Apple and Amazon Deliver Loophole To Consumer Magazines

Don't be surprised if you start seeing special offers soon for magazines' iPad or Kindle Fire versions of their back issues.

Sketchy sales data from Apple and Amazon have led to a new loophole for magazines whose circulation is checked by the Audit Bureau of Circulations. The loophole will enable them to bolster the reported circulation numbers of a weak-selling issue with single-copy sales of better-selling issues.

Erratic single-copy sales are the bane of many magazines that guarantee their advertisers a ratebase (a minimum number of copies that are purchased or delivered). By the time a publisher realizes an issue isn’t selling well on the newsstand, it’s too late to do much about it before the issue goes off sale. As a result, many publishers build in a cushion – often an unprofitable one, such as free copies sent to hair salons – to ensure that weak-selling issues don’t miss ratebase.

For printed magazines, ABC is accustomed to publishers providing elaborate reports that document exactly how many copies of an issue were sent to legitimate subscribers or sold to customers. Not so with Apple and Amazon, which don’t provide precise information about the number of paying customers (subscribers and single-copy buyers) per issue.

As a result, ABC has authorized new methods publishers can use when calculating the number of electronic copies served per issue. (No such
calculation is required for NOOK editions because Barnes & Noble provides exact numbers by issue.)

“As magazines increasingly incorporate digital editions into their brands, it’s important for these editions to be counted properly and verified with an audit,” ABC said in a recent communication with publishers. But that can be challenging in the “immature space” of digital magazines, it acknowledged, because data about sales of e-editions are “maintained outside of the publishers’ fulfillment systems.” That’s a polite way of saying that the sales and financial reports Apple and Amazon provide to publishers are an incomprehensible mess created by people who have never heard of audited circulation.

One option for publishers reporting e-edition sales is the “Summary Method”, which assumes that each single-copy sale of iPad or Kindle Fire editions is for the issue that was on newsstands when the sale occurred.

Here’s how the loophole works: Suppose a publisher realizes that one title’s August issue, scheduled to be on newsstands until August 7, will be a poor seller. (The publisher may be looking at actual sales data. Or perhaps events that have made the cover less appealing – like a feature on an actor whose new movie turns out to be a flop.)

The savvy publishing company will have a couple of weeks to put together a promotion for the title’s previous hot-selling issues. As long as the sales occur before August 7, they will be counted as being for the weak August issue rather than for a successful previous issue that has already met ratebase. And the brands that advertised in the August issue will be none the wiser.

In the print world, by contrast, only sales of the August issue count toward meeting that issue’s ratebase. And the publisher has to present reams of data, such as where a subscriber lives or where a copy was purchased, that Apple and Amazon simply do not provide.

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