Paid Circulation

  1. Introduction
  2. Association Subscriptions (Paid)
  3. Combination Sales and Add Ons
  4. Individual (Paid)
  5. Multi-Copy Sales (Paid)

Introduction

This guide is intended to explain and clarify the rules and guidelines governing the more frequently used promotional programs that generate circulation classified as paid subscriptions or paid single copy for business publications.

This guide is not intended to be all-inclusive, but rather provides general guidance on the most common business publication initiatives used in today’s marketplace. It defines the various types of common promotions, identifies and explains the AAM requirements for the program, and provides guidance on how to design compliant promotional material.

The rules, policies and requirements identified and explained in this guide are those in effect for all issues with a cover date of Jan. 1, 2008 and forward.

As new rules become effective, these requirements are subject to change. It is the publishers’ responsibility to ensure their promotions are executed in compliance with all AAM rules and guidelines in effect at the time they are executed. The most current rules and guidelines can be found on the AAM website.

Upon request, AAM’s Publisher Relations department provides a confidential review of members’ programs. To take advantage of this review or if you are developing an initiative that is not addressed in this guide, please contact your Publisher Relations manager.

No part of this guide may be reproduced without making this forward a part thereof and without the consent of the Alliance for Audited Media.

Association Subscriptions (Paid)

Definition

Association subscriptions are defined as subscriptions included as a benefit of membership to an association. An “association” is defined as any organization or society that meets postal and federal or state tax rules as a not for profit or non-profit entity. See AAM Rule D 2.3 Association, Organization and Society Subscriptions.

As a reminder, AAM defines paid circulation as subscriptions and single copies paid at an amount of at least one cent, net of all considerations. See AAM Rule D 1.1 Paid Circulation.

A “consideration” is any item offered to the purchaser that may induce the sale of the publication. This includes, but is not limited to free gifts and discounted products or services (e.g. advertising). Therefore, the amount paid by the purchaser of the magazine must be at least one cent, after you subtract the market value of all of these inducements from the purchase price.

Qualification

For an association subscription to qualify and be classified as Association, the following AAM requirements apply (See Rule D 2.3 Association, Organization or Society Subscriptions):

  1. All association members must be notified that their annual dues or membership payment includes a subscription to the publication.
  2. A portion of the annual dues (or contribution) must be allocated to the subscription.
    • The amount allocated for the subscription must be no less than one cent.
    • The annual dues (or contribution) must be equal to or greater than the value allocated to the magazine subscription, plus any premiums received outside of the benefits of the membership.
    • Upon application for new membership, the consumer must be informed a magazine subscription is included as a benefit of membership and the value assigned to the subscription.
    • The portion of the annual dues (or contribution) allocated for the subscription must be clearly stated on every invoice or renewal notice for dues, annual membership payment or contribution.
    • The subscription value may be presented as either deductible or nondeductible, but all invoices or notices must state which approach applies.

Example of Acceptable Offer

___ YES! I want a one-year membership to Proto Association.
Enclosed is my $20.00. I understand $6.00 will be applied to a one-year subscription of Proto Business Journal and is nondeductible from my dues.

Name ________________________
Address ______________________
City, State, ZIP _________________

In this example, the consumer is notified the subscription is included with membership, the value of the subscription is at least one cent, the subscription value is noted as nondeductible and the annual dues are at least $6.01.

Reporting

The average copies served from both deductible and nondeductible association programs are disclosed in paragraph 1A as “Association.” Details of the association programs must be reported in the explanatory paragraph of the publisher’s statement and audit report.

Combination Sales and Add Ons

Definitions

AAM Rule D 8.5 Subscription/Single Copy Sales in Combination defines “combination sales” as the sale of two or more different publications together as a package and where the price for the combination package is less than the sum of what each publication may be purchased for separately.

“Add-ons” are defined as the addition of a new publication served in conjunction with the consumer’s existing subscription.

In situations where a publication consists chiefly of reference data rather than general reading material, premium requirements will apply, not combination sales.

As a reminder, AAM defines paid circulation as subscriptions and single copies paid at an amount of at least one cent, net of all considerations. See AAM Rule D 1.1 Paid Circulation.

A “consideration” is any item offered to the purchaser that may induce the sale of the publication. This includes, but is not limited to free gifts and discounted products or services (e.g. advertising). Therefore, the amount paid by the purchaser of the magazine must be at least one cent, after you subtract the market value of all of these inducements from the purchase price.

Subscriptions

The following qualification requirements apply for combination sale subscriptions (when two or more publications are sold together as a package for less than they can be purchased separately):

  1. A minimum of one cent per publication must be collected, net of considerations.
  2. The contractual portion of the offer must identify the subscription term for all publications and total purchase price.
  3. None of the promotional materials may state or imply that any of the publications are free, no additional cost, no extra charge or synonymous language.
  4. The promotional materials reflecting the combination sale are not required to provide the consumer with an option to purchase each publication separately. However, subscriptions for each must be available for sale separately in the general consumer marketplace.

The amount of money allocated to each title in the combination sale, for purposes of any price classification, shall be based on the following:

  • Stated values - the value of each subscription in the sale if referenced on the solicitation (the sum of which must total the combination sales price).
  • Pro rata value – the allocation of the combinations sales price based on each publication’s annual suggested price or basic price.

The following qualification requirements apply for add-on subscriptions (when a new publication served in conjunction with the consumer’s existing subscription):

  • The individual is notified a second publication is being added at time of renewal.
  • A qualifying price is being paid for all publications in the sale.
  • Either of the following criteria are met:
    • The consumer must opt-in to the added publication by paying an incremental amount for the additional subscription or the option to reduce the amount paid if the subscriber chooses not to take the additional subscription.
      or
    • When the consumer is not provided with the option to opt-in/opt-out of the additional subscription through incremental pricing, no reference or statement may be made in the promotion that infers the added publication be “free” or at no additional cost, or similar language.

The amount of money allocated to the add-on subscription is the amount charged incrementally if the additional publication is accepted or the amount reduced from the existing contract if additional publication is declined.

Single Copy

In a newsstand environment, the following qualification requirements apply for combination sales:

  1. The sale must comply with the “three-stack policy.” This means that each publication in the combination package must also be available for purchase separately at the same retail location where the combination sale is sold. This three-stack policy applies to all locations where the combination package is sold.
  2. The price at which each publication is sold separately must be less than the package price, but no less than one cent each.
  3. A minimum of 100 percent of the individual selling price for the highest priced publication and one cent for each additional publication must be collected for the combination package.
  4. None of the promotional materials may state or imply that any of the publications are free, no additional cost, no extra charge or synonymous language.

Reporting

The average copies served from combination sales and add-on programs are disclosed in paragraph 1A as “Individual.” Details of the programs must be reported in the explanatory paragraph of the publisher’s statement and audit report.

Individual (Paid)

Definitions

Paid, individual subscriptions or single issues are copies ordered and paid for by an individual for their own personal use, and where the magazine was the primary purchase by the consumer.

As a reminder, AAM defines paid circulation as subscriptions and single copies paid at an amount of at least one cent, net of all considerations. See AAM Rule D 1.1 Paid Circulation.

A “consideration” is any item offered to the purchaser that may induce the sale of the publication. This includes, but is not limited to free gifts and discounted products or services (e.g. advertising). Therefore, the amount paid by the purchaser of the magazine must be at least one cent, after you subtract the market value of all of these inducements from the purchase price.

The Word Free

It is possible to construct offers where the circulation is intended to be claimed as paid, but part of the total delivery term is presented to the consumer as “free,” “trial,” “no additional cost,” “bonus,” “no extra cost,” “gift,” or other synonymous language.

For the entire delivery term to qualify and be classified as paid circulation, the following is required:

  • The promotional material must present to the consumer a perceived dollar value for the entire delivery term.
  • This perceived value is accomplished through the existence of a contractual agreement in the offer stating the total term and total amount charged. The contractual agreement is the portion of the offer where the consumer takes action to order the subscription—checking a box, completing requested data, selection of service term or verbal agreement in a telemarketing offer.
  • The purchase price for the entire delivery term must be at least one cent.
  • See AAM Rule D 1.1 Paid Circulation Defined, section (d).

Example:

____ YES! Send me 3 trial issues and if I like Prototype Business Journal, please bill me for 9 more (that’s 12 issues in all) at the great price of only $20.00!

Name___________________________________________
Address_______________________ City________________ State _____ ZIP _______

 

Premiums

Premiums are defined as any item or inducement offered to an individual to entice them to purchase the business journal.

The following items are not considered premiums:

  • Publications (periodicals and newspapers) - combination sales rules apply.
  • Free or discounted access to the archives or back content.
  • Free or discounted access to online content or electronic edition from the same editorial home page of the publication.
  • Items offered to current paid subscribers as an inducement to convert to payment method for a future subscription.
  • See also AAM Rule D 8.2 Premium Defined.

For subscriptions or single copies sold with premiums to qualify and be classified as paid circulation, the following is required:

  • The purchase price must be no less than one cent plus the full value of the premium.
  • The “value” of the premium is considered the HIGHEST of either:
    • The recognized retail price (cost to purchase in the marketplace)
    • Represented, stated or advertised value (any value stated in the offer)
    • Cost to the publisher (to acquire or manufacture)
  • See also AAM Rules D 8.3 Premiums with Subscriptions/Single Copy Sales and D 8.4 Premiums with Combination Sales.

Premiums must be reported in the explanatory paragraph of the publisher’s statement and audit report.

Example:

If a premium costs $5.00 to manufacture, the promotional material states a value “worth $4.99”, and the product is not available for sale in the marketplace, then a value of $5.00 is assigned to the premium (highest value). Any subscriptions or single copies sold using this premium must have a purchase price of no less than $5.01 (one cent for the subscription or single issue plus the full premium value).

 

Collection Stimulants

A collection stimulant is anything offered to induce prompt payment or provide demographic information for a subscription already ordered. A collection stimulant may be extra issues of the publication, a cash discount, or anything of an extraneous nature. See AAM Rule D 7.3 Collection Stimulants.

If a publisher elects to use extra issues for inducement of payment, the solicitation must notate the total number of issues to be served for the total payment due. Per AAM Rule D 1.1 Paid Circulation, if a contractual agreement does not clarify the total term of service for the total cost, value is not implied for the extra issues and, therefore, the extra issues will not qualify as paid circulation.

If a publisher elects to use a product other than extra issues of the publication, the qualification rules are the same as premiums.

  • The purchase price must be no less than one cent plus the full value of the product.
  • The “value” of the product is considered the HIGHEST of either:
    • The recognized retail price (cost to purchase in the marketplace)
    • Represented, stated or advertised value (any value stated in the offer)
    • Cost to the publisher (to acquire or manufacture)
  • See AAM Rules D 8.3 Premiums with Subscriptions/Single Copy Sales and D 8.4 Premiums with Combination Sales.

Collection stimulants must be reported in the explanatory paragraph of the publisher’s statement and audit report.

Multi-Copy Sales (Paid)

Definition

Per AAM Rule D 2.1 Multi-Copy Sales are subscriptions and single issues purchased in quantities of two or more to promote the business interests of the purchaser.

As a reminder, AAM defines paid circulation as subscriptions and single copies paid at an amount of at least one cent, net of all considerations. See AAM Rule D 1.1 Paid Circulation.

A “consideration” is any item offered to the purchaser that may induce the sale of the publication. This includes, but is not limited to free gifts and discounted products or services (e.g. advertising). Therefore, the amount paid by the purchaser of the magazine must be at least one cent, after you subtract the market value of all of these inducements from the purchase price.

Post–expire copies served from multi-copy subscriptions are not eligible for inclusion in paid circulation.

There are three types of paid, multi-copy sales, as follows:

  • Multi-copy same addressee
  • Sponsored, Individually Addressed
  • Sponsored, Educational Multi-Copy Sales

Multi-Copy Same Addressee

Multi-copy same addressee circulation represents sales of two or more subscriptions or single issues to third-parties where the copies are shipped in bulk to the purchasers and redistributed for the purpose of promoting their business interests. In this situation, the publisher is likely not to know the end recipient.

Example:

Company X purchases 5,000 copies of Good Food Business Journal. Company X redistributes these copies to individuals who attend their trade shows or other related events.

Multi-copy same addressee circulation also includes subscriptions or single issues purchased by corporations, institutions or individuals for their own employees, but where the copies are shipped in bulk and records are not available to support distribution to employees, subsidiaries or branch offices.

NOTE: Subscriptions or single issues purchased by corporations, institutions or individuals for their own employees shall be classified as "Individual" subscriptions if evidence is maintained by the publisher to support the copies were distributed to employees, subsidiaries or branch offices.

Sponsored Individually Addressed

Sponsored, Individually Addressed circulation represents sales of two or more subscriptions or single issues to third-parties where the copies are individually addressed and mailed or the copies are shipped in bulk to the purchaser, but the publisher maintains documentation identifying the designated recipients by name and title. In this situation, the publisher knows the name and title of the end recipient.

Example:

Company purchases 5,000 Copies of Good Food Business Journal for distribution to their loyal customers. Company X provides a mailing list (individual names and addresses) to The Good Food Business Journal who mails a copy of the publication to each individual on the list. As another option, Company X may choose to have all 5,000 copies mailed directly to them. Company X redistributes the copies to specific individuals. Though Company X handles the distribution, they provide a list of the recipients (names and titles) to the publication for the audit.

NOTE: If the subscriptions or single issues are purchased for distribution to their own employees, please see multi-copy same addressee.

Sponsored, Educational Multi-Copy Sales

AAM Rule D 2.2 Sponsored Educational Multi-Copy Sales allows business publications to solicit funds from corporations or other businesses to sponsor the purchase of subscriptions distributed to college/university students enrolled in studies within the “Field Served” of the publication provided the following criteria is met.

  1. Funding is solicited for the purchase of subscriptions to a specific program.
  2. If the sponsoring business is also an advertiser to the publication, the sponsorship amount must be incremental to the advertising purchased by the sponsor.
  3. Publishers must allocate at least one cent per subscription (or single copy) from the sponsorship funding for each sale.
  4. Recipients must be advised that the subscription/single-copy sales are being provided from sponsorship funding.
  5. No distribution is to be made unless the publication has received funding in advance.
  6. The paragraph related to general explanations shall include a description of all programs included in paid circulation. Such explanation should include a description of the sponsor(s), quantities purchased, amount allocated by the publisher from the sponsorship funding for each subscription/single-copy sale, and the average included in paid circulation. 

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