Friday, February 20, 2009

The Conde Nast Protection Acts?

If your publications don’t have well over 100 pages per issue, don’t assume that your postage rates will increase by only 4% in May.

Even if they mail efficiently, publications weighing less than half a pound will typically experience increases of 6% to 7%, Dead Tree Edition's exclusive analysis has found, even though the Postal Service says Periodicals increases will average just under 4%. Characteristics other than weight – such as dropshipping, co-mailing, ad-edit ratio, and non-profit status – have little impact on the percentage increase for Periodicals mailers who do not change their mailing practices.

No doubt some publishers will complain, as they did a couple of years ago, that these results reflect the undue influence of Time Inc.’s lobbying at the expense of small publishers. But the gradual move to cost-based rates, which means charging more for pieces and less for pounds, has been at best a mixed blessing for Time so far because of its many relatively light weekly publications. (Have you seen how thin Time magazine looks lately?)

The real winners, both two years ago and this year, are publishers of heavy magazines that dropship extensively. You could call these postal-rate changes the Conde Nast Protection Acts, though in all fairness I should add that Conde bore more than its share of Periodicals-Class costs under the old rate structure.

The chart below shows that the rate changes for outside-county Periodicals range from a decrease of more than 20% for weight going to a delivery unit to a 1,650% increase for a 5-digit bundle on a 5-digit pallet. So we’re getting more incentive to ship to delivery units as long as we’re entering mostly carrier-route and firm bundles there.

With the new rates, co-mailing still makes sense, though at first glance some have mistakenly concluded that the incentive to co-mail is being decreased because the gap between “5-digit automated” and Basic Carrier-Route piece rates will narrow slightly. For most publishers, co-mailing will generate enough savings in other areas (such as bundles, containers, and better dropshipping) to make co-mailing even more attractive than it is now.

Publications experiencing a 4% increase will probably weigh at least 0.6 pounds and more likely 0.7 pounds per copy, Dead Tree Edition’s analysis shows. For an 8” x 10.5” magazine using a 100# cover and having four pages of reply-card inserts, that would mean 148 to 180 body pages on 40# paper. For a tabloid newspaper, that would be about 120 to 140 pages on 45-gsm newsprint.

Here are some examples of how the rates would have affected recent issues of various outside-county publications:

  • National consumer magazine with numerous demographic versions run as separate mailstreams; 692,000 mailed copies averaging 0.96 pounds; 55% advertising; three-fourths of copies dropshipped: 2.7% increase. The magazine subsequently streamlined its versioning and joined a large co-mail pool. That approach would have reduced its postage by 24% (more than 11 cents per copy!) for this particular issue under both current and new rates, according to data provided by the consultant who engineered the magazine’s distribution transformation.

  • National consumer magazine in large (multiple millions of copies) co-mail pool; 0.60 pounds; 59% advertising: 3.9% increase.

  • National consumer magazine in a similar co-mail pool; 34% advertising; 0.27 pounds: 7.3% increase.

  • Non-profit journal mailing 53,000 pieces weighing 0.62 pounds each; 33% advertising; no co-mail or dropship: 6.0% increase. Most publishers will see their weight costs (advertising and editorial pounds) decrease, but this journal’s will actually increase because most copies are going to Zones 5 through 8, which got hefty rate hikes for advertising pounds.

  • Non-profit state association newspaper with 21,000 copies, about half qualifying for dropship discounts; 11% advertising: 5.9% increase. A publication with the same characteristics except for 50% advertising would see a 5.6% increase.

1 comment:

Anonymous said...

Thanks for the info. I am trying to do some budget estimates based on the increase, so this is helpful. I am a small, light non-profit periodical, so I will probably get the higher rate.