Digital Subs Loom As New Magazine Circulation Issue

by Michael Shields, Jul 27, 2004, 12:00 AM

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A relatively obscure circulation development that has mainly been a source of contention within tech publishing circles may be emerging as a hot issue for mainstream magazine publishers and their advertisers.

"What is the role of digital subscriptions in circulation?" asked Pat Kenealy, CEO of tech publisher IDG, framing the issue for the industry overall. While such subscriptions, which are based on digital versions of a magazine that are downloaded onto a subscriber's computer, are still relatively small for most general interest publications, they have become an important component for some publishers, particularly tech titles like those published by IDG and its competitors.

Kenealy, whose company publishes IT-professional-targeted titles like Computerworld and Macworld, has been telling anyone who will listen that rival publisher Ziff Davis is misleadingly pumping up its rate base for PC Magazine by giving away free digital subscriptions. Kenealy even claims that Ziff Davis is taking advantage of a cozy relationship with former employees to facilitate the process.

IDG's gripe is that Ziff Davis is using sponsored or partner-paid subscriptions, a common, though often criticized practice in the print world, to provide consumers free subscriptions as part of larger purchases or in exchange for personal data. Kenealy has a problem with Ziff's giving away digital subscriptions in this manner because of they way they are tracked.

Currently, auditors allow publishers leeway when they count digital subscriptions, as both the Audit Bureau of Circulations and BPA International require only the reporting of notification e-mails which are pushed to subscribers, while giving publishers discretion as to whether they report on actual downloads of these digital copies.

To Kenealy, that is not good enough. He believes that it is very easy for publishers to hand out free digital subscriptions with any real indication that these copies are read. "If you pay $25 dollars, you are likely to download the copy," he said, while freebies may be completely ignored.

Last fall, IDG's PC World announced it would be adhering to a higher standard, reporting only downloaded copies as paid circulation. Yet Kenealy fears that his competitor's failure to follow suite is hurting the industry and the growth of digital distribution.

"I don't want the whole tech segment tainted," he said. "I don't want digital subscriptions to come under negative bias among advertisers."

To date, digital subscriptions represent a small part of the magazine business. The practice, where subscribers receive full editions of print titles to be downloaded on a regular basis, has been adopted mostly by IT-focused titles and business-to-business publications. In most cases, these subscribers receive an e-mail notification that their titles are available and can choose when to retrieve the issue.

Peter Black, senior vice president of marketing at BPA International, says that only 50 to 60 of the titles that his company audits use digital subs, out of roughly 2,600 monitored books. For most of these magazines, Black said, digital subscriptions represent a small percentage of total circulation.

Auditors admit that the tracking of these subscribers is still evolving.

"It is a debatable point," Black said. "At what point do you actually count subscriptions?" The BPA has formed a digital committee to further explore the topic, yet the tendency has been to hold off on being too strict. "The idea has been, 'Let's allow it to grow, not put to many demands on it,'" Black said.

ABC spokesperson Heidi Chen said that digital circulation has been part of an "ongoing discussion. The question of receipt is something that is open to debate," she said.

For Ziff Davis' PC Magazine, digital subscriptions represent a significant portion of circulation: over 170,000 subs were recorded in its last official audit. In contrast, IDG's PC World delivered just 2,359 digital subscriptions in the second half of 2003 out of a total delivery of over 988,000 issues.

As for Kenealy's contention that Ziff Davis is using former employees to aid in its circulation growth, he is referring to digital subscription technology company Zinio. Recently departed Zinio CEO Mike Edelhart was a longtime Ziff Davis executive, while Zinio's current executive vice president Peter Longo was the former publisher of PC Magazine.

Longo is very open about the company's relationship with Ziff Davis. He says that Zinio manages digital subscriptions for Ziff's PC Magazineand eWeek, but the company, "has a relationship with almost every major publisher." That includes several IDG titles.

Meanwhile, Kenealy claims that Zinio has access to magazine download data for every title it does business with, but that the company rallied against stricter auditing rules.

According to Longo, Zinio does solicit subscribers using various third party agents. One of those agents is Synapse Inc., which several weeks ago was censured by ABC. Following that censure, Ziff Davis publicly defended itself in a statement where it revealed that ABC may require the company to reclassify some subscriptions from "paid" to "analyzed non-paid direct request."

The press release also revealed that, Synapse, through its Web site freebizmag.com, had offered free subscriptions to PC Magazine to visitors who agreed to complete a survey paid for by a third-party sponsor. No mention of digital subscriptions was made in the censure, and Longo claims that digital subscriptions are a "very small piece" of Zinio's work with Synapse. According to Longo, Zinio has undergone an extensive audit of its practices.

Ziff Davis declined comment for this story.

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