The average newspaper reader probably doesn't pay much attention to back-page arcana like real- estate foreclosure notices, but beneath the small type is a big revenue stream for the local press. And a city judge's recent decision on the way such ads are sold could keep the stream dammed up for start-ups and smaller papers in this largely monopoly-media town. When
Baltimore Press editor and publisher Mark Adams started the fledgling daily last March, he was counting on attracting foreclosure ads as a source of income. The ads are placed by auctioneers on behalf of the foreclosed properties' owners, who foot the bill. Any paid-circulation paper is eligible for the business, but Adams had trouble getting the auctioneers to advertise with the
Press. The reason, he maintains, is that auctioneers not only charge the property owners for the cost of the ad; they tack on 15 to 25 percent for themselves—a disincentive for the auctioneers to do business with smaller papers that charge lower rates. That extra charge is not disclosed to the property owner, whose bill often includes only a single figure for the ad sale.
The auctioneers and newspapers consider these charges commissions; Adams calls them kickbacks, a way for bigger papers to shut smaller fish out. He complained to Maryland Court of Appeals Chief Judge Robert Bell, who referred the matter to Baltimore City Circuit Court Judge Ellen Heller. On Jan. 27, Heller issued a memorandum ruling that the commissions are legal but ordering auctioneers to disclose them in written agreements with clients, include them on invoices, and provide information on them to auditors who file reports on foreclosure proceedings in the Circuit Court.
That's not enough for Adams, who continues to claim the practice is "wrong and illegal." With the size of the auctioneer's commission dependent on the cost of the ad, "there's no financial incentive to price-shop," he argues, thus denying the client the best return on his or her money. The publisher fired off another letter of complaint to Judge Bell on Feb. 2.
Whatever the merits of Adams' legal argument, the practice does seem to create a hardship for emerging publications. Since he began this battle, Adams has cut the Press back from a daily to a weekly, and in October he laid off 15 employees. That's not to say the tiny paper would be going gangbusters if Adams were able to attract more legal ads, but it does give this media watcher pause. (Recent issues of The Baltimore Press do include some foreclosure notices—about 40 such ads in the Jan. 29 edition and 10 on Feb. 5.) Unable to charge the higher ad prices of the big boys—in this case, The Sun and The Daily Record—a start-up has little chance of drawing foreclosure notices and other advertising where the person placing the ad is paid a percentage of the ad's cost. Low advertising rates—usually the attraction of smaller papers for advertisers—actually become an albatross. In a city with just one daily general-interest newspaper, that's a cause for concern. Baltimore needs more media variety, not less.
