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August 06, 2008 Phantom subscribers at the New York TimesPity the poor New York Times Company! In addition to all its other woes, one of the company's newspaper distributors has been accused of defrauding the company with thousands of phantom subscriptions, recycling the papers supposed to have been delivered to the nonexistent subscribers, and collecting about $227k in fraudulent delivery fees. Dan Slater of the Wall Street Journal Law Blog brought this case to our attention. The alleged fraud took place in La Crosse, WI, a pleasant small city on the Mississippi River that is home to a campus of the University of Wisconsin. Whereas the Times formerly averaged about 65 daily subscribers, and 110 on Sunday, after defendant Marton T. Hotlet began his alleged scheme about a year ago, it grew to about 2800 daily and Sunday, between January and March of this year. Hotlet received a total of $4.40 per week for delivering the papers. Late in 2007, the company's circulation officials noticed that the volume of new subscriptions was unusual, and began investigating. It seems that delivery began immediately, even though subscribers are billed and do not pay right away. In fact, almost nobody was paying for the new subscriptions after being billed in La Crosse, and many bills were being returned to sender. Assuming all the facts are correct and complete, Mr. Hotlet must be a rather dim bulb. Even the New York Times can pick up on the danger signs after half a year. People notice unpaid bills coming back with addressee unknown on them. As long as there is no way the GOP could benefit, the Times could be counted on to investigate looking for scandal. The complaint makes for interesting reading, if you want to understand the costs and mechanics of the struggle to make a buck out of publishing a daily nationally-circulated newspaper. Based on the cost data, it is clear that the New York Times makes little if any money on circulation itself in La Crosse. The costs of delivering and printing a week's worth of papers would be $6.29 a week, while the company is offering subscriptions in zip code 54601 at $6.70 a week. And that figure is the rack rate, not accounting for promotional offers, such as the free copies offered to teachers who get their classes to subscribe, or discounts for hotels and others. Or the substantial discounts for readers who let their subscriptions expire. If Hotlet had been a more skillful con man, he might have found a way to actually purchase subscriptions for less than $4.40 a week on average, taking advantage of the sort of remarkable offers I regularly receive from newspapers to entice me to re-subscibe to the three papers I used to read before the internet made them obsolete. It would still be fraud, and he would still face the multiple counts of mail fraud, wire fraud, and any other possible federal offenses that the Southern District of Manhattan US Attorney's office can justify. But it might have taken longer than half a year for the Times to figure out it has been had. Hat tip: David Paulin |
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The poor Old Gray harlot got stiffed by another John. Bawhaaaa.......
Posted by: wanderer | August 6, 2008 01:30 PM
I spent some time in the newspaper industry...actually worked for the vast right wing conspiracy itself. Subscription rates don't even cover the cost of the ink on the page for a local paper, let alone delivery. An interesting theory...home subscriptions are the gold standard for advertising rates...maybe the Grey Lady was all too happy to take the bump in circ to get higher rates? Desperate times call for desperate measures!
Posted by: Stokenrox | August 6, 2008 05:49 PM
I don't care. It's a biased, untrustworthy bird cage liner. I won't spend my money on it.
Posted by: Mike S. | August 6, 2008 06:09 PM
@Stokenrox
I had a friend a number of years back who was a big wheel in the distribution end of the newspaper game for a couple of rags, and based on what he told me, I'd have to say your theory about the Times and advo rates holds water. His distribution centre needed to be cleaned out with a fork lift and several industrial dumpsters every quarter because of the 'ordered but not deliverable' stock he was stuck with. Of course he had multiple clients for whom he did distro.
On balance, I can't say that I feel much compassion for the Times, though. They've been working hard to alienate Mom and Pop in the heartland for a long while.
Posted by: Geoff Gale | August 6, 2008 08:33 PM
Decades ago, there was another major NY paper, The Herald-Tribune. Taking a longer-term view of things, the current woes of the NYTimes are perhaps a belated collapse of another leg of the same table. Rumor has it that the Murdoch chain, which includes the London Times, the NYPost, and FOX News is also pressured for revenues. The fundamentals for print media are generally collapsing, specifics about the NYTimes aside. The Murdoch people may simply have better product diversification.
Beyond blogging as I am at the moment, we should think hard what new institutions, media or business arrangements will promote news distribution at least on a break-even basis. Complaints about the Times aside, God forbid the Government should step into the picture. My ultimate gripe is with the dumbing down of Public Broadcasting.
Could you imagine the disaster that would follow a government bailout of the Times, or print media generally?
Posted by: Dan Starr | August 7, 2008 12:16 AM
It looks like the Times will have to "give back" some of their advertising revenue.
My guess is the Times collects hefty "off the books" revenue for putting the "correct spin" on the news dujour.
Such practices as pretty common in most parts of the world for newspapers to be on the take to the highest bidder, it would be arrogant & naieve to think Amerika was any different.
Posted by: Smitty | August 7, 2008 12:57 AM
I could care less what happens to that worthless thing they call a newspaper. The NYT makes me sick just thinking about it.
Posted by: Dave B | August 7, 2008 04:14 AM
Cant wait for this paper to go under! not fast enough.
Posted by: Louise | August 7, 2008 04:35 AM
When the NYT eventually goes down, I do hope some other medium picks up William Safire's Sunday "On Language" column. At this point, Safire's column is the only reason to go to the NYT Web site.
Posted by: SAM | August 7, 2008 08:39 AM
Seems liberals have pretty much decimated the news industry from top to bottom, America won't buy liberal rags and the only entity making a buck is Murdoch's empire. Might have something to do with the non reading skills of liberals as well.
Look at Nancy Pelosi's "book", less than 3000 copies sold so far. Pathetic isn't even adequate to describe that apparent journalistic abortion.
Posted by: Chicago Ray | August 8, 2008 01:30 AM