ABC: Partnership Rules Have Not Changed
A nondeductible partnership program is defined by ABC as "a program wherein a magazine is included with the purchase of another product or service and for which the consumer does not have an opportunity to pay a lower price when the subscription is declined, nor is charged a higher price upon electing to receive a magazine (i.e. the cost of the magazine cannot be deducted from the sale).
"To qualify as paid circulation, the magazine must be paid for by the partner at an amount of one cent or more per subscription or single copy, net of all other considerations." There is also a series of notices that must be presented to the consumer in order to clearly explain the program.
For many partnership programs, this may represent a big change from previous standard operating procedures, just as it represented a change from the previous forms of sponsored sales.
Andrew Degenholtz, president of ValueMags, which has been working in the partnership space for several years, says that for now, nondeductible partnerships are still being counted as paid, but he plans to switch to only deductible partnerships in the future, as he expects the rules may change.
He says the agent compliance audit programs planned by both ABC and BPA and the tightening of the rules for paid circ are required by current state of the industry. He hopes ValueMags will be the first company to pass the new ABC agent compliance evaluation. Other agents feel differently. One subscription agent who is an associate member of ABC, says he recently put together a partnership package, which he says received ABC’s approval, yet he found it was impossible to convince some of the biggest publishers to participate. For more see this week’s issue of The Circulator.