing. Even then, I might not know,” Hansen said.

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