As easy as ABC

Why do publishers lie about their circulations?

People outside the print media may find it baffling that so much effort has to go into policing the circulation claims of publishers.

The latest up before the beak was the Wall Street Journal Europe: accused by the Guardian’s Nick Davies – scourge of  WSJ’s owner, Rupert Murdoch –  of cheating; and cleared, (kinda), by the UK Audit Bureau of Circulations.  The ABC said that there was ‘no clear evidence’ [my emphasis] that copies claimed by WSJE had not been paid for. It noted that payments were ‘complex and at times circuitous’; and added that it would be reviewing its own rules to see if they could be improved. The WSJE’s publisher, Andrew Langhoff, had already paid with his job, for offering editorial coverage to the company which apparently bought many of these copies, for perhaps one cent each, to gift to students.

The WSJ European edition, conceived as a counter-attack to the FT’s incursions into North America, has been a failure. Its average daily sale in Jan-June last year was a trifling 74,800 – but on closer scrutiny, many of those copies were either given away or sold at less than 5% of the published price: in effect more than half that 75K claimed circulation is bobbins. More people buy Mountain Biking UK magazine.

The most egregious UK national paper in this respect is The Independent. It is tiny – outsold by the Liverpool Echo. But it blows its numbers up with 53,000 bulk copies (free or virtually free) each day, to underpin a headline daily circulation figure of 128K. This compares to zero bulk copies at its 3 rivals the Telegraph, Times and Guardian.

The reason some publishers go to extraordinary – and sometimes illegitimate – lengths to maintain the appearance of a sale greater than the actual, stems from the unique two-sided nature of  (most) print media. Other media are either ad-free and paid for by the consumer – the BBC, all books; or free to consume and funded purely by advertising: commercial TV and radio (Sky is the exception that proves the rule – and its ad revenue is dwarfed by its subscription income). Only newspapers and magazines combine the revenue streams, and advertising revenue has been used, since the 17th century, to reduce the purchase cost to readers, and sustain historically handsome profit margins.  That’s why these businesses have been so hard hit by the shift of advertising to the web; and why they are so desperate to export their hybrid, bundled model to digital iterations.

Very crudely speaking, the higher your number of paying customers, the easier it is to sell advertising.  Within living memory (but then, I do remember black-and-white television…), gaming the audit system was relatively easy.  There was the music/clubbing magazine, whose ABC certificate was restated after a whole container full of undistributed copies was discovered quayside in Ibiza; and doubtless there were others not so careless or unlucky.  However, in recent years the ABC has made great strides in toughening both audit rules, and the audits themselves. (Declaration: I was a director of ABC, 2008-2010).  It is now very difficult indeed to fool the audit. The one exception remains copies distributed on mainland Europe. The costs of proving actual sale to individual copy level would far outweigh any benefit.

But the idea that advertising buyers are duped by pumped-up headline ABC numbers is misplaced. Around 4 in 5 display ads in British newspapers and magazines are bought by the top 5 agency networks. These sophisticated buyers deploy huge sums of money, and are certainly capable of scrutinising an ABC certificate.  (In any case, press planning, and pricing, is shaped more by data from the National Readership Survey, the UK’s largest piece of regular media research, consisting of random interviews with adults, and which has no statistical relationship to the ABC. But that’s another topic).

So why  – to return to the question – do publishers inflate their numbers? Buyers don’t fall for it. Readers don’t care: none could tell you the sale of their favourite title. The unhappy answer is that they are lying to themselves, to keep up the publishing company’s own spirits and pride. (I recall the frustration of the MD of a globally-respected newspaper, when his proposal to eradicate surplus copies from the ABC was met with horror by, of all people, the board of the parent company. Their potential embarrassment at being associated with a paper whose sale was apparently shrinking, outweighed the extra profit the move would deliver to shareholders). It is noticeable that even The Independent has been reducing the bulks in its numbers, and perhaps this is linked to a growing corporate confidence as that company’s two other titles, the Standard and the i, confound the doubters, (such as myself) with their differentiated and radical strategies.

Telling yourself that things aren’t as bad as they seem, is a deep human need. As a plank of corporate strategy, though, it is pure poison. I was lucky enough to hear Sir Terry Leary speak a few years back about how he had led Tesco to the world’s 3rd largest retail business. His number one rule, which underpinned all other decisions, was ‘understand the truth of where you are’. This, he noted, was ‘not as easy as it sounds’. Every day spent kidding oneself about the real sales performance of a publication, is a 24-hour deferral of seeking a route to renewal.

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