Postal Service Mixes Up Its Fruits

Apple,  Blackberry, whatever -- one of those fruity things.

The U.S. Postal Service touted a new app for Apple's iPhone and iPod products Friday with an illustration clearly showing a competing Blackberry device.

The monthly issue of the e-newsletter PCC Insider, which goes to members of Postal Customer Councils, noted the advent of "a new revenue stream for USPS -- and it's being generated online." The article explained that Apple's new Cards app will enable "users to create personalized greeting cards with their own text and photos and have them delivered by First-Class Mail to any address in the world."

But the photo is clearly of a Blackberry device made by Canadian company Research in Motion.

Here's the difference: An iPhone is a smartphone that can run apps. Friends tell me that a Blackberry is a not-so-smart phone (perhaps from playing too much hockey without a helmet before crossing the border) that runs "crapps", which is short for "crappy apps."

The Magazine Industry's Identity Crisis

The business formerly known as the magazine industry is going through an identity crisis -- and we're proud of it.

"In 2001, we were a print-centric medium catering to millions of readers. Today we are Magazine Media – and our content gets read, watched, listened to, commented on, repurposed, and disaggregated," crowed MPA president Nina Link recently to the Magazine Media Conference.

In fact, what was the Magazine Publishers of America a decade ago has morphed into MPA--The Association of Magazine Media. (What's that you say, those initials should be "AMM", not "MPA"? Shhhh, don't tell.)

We used to know what we were – magazine publishers. We produced printed products that were distributed on a regular basis, usually weekly or monthly. But no one, it seems, produces only printed magazines any more.

Now we create magazine media, whatever those are. There's nothing particularly "magazine" about the Weight Watchers Mobile app, an AARP video of Raquel Welch about going "beyond the cleavage", or FarmersAlmanac.com, but all are produced by organizations that publish magazines (though none fit neatly into the category of magazine publishers).

OK, Nina, so what are magazine media? She didn't say. But she did announce the launch of The MPA Digital Glossary of terms related to "the technology and usage of personal mobile devices . . . that offer magazine media content and advertising." Nice, a guide for us ink-on-paper types who don't know the difference between a bootloader and an eReader.

The glossary, however, doesn't define "magazine media." It doesn't even define "magazine" -- a word that no longer has a distinct meaning in a world of apps, e-editions, and bookazines.

Oh, and there's one other significant omission: The glossary doesn't define an eleven-letter word beginning with "cluster". If you've worked in magazine media for awhile, whether analog or digital, you certainly know how essential that word is to understanding the industry.

Burrus Responds: Not Giving Up on 6-Day Delivery

Long-time postal union leader William Burrus objected today to a Dead Tree Edition article that indicated he might be giving up on trying to preserve Saturday delivery.

Burrus' blog post, Pick Your Fight, was clearly a response to my article Sunday called Throwing in the Towel on 5-Day Delivery?. In the interest of fairness, Dead Tree Edition is republishing his entire commentary below, along with some comments [in brackets].

One of the web sites that focuses on postal issues [that would be Dead Tree Edition] recently suggests that I favor "throwing in the towel" on 5 day delivery by supporting the Obama plan for postal reform. [The "throwing in the towel" phrase was in a rhetorical question, not a statement.] This analysis misinterprets my suggested course for addressing the USPS’ dilemma. The choices offered in this political struggle are:

1. Issa/Ross - Carper/McCain

a. A Republican controlled House and

b. A Democratic Chairman in the Senate who accepts the GAO report [which says the federal government didn't overcharge the U.S. Postal Service for pensions, contrary to most expert views]

2. Obama proposal that includes 5 day delivery

3. HR 1351 which has major obstacles in the House and Senate. The path to passage would require a miracle and even then you would be only half way there, requiring Senate confirmation

Each of these options is unacceptable in their present form but the Obama fight is much more targeted and would be among friends

I do not suggest "throwing in the towel on 5 day delivery” but settling on a specific target and directing all the guns in one direction. It gives you a better chance of hitting something you want to eat. [I think he's saying that the Obama plan, though flawed, is the best hope for stopping the Issa/Ross "FEATPO" (Fire Everyone at the Post Office) plan; stopping five-day delivery is a future battle.]

And to the blogger [not I] who continues to write about the timing of my retirement, I suggest that when he reaches 53 years of service at the age of 75 he will be qualified to question my decision. [That may refer to an anonymous commenter on the "throwing in the towel" article who said, "I loved that Burris (sic) retires before the most critical time in APWU history since 1970" and added, "He knew it was crunch time and he got off the ship first like a rat or cowardly captain of the ship." My question to Anonymous: If Burrus was supposed to wait until APWU and USPS were not in crisis, how old would he be upon retirement?]

Mailers Getting Cold Feet About Postal Service Cuts

Recent problems with slow deliveries are causing some mail-dependent companies to think twice about supporting the radical downsizing of the U.S. Postal Service. Good idea.

An influential group of publication printers sent a letter to postal management last week to “express our concerns over the recent increase of customer complaints related to the late delivery of their catalogs and magazines."

“SCF drop shipments have increased from 3-day to 5-day at a large percentage of facilities,” stated the letter from Idealliance’s POISE committee. The POISE printers produce and distribute more than 70% of the Postal Service’s flat mail. Mailers typically look to these printers for help navigating operational issues with the Postal Service, including late deliveries.

The letter, which was distributed via Idealliance to numerous mailers, notes that postal management has asked the printers to support its “aggressive network optimization initiative.”

“To date, we have publicly supported the efforts of the US Postal Service, but the POISE group feels this is becoming increasingly difficult as we face these delivery issues and concerns from frustrated and unsatisfied customers.”

If they think things are bad now, they should take another look at what might happen if all of Postmaster General Pat Donahoe’s recently announced cuts are carried out. The USPS’ Radical Plan: Good in theory, potential chaos in reality, my article in the new issue of Publishing Executive magazine, explains why.

In short, it’s not that there aren’t plenty of opportunities to make the Postal Service more efficient, as noted in yesterday’s article Why Mailers Support Radical Downsizing of the Postal Service. The problem is that the groundwork hasn’t been laid for successfully restructuring USPS and ramping up its efficiency.

Real productivity improvement is built on a foundation of investments -- in equipment, technology, training, procedures, etc. Donahoe’s plan to downsize the USPS workforce by 30% in the next four years is like trying to install the roof before the foundation has been laid.

Mailers should expect more customer service problems in the next few years if politicians force the Postal Service to make huge cost cuts without giving it the resources to work more efficiently.

Related articles:

• How Congress Bankrupted the Postal Service in 3 Easy Steps
• Donahoe's Downsizing Plan for USPS Yields Huge PR Coup
• USPS Retirement Mess: A Major Barrier To Downsizing

Why Mailers Support Radical Downsizing of the Postal Service

If you want to know why major mailers are generally supporting major cost cuts at the U.S. Postal Service, consider this recent quotation from magazine-industry veteran Tom Martin:

“When you look at the Three Ps, in 2000, printing was 45 percent to 55 percent of costs, paper was probably 20-25 percent of your costs, and postage was between 30 to 32 percent of overall costs,” the Cygnus Business Media executive told Folio: magazine. “But now the printer is probably sitting with only 32 to 35 percent of overall costs. Paper hasn't changed that much on a percentage basis but the number that has changed tremendously is postage. That's probably sitting at 42-46 percent of overall costs depending on the magazine.”

Martin’s insight rings true not just for the B2B magazines in Cygnus’ portfolio but also for the large consumer magazines – and in fact for every mail-dependent organization. While everyone else in the ink-on-paper world has been slashing costs in the past decade, the Postal Service mostly just passed cost increases along to its customers and only in the past few years got serious about real efficiency gains.

That’s why mailers think the Postal Service is ripe for some serious downsizing. (But they had better be careful what they wish for, as Dead Tree Edition will explain tomorrow in Mailers Getting Cold Feet About Postal Service Cuts.)

As for Martin’s statement, here’s what’s happened to the “three Ps”:

Prices for publication printing have been dropping at about 3% to 4% per year (NOT adjusted for inflation) for more than a decade. Prices for coated paper have fluctuated greatly but are almost exactly identical (NOT adjusted for inflation) to what they were 10 years ago.

But USPS rates for most types of postage rose faster than the rate of inflation rate during the first half of the past decade and increased in line with the inflation rate the past few years.

Postal executives complain that their rate increases are limited “only” to changes in the Consumer Price Index. But most mailers have no sympathy for those complaints: They’re happy if they can avoid cutting the prices they charge and would be ecstatic if they had the kind of guaranteed price hikes the Postal Service enjoys.

Mailers believe the Postal Service only got serious about cost cutting when it was forced to do so – by declining demand for mail and the CPI-based price cap. And despite USPS’s aggressive downsizing the past couple of years, mailers still see a system that has far too many post offices, sorting facilities, and people (especially supervisors) than it needs to handle current or future mail volume.

Related articles:

• The USPS's Radical Plan: Good in theory, potential chaos in reality: D. Eadward Tree's new article for Publishing Executive magazine, which explores why mailers should be cautious about how and how quickly the Postal Service is downsized.
• Postal Service Has Too Many Employees and Pays Them Too Much, Mailer Groups Say: USPS has 170,000 too many employees, according to a coalition of major mailer groups.
• Why Are the Postal Service's Financial Problems Such a Surprise?: Explores how USPS has been bailing out the federal government for years.

Throwing in the Towel on 5-Day Delivery?

At the end of a lengthy analysis of the prospects for postal legislation yesterday, long-time postal union leader William Burrus made a statement that could signal a change in strategy on five-day delivery:

"His [President Obama's] proposal includes 5 day delivery which is strongly opposed by the unions but the decision must be made on which fights to engage in and with whom. Do we fight the Republican efforts to destroy the Postal Service and the unions or do we fight the Obama inclusion of 5 day delivery. This is a legislative and executive decision but it is time to decide and serious consideration must be given to the results if you don't prevail. In American Politics you can be right and lose."

Burrus has retired from the presidency of the American Postal Workers Union (APWU) but still has plenty of connections in and knowledge of Washington's ways. Dead Tree Edition has questioned his rhetoric and math at times (See Mathematically Challenged: Burrus Proposal Doesn’t Add Up for USPS and The Reinterpretation of William Burrus) but not his political savvy or inside information.

Burrus' statement suggests that the prospects are slim for getting the Obama Administration to change its mind on preserving Saturday delivery. Without an Obama push to counter the mostly anti-union Republicans, a labor-supported position has little hope for success these days.

Burrus seems to be suggesting that the postal unions save their powder for a more important and more winnable fights. Tops on the list is stopping the Issa/Ross bill that would put the U.S. Postal Service into something resembling Chapter 11 bankruptcy reorganization and potentially tear up the union contracts. Related battles are ending USPS's subsidies of the federal government that have pushed it to the verge of insolvency and opposing postal management's request to void the no-layoff clauses in union contracts.

Update: Burrus took offense at suggestions he may be "throwing in the towel" on preserving six-day delivery -- Burrus Responds: Not Giving Up on 6-Day Delivery.

Other articles on Obama's Postal Service proposals:

•  Obama Supports Postage Increase: Is He Dissing the Print Industry?
•  Please Mr. Postman, Look and See, If There's a Six-Pack in Your Bag For Me
•  Obama Hints At Changes To Postal Service Workforce

Postal Study Is Bad News For Publishers

Pressure to jack up postal rates for magazines and newspapers was heightened today with the release of a long-awaited study of Periodicals class costs.

Publishers have been hoping for years that the joint Postal Regulatory Commission-U.S. Postal Service study would disprove USPS's claim that postage is covering barely three-fourths of the Periodicals-related costs. No such luck.

"After review of Postal Service responses to data quality recommendations from prior reviews, the Postal Service and the Commission agree that the cost data are reasonably accurate for ratemaking purposes," the report says.

The publishing industry has frequently criticized USPS's methods of allocating costs among classes, noting the rapid increase in costs attributed to Periodicals despite greater automation and better mailing practices.

"Over the past decade, the unit cost of Periodicals has increased faster than the cost of inflation," the report acknowledges, partly because of "the Postal Service’s inability to capture efficiencies in flat mail processing similar to those it has captured for letter mail."

"Substantial opportunities for increasing the efficiency of flat mail processing and transportation exist. Over the past decades the Postal Service has introduced many programs designed to capture some of these efficiencies. However, it is unclear how successful these programs have been."

Still, the PRC believes that "most, but not all, of the Periodicals deficit can be resolved through operational efficiencies." Some of that would entail handling Periodicals mail more like Standard flat mail (such as catalogs).

USPS, however, "believes that substantial differences exist between the characteristics of Periodicals and Standard Mail flats, and that these differences reflect mailer and reader preferences that need to be respected." Upholding those differences limits the potential efficiency savings for Periodicals.

The report spells out ways that the inflation-based cap on postage increases could be pierced to bring Periodicals revenue more in line with costs:

"A legislative change which relaxes strict inflation-based price caps by class and allows for flexible pricing reflecting market dynamics might enable the Postal Service to further remedy the Periodicals cost coverage issue. Absent this legislative change, regulatory action could fix the Periodicals cost coverage problem if the Postal Regulatory Commission intervened as part of its Annual Compliance Determination (ACD) process to raise Periodicals prices to achieve 100 percent cost coverage."

Another option is to get rid of Periodicals pricing altogether, the report says. Periodicals could be charged First Class rates for relatively fast service or Standard rates for slower service and then receive a special discount that recognizes periodicals' unique role in educating and informing the public.

Other articles about Periodicals cost coverage include:

• Special Mail Processing of 'Hot' Publications To End Friday
• USPS Is Wasting Money on Unwanted Services, Publishing Executive Says
• Don’t Blame ‘Overpaid Postal Workers' for Rising Periodicals Costs 
• Do Postal Execs Want To Lose Money on Periodicals? Tough Question #4 For USPS

Abitibi's New Name: A Portent of Things To Come?

After considering hundreds of possible monikers, newsprint giant AbitibiBowater has chosen the name of a ship that was trapped in the Canadian Arctic, abandoned, rescued by Americans, and broken up by the British.

Is that a prediction of things to come or just a failure to know history?

AbitibiBowater (AKA AbitibiUnderwater) announced today that it will become Resolute Forest Products on November 7 as it tries to leave behind its debt-burdened past and find a name that customers can pronounce.

"Resolute" means being determined or having a single-minded resolve. The word most famously appears in the name of the HMS Resolute, a British exploration ship that was abandoned in 1854 after being trapped in ice. American whalers freed her from the ice the next year and sailed her to the U.S.; the American government presented the ship to Queen Victoria the following year in a show of friendship.

After the British navy decommissioned the Resolute, the ship was broken up, with some of the timbers being used to make a pair of desks -- one for Queen Victoria and one for the U.S. President (and still in the Oval Office). Replicas of the American desk have appeared in various movies about the White House -- most prominently in "National Treasure 2: Book of Secrets," in which a hidden compartment contains an important clue.

Related article: Suggestions for AbitibiBowater's New Name.

Please Mr. Postman, Look and See, If There's a Six-Pack in Your Bag For Me

President Obama thinks beer and wine are just the thing to help the U.S. Postal Service with its financial problems.

The "President's Plan for USPS Reform" includes "acceptance of beer and wine in the mail," according to a recent presentation by Postmaster General Pat Donahoe. Current law prohibits shipping alcoholic beverages by mail.

The Obama Administration may also have altered its USPS plan in a way that would definitely give mailers a hangover, the Donahoe presentation indicated. The Administration announced last month that it would propose "a modest one-time increase in postage rates." (See Obama Supports Postage Increase: Is He Dissing the Print Industry?).

But Donahoe's description was a bit different: "Give USPS ability to raise postage rates above current price cap." Have "one-time" or "modest" been dropped from the plan?

The beer-and-wine language is also a bit mysterious: "Allow USPS to increase collaboration w/ state and local governments; e.g. non-postal products, acceptance of beer and wine in the mail." With many states having tight controls and hefty taxes on beer and wine, it's not clear how enabling the Postal Service to deliver such products would constitute collaboration rather than competition.

Perhaps the states will enjoy a spike in their liquor-tax revenues when mailers are notified of the new postal rates.

Why Are the Postal Service's Financial Problems Such a Surprise?

The U.S. Postal Service's financial problems have, of course, been big news lately, but they should hardly be a surprise.

It didn't take a genius to see this coming; here's what appeared in Dead Tree Edition almost two years ago:

"Although the Postal Service is on track to become insolvent within a couple of years, Congress has shown no appetite for wrestling with the problems that vex the USPS. The Postal Service's requests to stem the financial tide -- by eliminating Saturday delivery and eliminating the prepaid retiree-benefit requirement, for example -- will inevitably lead to a Congressional discussion of whether postal rates should be raised."

USPS is still trying to eliminate Saturday delivery and the prepaid retiree benefits. And recent Obama Administration support for a one-time higher-than-inflation-rate increase in postal rates (See Obama Supports Postage Increase: Is He Dissing the Print Industry?) means Congress is indeed likely to discuss raising postal rates.

That article from two years ago, by the way, was about the idea of letting the Postal Service conduct national lotteries as a profit-making venture. ("Look, Marge, I won a hundred Forever Stamps!") I haven't seen that idea come up in recent Congressional discussions. But it just might.

One good thing about all the political and mainstream-media attention being paid to the Postal Service's finances is that it's finally bringing to light how Congress has made a mess of the agency's finances.

Perhaps the best "ah-hah" MSM commentary was published yesterday by Bob Sullivan, a consumer-affairs reporter for MSNBC, in explaining that USPS is not looking for a bailout:

"In fact, it's the Postal Service that’s currently bailing out the U.S. government. Politicians have been raiding Postal Service revenues for years, using them to make the federal deficit appear smaller than it really is. The fiscal gyrations are so twisted that the Postal Service is right now forced to pre-pay health care benefits for employees the agency hasn't even hired yet — in fact, for many future employees who haven't even been born yet — all to artificially shrink the federal deficit. It's these crushing accounting tricks, not the cost of delivering mail, that has pushed this 200-year-old institution to the brink."

By the way, that's not much different -- but, frankly, better written -- than what Dead Tree Edition published in September 2009:

"The billions of dollars the Postal Service pre-pays every year into a retirement-benefits fund have nothing to do with retirees and everything to do with making the federal deficit look smaller. Congress is playing an accounting shell game, with the cost of the payments being passed along to mailers in the form of higher rates. That has made mailed products increasingly uncompetitive with such electronic substitutes as email and Web sites, leading to volume decreases and excess capacity in the postal system."

Related articles: How Congress Bankrupted the Postal Service in 3 Easy Steps and How USPS Could Bypass Congress on Saturday Delivery.

Mooks and Canucks: The Bookazine Invasion Crosses the Border

Barely a week after Dead Tree Edition chronicled the rise of bookazines at U.S. newsstands, word comes that the hybrid publications are on the march in Canada as well.

"Special interest publications -- spinoffs from a core magazine -- are definitely a growth area for traditional publishers," the Canadian Magazines blog quotes Maryam Sanati of Toronto Life telling a meeting of Toronto editors.

Her advice includes "build on your publication's core competencies," "repurpose what you can from the main book", and "be as specific as possible." Sanati's formula for SIPs: "Very specific, very vertical = very successful."

Her goal is to meet the needs of specific consumers so well that "the newsstand-only products leap off the racks."

That raises a question relevant to both Canadian and U.S. bookazines: Why do we refer to them as “newsstand-only” books when we publishers claim to have gone multimedia and multichannel? Why aren’t we calling them “non-subscription” products and selling them on the Web and in editions for Nook, Kindle, iPad, etc.?

When NOT To Use a QR Code

With all of the excitement about Quick Response codes among print people these days ("See, we're still relevant in the Internet age!"), it's easy to forget that they aren't right for every occasion.

A colleague in the magazine industry relates this recent incident: A customer submitted a print ad with a QR code, which my friend subjected to the Paranoid Production Manager's 3 Tests for QR Codes. (FYI, all good production managers are paranoid.):

1) Is a URL shown with the QR Code? That might not be necessary in countries like Japan where using QR codes is second nature. But in less advanced countries with more primitive phone systems and many people who don't know what to do with two-dimensional barcodes -- like, say, the United States -- not including a Web address will hurt response. Check.

2) Is the QR code readable? There are some real horror stories about promotions containing QR codes that weren't readable. Check.

3) Does the QR code take you to a web page that is relevant to the ad? Just because the code is readable doesn't mean it directs readers to the correct web page. Designer have been known to make mistakes. Check.

But then my colleague spotted a problem: The promotion was for the sale of a product that has to be shipped to the buyer, which means the buyer has to enter credit-card or PayPal data, email address, and mailing address. That's way more typing than most people want to do on the typical smartphone. The client agreed that it should remove the QR code from the ad.

Moral: Don't use QR codes if the landing page is not optimal for mobile devices.

Other articles about managing print projects include:

• 12 Telltale Signs That You Are A Printing Geek
• The Changing World of Print Buyers: An Interview with Margie Dana

Facebook Is Doomed, BoSacks Says

There are those on Wall Street who say that Facebook will be worth $100 billion when it goes public next year, but the magazine industry's favorite pundit has a different view of the company's outlook.

"I'm prepared to predict the death of facebook. It's lost its way & in oriental terms has no face. Over-commercialism & abuse will kill it," BoSacks (AKA Bob Sacks) tweeted yesterday.

So who are you going to believe -- a bunch of greedy MBAs eager to cash in on the next big thing? (Remember when Enron was a can't miss?) Or a guy who helped found High Times magazine and then started what may be the first e-newsletter?

My money's on Bo. After all, he was a magazine production guy (you can always trust us), and he frequently quotes an obscure blog known as  Dead Tree Edition in his newsletters.

I just wonder what will happen to all the stuff people have put on their Facebook pages when that social network circles the drain. Maybe they'll be able to port it over to their Friendster accounts.