Publishers Have Major Hurdles to Clear
Speaking at the American Magazine Conference in late 2004, Postmaster General Jack Potter reiterated his commitment not to raise postal rates until 2006. Magazine publishers, already dealing with substantial paper price increases, welcome Potter's statements with a sigh of relief, but the industry needs to prepare for this increase now.
Handling mail sacks is a major cost center for the U.S. Postal Service and the topic of a complaint filed by five publishing giants: Time Warner, Condé Nast, Newsweek, The Reader's Digest Association, and TV Guide Magazine Group.
The complainants are seeking to restructure Periodicals Class rates to eliminate classification subsidies that minimize cost burdens on "inefficient mailers" under the guise of "dissemination of information." They argue that there are no price incentives for inefficient mailers to switch from sacks and bundles to pallets. If they get their way, sack and bundle users will be hit hard.
A study conducted by American Business Media tested the impact on member publications. The results are jolting: 49 percent of magazines tested would realize double-digit increases, and 12 percent would see increases between 50 percent and 81 percent. These figures would encourage many publications to re-evaluate their mailing methods. The question is: Will they have the opportunity to switch to efficient methods? Unfortunately, the answer is: probably not.
Publishers must clear a major hurdle to get publications out of sacks. The first is to find a way to move to pallets. The complainants' publications typically mail enough copies to various postal facilities to fill up pallets in a timely manner. The publications most affected by their proposal do not have adequate volume to do the same. The solution appears to be co-palletization, a method in which bundles of different magazines are combined on the same pallet headed to a specific postal facility.