5 B. Magazines

CATEGORIES OF CIRCULATION

B.1.	NET PAID SALES

1.1.	For the purposes of magazine circulation audit reports, 'Net Paid Sales' are single copies of publications sold at 50% or more of their cover price, inclusive of GST, which:

(a)	are sold through retailers, magazine or wholesale distributors and other recognized distribution channels that pay the wholesale price for single copy sales and claim credits for unsold copies;
(b)	are sold directly to the public;
(c)	if subscriptions are offered, are accepted at the full advertised subscription price, where the subscription price is 50% or more of the cover price for that subscription term;
(d)	are sold as retail or subscriber sales of two or more issues within the same audit period, at a total price which represents 50% or more of the retail cover price for each issue;
(e)	are sold as multiple copies (as defined under 2.1 'Multiple Paid Sales') to one person or location and make up in total less than a cumulative 5% of the magazine's Total Net New Zealand Circulation for the audit period;
(f)	are single copies of a magazine purchased by the recipient, or a company or organisation on their behalf, and are sent out addressed by name, directly to the individual at a verifiable recipient address.

1.2.	The following are not classified as Net Paid Sales:

(a)	inter-company sales where copies are purchased within the publishing company or by a subsidiary for free onwards distribution.

B.2.	MULTIPLE PAID SALES

2.1.	For the purposes of the audit reports, 'Multiple Paid Sales' are copies of a magazine that are sold as multiple copies to one person or location, at 50% or more of the cover price inclusive of GST and:

(a)	are in excess of a cumulative 5% of the magazine's Total Net New Zealand Circulation for the audit period;
(b)	do not require returns to be recorded;
(c)	are intended for onward distribution, where the purchaser is not the intended recipient.

2.2.	The following are not classified as Multiple Paid Sales:

(a)	multiple copies sold at less than 50% of the cover price; these are to be defined as 'Free Copies'.

B.3.	DIRECTED CIRCULATION PAID

3.1.	For the purposes of the audit reports 'Directed Circulation Paid' is defined as single copies sold at 50% or more of the cover price inclusive of GST and are:
3.2.	requested by the recipient through a deliberate action, or by a company or organisation on their behalf, and are sent out addressed by name, directly to the individual at a verifiable recipient address.

B.4.	DIRECTED CIRCULATION REQUESTED

4.1.	For the purposes of the audit reports, 'Directed Circulation Requested' is defined as single copies, which are not paid for and are, therefore, available at less than 50% of the cover price or free and are:

(a)	requested by the recipient through a deliberate action, or by a company or organisation on their behalf, and are sent out addressed by name or title, directly to the individual at a verifiable recipient address.

DIRECTED CIRCULATION NOT REQUESTED

B.5.

5.1.	For the purposes of the audit reports, 'Directed Circulation Not Requested' is defined as:

(a)	single copies of a magazine not requested by the recipient, sent out addressed by name or title, directly to the individual at a verifiable recipient address;
(b)	single copies of a magazine that are not addressed but are delivered according to a master list itemized by name, to a verifiable rural mail delivery box or recipient RD address.

B.6.	CAPPED PROMOTIONAL COPIES

6.1.	For the purposes of the audit reports 'Capped Promotional Copies' are defined as:

(a)	single or multiple copies of a publication that are distributed as Free Copies (as defined below under 7.1 'Free Copies') to individual recipients and which make up in total less than the allowable percentage of the magazine's Total Net Paid Sales for the audit as defined in the Audit Guidelines.

B.7.	FREE COPIES

7.1.	For the purposes of the audit reports, 'Free Copies' are defined as:

(a)	single or multiple copies of a publication that are distributed to individual recipients where a publication also distributes via one or more of the auditable categories outlined above.
(b)	single or multiple copies of a publication that are distributed to individual recipients and are in excess of the Capped Promotional Copies as in paragraph B.6.

B.8.	COPIES SOLD OVERSEAS

8.1.	For the purposes of the audit reports, copies of magazines that are sold to recipients outside New Zealand, and which would otherwise qualify as 'Net Paid Sales', can be recorded as either Sales Within Australia or Sales Within Other Areas.

EXPLANATORY NOTES FOR MAGAZINE PUBLISHERS AND AUDITORS

B.9.	Publishers must provide to the auditors the following details to support an audit of issues published during any audit period (usually systems generated reports):

9.1.	Paid copies: Totals of paid sales of single and multiple copies.
9.2.	Non-Paid copies: Totals of Directed Circulation Requested and Directed Circulation Not Requested and all other non-paid copies.
9.3.	General-Net New Zealand Circulation: the number of issues of the magazine published in the audit period and the cover price for those issues.

B.10.

The following shall be included in the audit period:

10.1.

All issues of a magazine bearing a cover date within the six-month periods 1 January to 30 June and 1 July to 31 December inclusive.

B.11.

The following magazines shall be excluded from the audit of Total Net New Zealand Circulation:

11.1.	Copies that are used for checking purposes in the publisher's office, office file or record copies, copies exchanged with other publishers for comparison purposes and other copies of a similar nature.
11.2.	Individual subscriptions in arrears; the number of unpaid subscription issues allowed before exclusion are:

11.3.	Waste copies, spoils, overruns and replacement copies of all descriptions, incomplete copies.
11.4.	Copies where payment is more than six months in arrears.
11.5.	Issues may be excluded due to exceptional circumstances resulting in a verifiable disruption to sales and supported by supplier documentation. These will include press, machinery or transport breakdowns resulting in a delay of retail delivery; periods when audit information is unavailable because of the purchase of a title by another publisher during the audit period; and market circumstances that result in the non-availability or withdrawal of part or all of the copies in the market, with a significant effect on retail distribution.
11.6.	Publishers may request an exclusion where there has been a disruption of scheduled distribution by statutory holidays (as defined by the Holidays Act) in the region where the publication is distributed.

NOTE:	In the case of 11.5 and 11.6, written application must be made by the publisher to the office of the ABC for approval of the exclusion. Proof of circumstances will be asked for.
	Copies of all magazines sold in Australia or elsewhere in the world, or classified as Free Copies. However, such sales may be recorded separately.

11.7.

The calculations to be used to produce the circulation quantities for the audit period are:

(a)	Calculate Total Net Paid Sales by adding the net paid sales for all issues;
(b)	Calculate Total Net New Zealand Circulation by adding the totals of Net Paid Sales, Multiple Paid Sales, Directed Circulation Paid, Requested and Not Requested, and Capped Promotional Copies for all issues within the audit period;
(c)	Calculate Average Net Paid Sales for the period by dividing total Net Paid Sales by the number of magazine issues in the audit period;
(d)	Calculate Average Multiple Paid Sales for the period by dividing total Multiple Paid Sales by the number of magazine issues included in the audit period;
(e)	Calculate Average Directed Circulation Copies for the period by dividing total Directed Circulation Copies (Paid, Requested, Not Requested) by the number of magazine issues included in the audit period;
(f)	Calculate average Capped Promotional Copies for the period by dividing total Capped Promotional Copies by the number of magazine issues included in the audit period;
(g)	Calculate Average Total Net New Zealand Circulation per issue for the period by dividing Total Net New Zealand Circulation by the number of magazine issues included in the audit period;
(h)	Calculate Average Free Copies for the period by dividing total Free Copies by the number of magazine issues included in the audit period;
(i)	Calculate Average Copies Sold Overseas for the period by dividing total Copies Sold Overseas by the number of magazine issues included in the audit period.

B.12.

In addition to procedures and duties detailed in these Rules and Circulation Audit Guidelines, auditors are obliged to:

12.1.	Obtain the publisher's internal financial reports for the audit period and verify paid sales against the publisher's supporting documentation.
12.2.	Obtain the publisher's internal print-run reports for the audit and verify these against the publisher's supporting documentation.
12.3.	Compare the print-run reports to the distribution confirmation or mailing lists and investigate unusual variances due to wastage, internal usage, etc.
12.4.	Compare the current audit period's distribution to that of the prior period and investigate unusual variances.
12.5.	Where Directed Circulation Paid is claimed, reconcile the paid circulation figure with the publisher's financial records.
12.6.	If the publication is distributed by an external organisation, confirm with these distributors the average number of magazines delivered per issue (excluding any returns) for all the issues in the audit period.
12.7.	Where Multiple Paid Sales are claimed, ensure that proof of onward transmission from the external distribution organisation to the delivery points is available.
12.8.	Where Capped Promotional Copies are claimed, ensure that proof of onward transmission to the delivery points is available, and verify that the distribution organisation has confirmed the distribution of promotional copies to individual recipients.
12.9.	Where delivery of copies by mail is to other than a mailing address, ensure that proof of onward transmission from the external organisation to the delivery points is available and conduct random tests to ensure receipt of un-addressed copies delivered to rural delivery addresses or post office box holders.
12.10.	Compare the average Net Paid Sales, average Multiple Paid Sales, average Directed Circulation, average Capped Promotional Copies and average Total Net New Zealand Circulation with these averages for prior audit periods and investigate any unusual variances by discussion with the publisher.
12.11.	Form an opinion about the minimum level of circulation that can be audited and officially report a figure for this that can be supported by objective evidence.
12.12.	Verify and document in the Audit Report for any magazine:

(a)	Its cover price;
(b)	Date first published;
(c)	Average Net Paid Sales;
(d)	Average Multiple Paid Sales;
(e)	Average Directed Circulation (Paid, Requested and Not Requested);
(g)	Average Total Net New Zealand Circulation;
(h)	Average Free copies;
(i)	Average Copies Sold Overseas;
(j)	The number of issues published (less exclusions).

12.13.

Verify the actual sales for any estimates of issues included in the previous audit period. Where actual sales vary significantly from the estimated sales, the Bureau should be informed so that the relevant figure can be amended in the summary of the relevant audit period.

B.13.

The audit must be completed and signed off by a Chartered Accountant who:

13.1.	is not an employee of the publisher;
13.2.	is the holder of a current certificate of public practice; and
13.3.	has been formally approved as auditor by the ABC following the publisher's submission of them as their auditor of choice.

NOTE:

The specific rules, guidelines and explanatory notes outlined above must be agreed to by the auditor and this agreement then becomes part of the audit approval process.

EXPLANATORY NOTES

B.14.	Main Segments and Categories of Circulation
	Audit Reports separate magazine circulation into three segments:

(a)	Net Paid Sales;
(b)	Total Net New Zealand Circulation (that is, the total of the paid categories Net Paid Sales, Multiple Paid Sales and Directed Circulation Paid, and the non-paid categories Directed Circulation Requested, Directed Circulation Not Requested and Capped Promotional Copies);
(c)	Free Copies and Copies Sold Overseas are detailed separately and are not included in the Total Net New Zealand Circulation.

For the three paid categories (Net Paid Sales, Multiple Paid Sales and Directed Circulation Paid), the qualifying price paid per issue for inclusion in the audit is 50% or more of the retail cover price. If a price of less than 50% is paid for copies, or copies are given away free, these are classified as non-paid copies.

B.15.	Cover Price
	'Cover price' is defined as the retail price in NZ dollars, including GST, that is displayed on the masthead or cover of a magazine when it is published.
B.16.	Net Paid Sales - Inter-company Sales
	Copies that are the subject of an inter-company sale can be treated either as Directed Circulation Requested or as Free Copies, which are not included in the calculation of Total New Zealand Net Circulation.
	Example: Inter-company Sales
	Copies sold within the publishing company for free distribution are not to be included as Paid Sales (ie, where the marketing department of a publisher self-purchases copies of a magazine using its marketing budget and then gives the copies to an advertiser for free distribution at a showroom or exhibition). These can be recorded either as Directed Circulation Requested or as Free Copies, according to the level of addressing criterion outlined above.
	Copies sold by the publisher to another company in the same group for inclusion in a loyalty scheme or other incentive scheme and given to recipients as part of a service provided by the purchasing company may be included in the relevant classification.

B.17.

Multiple Paid Sales

	This category allows for differentiation between single copies that are generally paid for by an individual and large numbers of multiple copies that are paid for by a company or organisation and then given free to individuals.
	Example: Multiple Paid Sales With the Intention of Onward Distribution
	Copies sold to a vehicle distributor for them to send to their clients. If the vehicle distributor mails to their own list of individuals at verifiable recipient addresses, and can provide audit proof, these copies can be recorded as Net Paid Sales. If delivery verification of the magazines to individuals at a verifiable recipient address is not available, these copies can be recorded under Multiple Paid Sales.
	Multiple copies sold to one person or location that make up less than a cumulative 5% of the magazine's Total Net New Zealand Circulation for the audit period can be recorded as Net Paid Sales. Copies above this threshold are to be recorded as Multiple Paid Sales.
	Example: If the Total Net New Zealand Circulation for the 6-month audit period equals 10,000 copies, 5% of the 10,000 copies equals 500 copies. Therefore, 500 is the threshold number of Multiple Paid Sales copies that can be included in the Total Net Paid Sales calculation - any copies over this amount must be audited in the category 'Multiple Paid Sales'.

B.18.	Directed Circulation Paid
	Inclusion in the Directed Circulation Paid category requires a deliberate action towards receiving copies to be made by an individual or by an organisation on behalf of an individual - for example ticking a box, receipt of a signed form or email or similar.
	This definition also includes copies of a magazine provided as part of a primary product or service where the magazine is paid at 50% or more of the cover price. This classification may be used to highlight the importance of copies that are purchased by a defined interest group or organisation.
B.19.	Directed Circulation Requested
	Inclusion in the Directed Circulation Requested category requires a deliberate action towards receiving copies to be made by an individual or by an organisation on behalf of an individual - for example ticking a box, receipt of a signed form or email or similar.
	This category also includes copies of a magazine provided as part of a primary product or service where the magazine is either free or paid at less than 50% of the cover price.
B.20.	Directed Circulation Not Requested
	To qualify under this category, no more than one copy of a magazine can be sent to each person at an address (either mail address or delivered directly to an individual attendee at a conference, course or event as part of materials or in an event bag issued to each individual participant).
	If the publication is distributed by an external organisation, documentation of onward transmission will be required.
	This rule takes into consideration the special conditions relating to rural delivery contractors who deliver to rural mail boxes or RD addresses, where the name of the individual is on a master list. These copies may be un-addressed if an acceptable level of documentation regarding delivery is available.
B.21.	Capped Promotional Copies
	The number of Free Copies that may be included in the Capped Promotional Copies category may be up to, but not exceeding, the following percentages of Total Net Paid Sales:

	Net Paid Sales 50,000 and over	2%
	Net Paid Sales from 40,000 to 50,000	2.5%
	Net Paid Sales from 30,000 to 40,000	3%
	Net Paid Sales from 20,000 to 30,000	3.5%
	Net Paid Sales from 10,000 to 20,000	4%
	Net Paid Sales from 5,000 to 10,000	5%
	Net Paid Sales from 2,000 to 5,000&	7.5%
	Net Paid Sales of 2,000 and under	10%

B.22.	Direct Dispatch
	Where copies of a magazine are sent to an individual they shall be dispatched directly by the publisher, or by their distribution provider to a mailing list provided by the publisher, except in cases where the purchase and dispatch is by a third party or organisation that provides confirmation to the satisfaction of the Auditor of the addressing format (by individual name or by title) together with proof of onwards transmission.
B.23.	Distribution Channels
	For the purposes of the audit reports, Distribution Channels for copies not sold at retail include delivery by mail, letterbox delivery and distribution at conventions or expositions, measured against the level of addressing criterion outlined in each category of classification.
B.24.	Free Copies
	Free Copies may be recorded in the audit report but do not form a part of the publication's Total Net Circulation.
B.25.	Copies Sold Overseas
	Copies sold overseas include retail sales made at a location outside New Zealand, and subscriptions delivered to recipients at a delivery address outside of New Zealand.