Questions & Answers

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I have read and studied the new proposed rules from ABC for the changes in Paid and Verified circulation. I am both excited and yet apprehensive about the changes and the impact to our business models. Also, I only see that this will be phased in over a period of time in the next three years. It seems that newspapers will be able to count as Paid any price from one cent on up, while all else will be Verified. This raises several questions in my mind.

Answers above from Steve Hesse

Answer 2: These new rules are basically the same as Canadian, only Canada has had them for several years. Perhaps a contact with the Canada Circulation Association can provide some insight.

Answer above from Lewis Floyd

Answer 3: This reporting change will not have a significant impact on our business model. I say this because, in my opinion, the main reason for changing is to simplify the rules/reports so that hopefully the audit process is more efficient for both ABC and newspapers.

Yes, universal pricing will give us some additional flexibility -- for example e-editions and demo/geographic targets. Keep in mind, however, that under the current ABC rules anyone can sell a subscription today for one cent if they wanted to. In other words, if reducing your price is a good business decision for you today -- don't wait three years -- you can work within the current rules and sell at discounted rates. By the way, it's my understanding that universal pricing ("paid at any price") will not be implemented until April 2009. As such, I don't see any impact to pricing for NIE & third party in 2008. Going forward, I hope that ABC will decide that payment is not required for NIE/ 3rd party copies. That said, will our Publishers want to deliver copies with no revenue? I'll bet that most would not -- or at least require that we cover newsprint and delivery expenses.

There is talk that the reporting of hotel copies will be changed such that hotel copies will be reported as a separate category of circulation under two new line items -- "hotel refund based" or "paid for by hotel". Therefore, by 2010 there will be three key categories of circulation: "Paid for by individual recipient", "Hotel copies/Business Traveler copies", and "Verified Circulation" which will include N.I.E., employee copies, and third party copies.

Does this make Paid less valuable to advertisers than today's value? Again, I don't see that by simply changing the words from "Other" to "Verified" it changes the buying decision for the majority of our advertisers. Does the fact that we don't get a sponsor to pay for NIE copies make this less valuable? Seems to me that our reports/numbers don't mean a thing if our advertisers' cash registers don't ring.

Does this give us the tools we need to focus on overall penetration or audience measurements rather than on simply Paid circulation as a valid measurement? Again, I don't think the reporting change does anything to change this... rather I guess the question is will advertisers embrace the new audience fax measurement. I think it's up to all of us in the industry to discuss readership/audience and for CD's to include our web numbers when discussing "reach in our market".

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