In what could signal a sweeping change in the way magazine advertising is bought and sold, Time is seriously considering the elimination of its rate base, the circulation it guarantees to advertisers. While the Time Inc. newsweekly would not be the first publication to do so, it would be by far the most prominent, as one of the magazine industry’s leading titles, and the largest-circ newsweekly. The move could pave the way for publishers, especially for other Time Inc. titles such as Money and Essence, to rely instead on metrics that track reader engagement and audience levels.
Over the past year, top Time Inc. executives have held meetings to discuss a number of options that could alter the newsweekly’s circulation strategy, said Time Inc. insiders. One such meeting in midsummer recommended a range of options from doing away with Time’s rate base to chopping its guaranteed circ by as much as 25 percent to equal that of rival Newsweek’s 3.1 million circ, according to a Time Inc. source familiar with the meeting. Time is expected to make a decision as early as November, which is just two months shy of when the weekly’s on-sale date moves to Friday from Monday.
“There have been a lot of meetings about time on a lot of levels,” acknowledged a Time representative. “Many things are being discussed and considered, but nothing beyond what has been announced has been decided. The focus right now is entirely on [managing editor] Rick [Stengel]’s editorial vision for Time and Time.com, and any business decisions will follow that.”
Time’s bold plans come as it faces both internal changes and external pressures. In July, Stengel, a Time veteran, became m.e. And like his counterparts at Newsweek and U.S. News & World Report, Stengel has his hands full with making his magazine relevant in a news cycle that’s 24/7.
But there also may be other forces that are encouraging Time to act, namely circulation pressures. Publishers must contend with tighter circ rules imposed by the Audit Bureau of Circulations. Effective with the reporting period covering the first six months of this year, publishers were required to break out public-place copies and those copies sent to individuals who are likely to have a strong affinity for the magazine (also known as negative-option subs). Previously, such copies had been lumped into the paid circulation category; they now have been reclassified as verified (unpaid) circulation. That means rate bases may now include a blend of paid and nonpaid circulation, which could lead advertisers to begin scrutinizing how much of a rate base is paid, or a combination of paid and verified. Compounding this is the soaring cost of bulking up on subscriptions via direct mail or third-party agents.
“The rate base is really just an anachronism,” said Rebecca McPheters, who is president of McPheters & Co., a consulting and research firm. “The value to the advertiser is not the number of copies or how they are paid for or distributed, but rather who reads it and who buys the advertiser’s product. It would be a very brave thing for Time to do and would be an exciting development for the industry.”
While Time’s paid and verified circulation rose 1.2 percent to 4 million in this year’s first half compared to the year prior, according to the ABC, its verified circ totalled 350,623. Newsweek’s paid circulation fell 1.8 percent to 3.1 million in the same period (the title claims no verified circ).
If Time were to eliminate its rate base, it would not be alone. Some 43 ABC-member titles, or 17 percent of those titles making a rate-base claim, threw in the towel between 2000 and 2005, according to Capell’s Circulation’s Rate Base Review (including Newsweek Asia and Newsweek Latin America). Many of the publications, however, are enthusiast magazines that rely on endemic advertisers that are drawn to the targeted readership.
But it may be a far tougher sell for Time to lose its guaranteed circ—at least one senior media buyer has a problem with it. “In the environment we are currently experiencing, in terms of transparency and accountability, it would be difficult to do business with a book that won’t guarantee a rate base,” said Robin Steinberg, senior vp, director of print investment for MediaVest. “The question is, will advertisers agree to a different form of measurement that is exclusive of circulation? And if other magazines follow suit, will buyers just move money to different media?”
These are all good questions that Time execs, who wouldn’t comment for this story, must be considering. But if it’s simply a matter of slashing millions of circ off the rate base, Time would certainly not be the first (see chart). Steinberg said she would be supportive if Time were to make dramatic cuts.
“Time should have done this a year ago,” Steinberg said. “There’s been a change in the way people consume news and ultimately it’s driving down circ and audience in this category and medium. However, viewership is increasing online.”
