An advertising-driven revenue model provides the motive for cheating, and loopholes in counting methods provide the means, writes The Weekender in an editorial in the wake of the circulation scandal rocking Media24 magazines.

The Weekender writes in an editorial:

IT IS best for competing media organisations to resist indulging in a bit of s chadenfreude over the scandal at Media24’s magazine publisher, Touchline Media, where the Audit Bureau of Circulation (ABC) has now found manipulation of circulation figures at a second set of the group’s titles.

It might be said a little fiddling goes a long way in improving a publication’s fortunes in an industry where advertising accounts for most of the revenue. It is not the first time publications have cheated and, sadly, it probably won’t be the last, but it is in the interests of the entire industry that those responsible face the consequences of their actions.

Just two years ago a number of leading newspapers in the US — the Dallas Morning News, Long Island’s Newsday, the Spanish language Hoy and the Chicago Sun-Times — were found to have manipulated their circulation figures. For that indiscretion, more than a dozen circulation staffers at Newsday and Hoy were fired or took early retirement, three faced prosecution, and the Sun Times provided for $300m in compensation to advertisers.

Back in the 1980s, Beeld, which is from the same Naspers stable as Media24, brought a case for damages against its rival Die Transvaler in the Perskor group after tons of undistributed newspapers were discovered in a basement. Die Transvaler was banished to a newspaper wasteland north of the Jukskei River, and Perskor received a big fine.

In the end Die Transvaler succumbed along with a number of other Perskor titles, and Beeld gained hugely from their loss. Perskor’s circulation scandal was certainly not the only factor in the demise of its titles, but it marked the beginning of the end. Ironically, that event also marked the beginning of the rise of Naspers, which now dominates almost every sphere of the media business in SA.

Media24 has already announced it will take disciplinary action against the people responsible, and that criminal prosecution is likely. It has also said it would compensate its advertisers for their expenditure.

That’s the least Media24 will be required to do to fix the mess. By now competitors would be calculating their loss of market share, and calling their lawyers about suing for damages. The affair is certainly going to cost Media24 a lot of money, perhaps more over the long term than can be calculated now, when the damage to its reputation is taken into consideration.

Senior managers may not have been directly involved in dishonesty, but they must take responsibility for allowing the situation to grow out of hand. The group has won the grudging admiration of its competitors for its aggressive style and almost fanatical emphasis on staff performance, but the downside of such a culture is often that people may pursue their targets at almost any cost.

But taking responsibility for the debacle must go beyond prosecuting the dishonest few, and holding their employers liable for damages. For as long as advertisers dictate the way the industry functions, the temptation for cheating will be there. And for as long as circulation is calculated by subtracting the number of unsold copies of the magazines from the number of printed copies, the opportunity to collude to cheat will be there.

There are other means too. ABC allows for a number of loopholes, such as bulk sales and fuzzy mathematics, to smooth out any unusual dips in circulation that may be ascribed to the weather and similar factors. It is fertile ground for mischief.

If it is so easy and so tempting to cheat, and so easy to conceal the truth, who knows what else is going on? There can be little doubt that the scandal has damaged more than Touchline Media’s advertisers and competitors.

Perhaps the best outcome from the whole sordid affair would be if advertisers took a closer look at how media buyers spend their clients’ money and for publishers to reconsider the advertising-driven revenue model.

* This editorial appeared in The Weekender on October 6 2007.