ABC Business Division Moves to Kill 50% Rule

Folio: The Magazine for Magazine Management, Dec 15, 2000 by Geoff Van Dyke

Business division nears finalizing rule change, while disclosure issues hinder change on the consumer side.

The Audit Bureau of Circulations' board of directors last month gave first passage to a reporting modification that effectively eliminates the 50 percent rule for its business publication division.

If the changes are approved for final passage, copies sold at any price more than one cent will be counted as paid circulation in the business publication division. ABC expects final passage at the board of directors meeting in March 2001, at which point the board would also decide when the changes go into effect. ABC president and managing director Michael J. Lavery says implementation "could be as early as the publisher's statements beginning July 1, 2001."

The board's decision to give first passage to the redefinition of paid circulation comes one month after BPA International announced that it would drop the 50 percent rule effective January 1,2000. "ABC is trying to stay in line with BPA because they've really taken the initiative," says one circulation executive at a major business publisher. "They're definitely following suit."

At ABC, reporting criteria is still being developed. "The business publications are looking to report production by bands relative to basic price," says Peter Johnson, vice president, corporate circulation director of Crain Communications. In other words, statements would break out the percentage of magazines sold at various price points. The increments of those "bands," or percentages, have not been decided. But Johnson notes that both publishers and buyers have agreed on this method.

Although the details are still being hammered out, circulators say they are gearing up for the change. "As a circulator, this is a godsend," says Micki Laporte, group circulation director for Cahners Business Information, citing increased flexibility with promotions and opportunities to use incremental renewals. "But it dilutes paid circulation as a media buy. It's going to be difficult to sell the strength of paid circulation in the future."

Change, however, is not occurring as quickly on the consumer side. The issue of ratebase guarantees is not as topical with business magazines, notes Lavery. When it comes to consumer magazines, he says, issues remain over which copies will be credited as paid circulation against ratebase. "The hurdles aren't that big," Lavery says. However, disclosure requirements for copies that are to be qualified as paid circulation have not yet been determined, he says.

Alec Gerster, chairman of Mediacom, a unit of the Grey Global Group, explains that, without the 50 percent rule, media buyers and advertisers want to understand how many copies were sold at various price points.

"If you looked at a paid publication in the past and the circulation was three million and now it's 4.5 million, is that because someone dumped a lot of copies at one penny?" Gerster says. "Or is that because there was genuinely innovative consumer marketing that led to the increase?"

ABC is "optimistic," according to Lavery, that the rule changes in the consumer division will receive first passage in March 2001. Meanwhile, ABC is in the process of organizing meetings for January 2001 to discuss issues that still have not been settled on the consumer side.

If ABC's board goes forward with the proposed changes in both divisions, it appears that the implementation of the rules would take place at different times. In that case, Lavery says, ABC will be working to ensure that fulfillment issues are consistent for both divisions.