Impact of Frequency Reductions

How altering your magazine's frequency may impact the reporting of subscription circulation.

 

Some magazine publishers may consider restructuring their business models through tactics such as frequency reductions to reduce costs. A frequency reduction is defined as a decrease in the number of print issues published annually, which results in an extension of current subscribers’ expiration dates.

If you are considering a frequency reduction, please note the qualification and reporting impact of the subscription circulation effected. See also: AAM Rule F 9.3/F 109.3 Extensions Because of Reduction in Frequency.

 

Extension of Subscription Term

A publisher may choose to extend the expiration dates of their paid subscribers because of a frequency reduction. This is an optional strategy the publisher may wish to implement, not an AAM requirement. The copies served as a result of the extension may be eligible for inclusion in paid circulation, provided the new expire date is limited to fulfilling the delivery of the same number of issues originally ordered and promised to the subscriber.

For example:

  • Yesterday magazine currently publishes 12 issues per year.
  • Jane Smith ordered and paid for a one-year, 12-issue subscription. She has been served five issues and has a copy liability of seven issues left on her account.
  • Yesterday magazine decides to reduce their frequency to 10 issues per year.
  • The magazine may decide to extend the expiration date on Jane’s account to complete service of the seven issues still due to her. The issues served to Jane as a result of the extension may qualify and be classified as paid circulation on AAM documents.

If a publisher decides to increase the frequency of the magazine before the extended accounts reach their new expiration date, then these extended accounts must be readjusted upward so the total number of issues served reflects the increase in frequency.

If you plan to reduce your frequency and therefore extend the expiration dates of current subscribers, please notify AAM in advance.

 

Impact on Average Price

The calculation used for annualizing the average price element of a publisher’s statement is based on the number of issues published in a specific one-year time frame. A frequency reduction only effects determining the annualized average price by reducing the annualizing factor used for the reporting period.

For example:

  • Tomorrow magazine planned to publish 12 issues during the 12-month sales period of July 1, 2015, to June 30, 2016.
  • On January 1, 2016, they decided to reduce their frequency to 10 issues, five in the first half of 2016 and five in the second half of the year.
  • For the December 2016 publisher’s statement:
    • The average price period covers July 1, 2015, to June 30, 2016.
    • There were six issues published from July to December 2015 and five issues published from January to June 2016.
    • The frequency used for the annualized average price calculation is 11 issues.
  • For the June 2017 publisher’s statement:
    • The average price period covers January 1, 2016, to December 31, 2016.
    • There were a total of 10 issues published in 2016.
    • The frequency used for the annualized average price calculation is 10 issues.

 

Audit Records and Additional Cost

When subscription expiration dates are extended because of a frequency reduction, the following documents should be retained for the auditor’s review:

  • A mail galley for the issue published immediately before the extension in expiration dates occurs. This should reflect the original expiration dates. AAM prefers this information be retained in an electronic format for auditor review.
  • A mail galley for the first issue published that reflects the extended expiration dates. As an alternative to the galley, you may retain a list indicating the dates to which each subscription is extended. AAM prefers this be retained in an electronic format for auditor review.
  • All typical subscription data reviewed during the audit—original media, account history, payment, etc.

There is an additional flat fee of $1,800 in the audit year the extension occurs. This cost covers the effort to review the subscriber file prior to the frequency change and test the file after the change of expiration dates to ensure they were properly extended.

 

A Note About Double Issues

Some publishers may choose to reduce the frequency of their magazine by offering double issues.

  • If the double issue will reduce the copy liability on a subscriber’s account by two issues, then the frequency has not been reduced.
  • If the double issue will reduce the copy liability on a subscriber’s account by only one issue, then the frequency has been reduced and issues served as an extension due to this reduction may qualify and be classified as paid circulation on AAM documents.
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