Chronicle Inflating Circulation Numbers with “Third-Party Sales”

by Casey Mills on January 20, 2005

You’ve probably heard the same story over and over – someone cancels their subscription to the Chronicle, but it keeps on coming, like the next incarnation of “The Simple Life.” Or one day, out of the blue, the Chronicle shows up on their doorstep, and continues to show up for weeks on end. An analysis by Beyond Chron has revealed this is a part of a strategy increasingly used by the Hearst-owned newspaper to boost its circulation numbers.

Newspapers rely on annual paid circulation figures to lure advertisers and develop pricing for advertising. Three years ago, the newspaper industry decided to allow “third-party sales” to be included as part of newspaper’s circulation. This practice was formerly frowned upon by the industry, but due to plummeting sales of newspapers across the country, companies are increasingly relying on third-party sales to boost their numbers.

Third-party sales include newspapers distributed to patrons of hotels, airlines and restaurants that are paid for by the owners of these institutions. They also include papers delivered to people’s homes that are paid for by advertisers. In the Chronicle’s case, they categorize this circulation as going to ‘specified geographic locations.’ This category means that, for example, a car dealer could pay to have papers delivered to a specific area code.

According to publishers’ statements provided by the Chronicle to the Audit Bureau of Circulations, the percentage of the Chronicle’s total average paid circulation coming from third-party sales has risen over the past three years from 1.4% to 4.3%. While the Chronicle’s paid circulation dropped by about 4 percent over the same time period, it would have dropped 7 percent if the percentage of third-party sales had remained constant.

The biggest rise in the Chronicle’s third-party sales has been in the aforementioned “specified geographic locations” category. Since the industry changes, the Chronicle now counts more than 19,000 more paid subscribers from Wednesday through Sunday than it used to. Every one of these subscribers has been gained not because they have actively requested the paper, but because an advertiser has paid to have the paper delivered to them.

A recent report by the New York Times revealed this to be a nation-wide trend. After a review of publishers’ statements from over 669 newspapers, the report showed more than 1.6 million people across the country are receiving subscriptions to newspapers they did not pay for. The report also noted that advertisers are growing increasingly wary of this new way newspapers are boosting their circulation numbers.

Filed under: Bay Area / California