Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Posting-Version: version B 2.10.2 9/18/84; site sftig.UUCP
Path: utzoo!watmath!clyde!burl!ulysses!mhuxr!mhuxn!mhuxm!sftig!danny
From: danny@sftig.UUCP (L.Rosler)
Newsgroups: net.consumers
Subject: Re: Question about Sweepstakes
Message-ID: <649@sftig.UUCP>
Date: Tue, 31-Dec-85 16:37:23 EST
Article-I.D.: sftig.649
Posted: Tue Dec 31 16:37:23 1985
Date-Received: Wed, 1-Jan-86 02:36:22 EST
References: <474@iheds.UUCP>
Distribution: net
Organization: AT&T Bell Laboratories, Summit, NJ
Lines: 25

> Well, it's the time of year again when our mailboxes bulge with those
> Sweepstakes entries from magazine and book clearinghouses.  One company
> is advertising a 10 million dollar grand prize!  My question is this:
> How can a clearinghouse afford to give away prizes of such magnitude??

> 2. Since they are not the publishers themselves, but rather the "middleman"
>    or distributor of the materials, they cannot expect to make more than
>    a dollar or two on a $25 subscription.
> 
> If these assumptions are true, then it doesn't seem possible that an
> advertising blitz such as this, complete with prime time TV commercials,
> could possibly generate enough revenue to even pay for the sweepstakes
> prizes, let alone to make a profit.  Even if 10 million people send in
> their entry forms, how many of them will also subscribe to a magazine, since
> it is not a prerequisite to winning??
> 
   Reading the fine print on the bottom of one of the prime time
 advertisements I discovered the "lotto" style of payoff.  The $10
 million is given out in $333,333 per year.  The rest is reinvested
 by the company and they make money.  They don't lose $10 million
 suddenly.


     Dan Rosler
     ihnp4!attunix!danny