Magazine article Editor & Publisher

Direct-Pay Option Drives Carriers to Organize

Magazine article Editor & Publisher

Direct-Pay Option Drives Carriers to Organize

Article excerpt

In unusual move, Plain Dealer publisher promotes incentives, including subscription price cut

A new payment option giving subscribers of The Plain Dealer in Cleveland a lower rate if they pay the newspaper directly, instead of individual carriers, has raised objections from a faction of carriers, who claim it reduces their profits. Some of the carriers are so angry that they have organized an association to fight the new plan.

"They are taking over control of our cash flow," said Cheri Fioritto, 38, who has delivered the newspaper for 21 years. "They are dropping the price, and they can drop it to anything they want. There is no guarantee."

But Publisher Alex Machaskee, who said the new program has been in place since July, called it a success that has been well- received by most carriers. "If there is somebody who doesn't like the program, that is their prerogative," he said. "We are offering our subscribers an opportunity to pay directly and there is [a financial] incentive to do that."

The direct-payment option is not unusual in the industry, according to circulation directors at other newspapers. But they said the customer rate usually remains the same whether subscribers are billed by the newspaper or the carrier.

The Plain Dealer's Easy Pay plan allows readers to pay less through direct billing from the newspaper, and also includes incentives, such as local restaurant discount cards for those who participate in the new plan. The program has not been automatically instituted for every customer, but is being offered as an option, Fioritto said.

Currently, carriers act as independent contractors who purchase newspapers from the circulation department and sell them to home subscribers at the carriers' own rate. Fioritto said she pays a dollar eighty-five a week for each customer's newspapers, including Sunday, and sells them at a rate of four dollars and seventeen cents a week, pocketing the difference.

But, under the Easy Pay plan, the newspaper sets the rate, collects the fee, and gives the carrier his or her portion. Since the new option went into effect, carriers said the newspaper has been charging a lower rate, reducing their profit.

Fioritto said the newspaper is charging her customers only three dollars and sixty cents a week, which means a loss to her of 57 cents a week on each customer who switches to the new plan. If all 300 of Fioritto's customers switched, she would lose 171 dollars a week, or 8,892 dollars a year. …

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