• by Michael Shields , August 30, 2004

The Audit Bureau of Circulations (ABC) has completed an audit of publisher Ziff Davis' PC Magazine, confirming that a small portion of the tech title's subscriptions must be reclassified. Significantly, the ABC found nothing wrong with the integrity of the magazine's subscriber list.

The audit, which examined the book's 2002 and 2003 ABC publisher's statements, expanded on a July 12 ruling that required Ziff to reclassify some subscriptions as "analyzed non-paid direct request" rather than "paid."

At the time of that ruling, Ziff Davis was considering an appeal. With the audit announcement, that was a dead issue. "There is no appeal," said Tim Castelli, senior vice president and group publisher of Ziff Davis Media. "We are cooperating fully."

Ziff had been considering contesting the ABC's findings based on the belief that the subscriptions in question belonged in the "paid" category. However, these subscriptions, which had been acquired through a third-party agent, had not been paid for in a timely fashion, according to ABC rules, in which subscriptions must be paid within seven months to qualify. Hence the reclassification.

"This is all related to the agent and timely receipt of payment," said Castelli, adding, "This is simply just a reclassification. It's really a technical issue. It doesn't change anything about the quality of the subscriptions. We have data on these folks."

The audit appears to back Castelli up, as PC Magazine's total circulation figures remain unchanged by the reclassification. In fact, ABC's audit procedures verified that all of these individual subscribers were delivered copies of the magazine.

The magazine's 2002 Audit Report states that an average of 63,753 subscriptions, out of a total average circulation of 1,232,266, are categorized as "analyzed non-paid" (roughly 5 percent). In addition, PC Magazine's 2003 audit report and its publisher's statement for the first half of 2004 reflect an average of approximately 260,000 subscriptions as "analyzed non-paid."

Going forward, Castelli indicated that Ziff could bring down the number of "analyzed non-paid" subscriptions by ensuring more timely payment schedules when working with agents.

One of those agents may or may not be Synapse Inc. That company, which is owned by Time Inc., was censured earlier this summer by the ABC, which in turn brought Ziff's circulation issue to light. Castelli would not comment on whether the company's relationship with Synapse will continue.

"We are taking steps to ensure that all agents we work with are in lock step [with ABC rules]," Castelli said. "We are developing a new process internally."

He hinted that while Ziff's Publisher's statements were being thrust into the spotlight, the issues being faced are not unique to PC Magazine. "The entire publishing industry is dealing with this," he said.

Another issue that publishers are addressing, particularly technology titles like PC Magazine, is that of digital subscriptions. Late last month, rival publisher International Data Group (IDG), which produces PC World took Ziff to task for its use of digital subscriptions, particularly through third-party agents via incentive offers. As of December 2003, PC Magazine had 165,442 digital subscriptions, or around 13 percent of total subscriptions.

At the time, IDG CEO Pat Kenealy questioned Ziff's integrity and implied that it was damaging the digital subscription business in general.

Castelli vehemently dismissed such claims. "This has nothing to do with digital subscriptions," he said. "That is a totally separate subject."

Overall, Castelli treated the news as nothing more than harmless bookkeeping, as he focused on the positive. "PC Magazine is having a great year," he said. "It continues to be the No. 1 technology publisher out there."