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has papers nervous
Deep circ losses if telemarketing rules get OK
By David Moore
Telemarketing is an important way for newspapers and magazines to gather new subscriptions.
But if stricter regulations on telemarketing are adopted, the number of new subscriptions for newspapers and magazines could plunge.
The Federal Trade Commission is considering amendments to its telemarketing rules that would create a national do-not-call registry, and newspaper and magazine publishers are busy lobbying to ensure that their telephone salespeople are exempt from inclusion.
The do-not-call registry would allow consumers who enrolled to block most telemarketing calls.
Seeking the exemption are the Newspaper Association of America and the Magazine Publishers of America. According to the NAA, telemarketing generates 60 percent of new newspaper subscriptions, making it the single largest source of new subscribers.
Magazines are less reliant on telemarketing for new subscriptions, but the regulations would still take a serious bite.
Dan Capell, a magazine circulation expert, estimates that telemarketing is responsible for about 10 percent of new magazine subscriptions.
The NAA and the MPA have already submitted extensive comments to the FTC explaining their objections to the proposed do-not-call registry and are expected to participate in a forum on the registry at FTC headquarters in June.
In addition, the NAA is weighing what legal measures might be brought to challenge the constitutionality of a federal do-not-call list.
Dean Singleton, the recently inducted chairman of the NAA, argues that such a list would be unconstitutional as a restriction on free speech.
Says Singleton: "I'm certain it will be challenged."
Molly Hemsley, an NAA lobbyist, contends that as local businesses newspapers should not have to comply with national do-not-call regulations.
Hemsley points out that newspapers already observe many federal regulations with regards to telemarketing.
The FTC currently requires companies to maintain their own do-not-call lists shielding numbers from telemarketers for 10 years.
In addition, about 20 states have their own do-not-call registries. Of these, eight states have exemptions for newspapers.
To require that newspapers check their in-house and state do-not-call lists against a national list, Hemsley says, would impose an unnecessary burden on newspaper companies.
Further, she argues it would be unnecessary, since it is in a paper's best interest to not call people who have already expressed a do-not-call preference.
States that currently have do-not-call lists have received a strong response, despite not having the level of publicity that a national "do-not-call" list would likely have.
In Missouri, 41 percent of households have placed themselves on the do-not-call list. In Indiana, it's 38.5 percent, 30 percent in New York, and 29 percent in Tennessee.
The FTC national do-not-call would be free of charge, widely advertised and easy to use, and for that reason many believe the percentage of registrants would exceed the one-third level of the state lists.
John Morton, a newspaper analyst with Morton Research, says that imposing restrictions on telemarketing would take away an important source of revenue for newspapers.
"Most newspapers rely heavily on telemarketing to keep circulation up," he said. "Revenue gained from circulation is an important support base when advertising declines," Morton says.
Magazines are no less anxious to gain exemption.
Rita Cohen, senior vice president of Legislative and Regulatory Policy for the MPA, said, "We are proposing alternative mechanisms that will provide consumer protection, but be easier for businesses to implement."
Cohen reported one example of a magazine contractor who generated seven million new subscriptions in 2000 through telemarketing.
Dan Capell, whose company, Capell & Associates, puts out the Capell Circulation Report, agrees that stricter regulations on telemarketing would hurt newspapers more than magazines.
"If somebody doesn't want to get called, they're probably not a good prospect to buy a magazine," Capell said.
Tightened regulations on telemarketing are not the only challenges newspapers and magazines have recently faced in marketing their publications.
Over the past few years, industry trends such as wholesaler consolidation have caused newsstand sales to decline. Whereas there were once about 400 independent wholesalers distributing magazines across the country, there are now only about 180, with a handful of leading firms controlling an overwhelming majority of market share.
Retailers, for their part, don't have shelf space for every one of the 4,000 consumer magazines, so they try to stock only a few magazine titles in each category. Again, the result is lower newsstand sales.
Moreover, Publisher's Clearinghouse, a traditional source of new subscriptions, has been litigated nearly out of existence.
The regulations being proposed could mean the end of telemarketing as we know it.
Telemarketing businesses employ six million people and last year generated $668 billion in sales, according to numbers supplied by the Direct Marketing Association.
Telemarketing is the largest segment of direct marketing, accounting for approximately $76.2 billion of advertising expenditures last year.
The Direct Marketing Association keeps its own do-not-call list that currently contains 4.1 million numbers, though it is not widely advertised. It is possible to register by mail, or by paying a $5 processing fee to register online.
May 6, 2002 © 2002 Media Life
-David Moore is a staff writer for Media Life.
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