News Corp’s shift to Emma could save the publisher millions of dollars as sources predict it will now quietly cull unprofitable circulation.
Unprofitable circulation includes the distribution of free newspapers to boost circulation metrics. It's a tactic that has been historically used by publishers globally, including Fairfax and News Corp.
In 2014 Fairfax removed unprofitable circulation from the print run of its major newspapers, including the Sydney Morning Herald, The Age and their Sunday titles, which lowered the circulation it reported.
As part of the move, Fairfax stopped providing copies to the gym chain Fitness First in 2013. This was replaced by copies of News Corp's The Australian and Daily Telegraph, according to a report in the Sydney Morning Herald.
It contributed to savings of $74 million in 2014, which was a 17% cost reduction to $362 million, according to its interim results. The move also garnered strong support from media buyers who welcomed the publisher’s transparency.
"We took an approach that said we wanted a business that reflected the people who read and bought our newspapers. We deliberately took our circulation down to reflect that reality. We did so through changes in pricing, reductions in production and changes in format," Fairfax said in its results.
"This is counter intuitive to the way this industry has operated for generations, and has been misunderstood by some, but as this result shows has been profoundly successful."
Sources say that News Corp will now undergo a similar cost-cutting initiative as it shifts to focus on readership instead of production metrics.
News Corp responded to AdNews query saying: "We are always reviewing our distribution channels and remain focused on growing our retail and subscriber sales."
News Corp has joined a number of publishers in its shift away from the AMAA metrics. Last year Fairfax, News Corp, Bauer, Pacific Magazines and other publishers pulled out of the audit.
Today, News Corp CEO Michael Miller said that the audit was “out of step” with how the advertising industry operates, following a review with more than 100 advertisers and media buyers.
Fairfax is now understood to be considering its own position on metric measurements. Fairfax removed if digital figures from the audit last year, leaving just its newspaper figures in the audit.
The AMAA has already been forced to move from quarterly to half-yearly as publisher support wanes. If Fairfax moves away from the AMAA too, the end of the audit is imminent.
Read AMAA's full statement about News Corp's move to Emma here.
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