When I first saw this story, about how the Wall Street Journal Europe had been “massaging” its circulation figures I thought it was all more of the same, a storm in a tea cup. For various papers are always sniping at various other papers about their audited circulation figures. To understand why you need to understand something about the economics of the whole newsprint (ie, newspapers and magazines) game.
The cover price is pretty much irrelevant to the main economics of the whole business. It, roughly you understand, the revenue from that cover price, pays for the paper, the printing and the distribution of the pieces of paper. The newsboy delivering it to your house, the trucks that get it to the newstand, the margins the newstand makes on selling it to you.
The actual journalism inside, the writing, is paid for by the advertising that the magazine or paper is running. In fact, to understand the money flows of the business it’s best to think of the journalism as the stuff that’s just there to get you to look at the ads. Good journalism brings more people to see more ads, that’s all.
In this business, how much you can charge for an ad depends upon what your circulation is and there are various different companies that measure this in different countries. There are also grey areas out there. What actually counts as paid circulation?
For example, if a student gets a subsidised subscription (as The Times used to offer) is this the same as a full price subscription for ad purposes? Or how about the Daily Mail which used to have a deal with British Airways, every passenger got a copy of the paper? Or a copy of USA Today if you’re a guest of certain hotel chains?
You can see that at the margins there can be some discussion: what actually counts as a “sale” and thus what counts in the circulation numbers and thus influences the prices the paper can charge for ads?
As I say, when I first saw this story in The Guardian I thought it was just this sort of backbiting. One of those irregular verbs perhaps: We offer deals to subscribers, you enhance your circulation, they lie about the numbers.
So I’m indebted to Felix Salmon for pointing out the truth at the heart of the matter:
“But this is really bad: the WSJ Europe was telling its advertisers that it had a circulation of 75,000 — but in fact fully 31,000 of those copies were bought for as little as 1 cent apiece by companies which never saw them, and pawned them off onto random students."
Ah, no, that is very different. It also helps to explain something I found a little odd a couple of months back when I did a piece for them. Compared to the UK papers their pay, for opinion pieces that is, isn’t all that high. We came to an entirely satisfactory agreement which is just fine, but this story about their circulation helps explain why they tend to offer a little less than papers that are selling a million copies or more.
Tim Worstall, Contributor, Forbes