Monday, February 2, 2009

How about some free printing?

Here's a way for American printers to make money producuing magazines: Don't charge for the printing of subscriber copies.

There's a catch (acually two catches), of course: In exchange, offer to co-mail the copies as long as you get to keep all of the postal savings.

Let's focus on a certain major publisher of monthly magazines that does no co-mailing. Suppose that its prominent 700,000-ratebase title has a 128-page (plus 4-page cover) issue and mails 650,000 copies. It would probably pay about $45 per thousand, not counting makereadies or consumables, to print the magazine using two 64-page offset presses plus a cover press.

Mailing on its own, the magazine probably gets carrier-route sortation for 35% to 40% of its copies. That would increase by about 50 percentage points if the copies instead went into a co-mail pool at one of the major publication printers, where mailstreams of 4 million or more are commonplace. With carrier route costing 10.2 cents per piece less than the next-best sortation level, the savings on piece rate alone would average roughly 5.5 cents per copy -- or $55 per thousand.

Co-mailing would also create more efficient bundles and pallets, reduce the number of sacks, and enable the printer to dropship the magazine more extensively. (Printers generally will not dropship sacks.) Such savings would probably equal at least a penny per copy ($10 per thousand).

So the printer would be giving away printing worth $45 per thousand but would receive $65 per thousand in postal savings. That net of $20 per M is more than printers receive in shared postal savings from some co-mail clients.

Let’s look at the same publisher’s magazine that has a ratebase of 200,000, with most of the copies going to affluent subscribers. It probably prints on 32-page presses, so the printing of a 128-page issue would probably cost a bit more than for its larger sibling – say, $54 per thousand.

Because of the magazine’s audience, it probably gets better sortation, perhaps 25% carrier route, than do most magazines mailing nearly 200,000 copies. But it’s still in the sweet spot for co-mailing. Going into a major co-mail pool would generate piece savings of at least $65 per thousand. And on a per-copy basis, the savings from such other items as bundles, palletization and dropshipping would be greater than for the larger title, probably another $20 per thousand.

So with Dead Tree Edition’s plan, the printer would net about $31 per M -- $85 in postal savings minus $54 in foregone printing charges. The publisher would have been far better off paying for the printing and doing the usual co-mail deal; under one printer’s formula, that would be about $59 per M. (For an explanation of how to analyze the publisher's savings from co-mail, see Steve Frye's excellent piece in the October issue of Publishing Executive.)

Oh yeah, the other catch: If magazine publishers nickel-and-dime their printers to cut print prices by 50 cents per M but leave savings of $40 or $60 per M on the table, what makes you think they’ll be smart enough to take the free-printing deal? Even some publishers that are co-mailing are doing some questionable things with their mailings, but that’s a subject for a future article.

After Standard flats postal rates were restructured in 2007, the catalog industry jumped into co-mailing with both feet. The magazine industry, which has had more than a decade to get on board and has even greater incentives to co-mail , has been a much slower sell for co-mail programs. Too many have a production “silo” that doesn’t bother to consider distribution.

You’d better blow up those silos fast. The next round of postal rates, due to be announced next month for implementation in May, are likely to be especially rough on inefficient mail in both the Periodicals and Standard classes. (See “Postal costs to go up less than 4% -- maybe” for details.)

If you have a legitimate reason for not co-mailing a standard-sized monthly magazine having between 25,000 and 1 million mailed copies per issue, please write to me at The only possible reason I can think of is demographic versioning, which might make selective binding (arguably a form of co-mailing) more efficient. Even then, co-binding is a possibility. And careful analyses would reveal that many demographic-advertising offerings are unprofitable, especially when the lost postal savings are figured in.

If you’ve run into some bad reasons not to co-mail, please pass those along as well. I already have a few candidates for the 10 Lamest Reasons Not to Co-Mail, but I’d love to hear yours.

1 comment:

Anonymous said...

I do not think so.