You Won't Believe What This Fortune Teller Predicts for Publishing in 2015!

 Smart phones, not-so-smart publishers, and hot new trends: 24 crazy predictions for the new year

Media consultant

When glancing at my article in the current issue of Publishing Executive, I had a revelation: Now that one of the publishing industry's leading magazines had called on me for predictions, I’ve graduated from blogger to media pundit.

And then my heart sank as I realized I had violated a cardinal rule of the International Order of Pompous Media Pundits: In its six-plus years of existence, Dead Tree Edition had never published a year-end list of predictions for the coming year.

With 2015 already under way and prognostication being new to me, I scraped up 50 bucks – Dead Tree Edition’s entire annual research budget – and headed over to Madame Marie, a local fortune teller and door-to-door magazine saleswoman.

Here are her 24 startling (mostly) predictions about magazines, the three Ps (postal, paper, and printing), social media, and publishing in general for 2015. If some turn out to be true, you can be sure I’ll be writing “told ya so” pieces in the next 12 months. And you can blame the wrong ones on Madame Marie:

1) Postal rates will not decrease, even though the exigent surcharge is set to expire this summer. Not sure if that will be from a court order or Congressional action. When I asked Madame Marie to explain, she responded, “What, you think I have crystal ball or something? All I know is, don’t ever bet on government getting rid of a temporary tax or fee.”

2) More web sites will jump into the printed magazine business. But they will not be welcomed into the fraternity of consumer-magazine publishers because they won’t have bloated ratebases or sell annula subscriptions for $5.

A postal bankruptcy would be, like, a bummer, man.

3) Three-dimensional printing will grow almost as fast as the buzz about it. By June, ad agencies will start demanding makegoods if their clients’ magazine ads aren't printed in 3D.

4) USPS will announce a new strategic plan called Seven Six Three – delivering Amazon packages seven days a week, other parcels Monday through Saturday, and everything else three days a week.

5) If you think native advertising is bad, wait until you see foreign-born advertising.

6) Mark Zuckerberg’s new book club will spread like wildfire, until people start seeing spammy “sponsored” posts and photos of distant acquaintances’ new puppies in their books.

7) Despite a decent economy, the market for huge yachts will plummet as billionaires join in the new craze for tasteful displays of wealth – buying a daily newspaper. When I asked Madame Marie whether the newspapers would still struggle, she said, “If you have to ask how much money they will lose, you can’t afford to buy a newspaper.”

8) Congressional Republicans will try to push the U.S. Postal Service into bankruptcy to break the postal unions – until voters realize a USPS bankruptcy would turn Forever Stamps into Never Stamps.

BoSacks flyin' high: Our consultant's
source of inspiration and insight

9) Congress’ next attempt at postal reform will be putting USPS up for sale. FedEx and UPS will quickly say, “No thanks.” However, the idea of buying out the middleman will intrigue Amazon, until it runs the numbers and realizes that, with proper accounting for pensions and retiree benefits, the Postal Service would be profitable. And you know how Amazon hates profits. To console himself, Jeff Bezos will buy another newspaper.

10) Amazon will go back to working on delivery drones.

11) Wal-Mart will announce the development of anti-drone missiles that can be mounted on store rooftops.

12) A major publisher will redesign its web site, then realize the snazzy new look and upgraded user experience can’t be seen on smartphones, which represent 80% of the site’s visitors.

13) “Big data” will be so hot that tech companies will try to differentiate themselves with new projects involving “Really Big Data,” “Huge Data,” and “Massive Data.”

A source of insomnia -- and much cursing

14) Tablets will be linked to insomnia. We’re not talking about the recent study proving that using e-readers before bedtime disrupts people’s circadian rhythms and makes it hard to fall asleep. (That’s so 2014!) We’re talking about MediaVest, the ad agency that is refusing to pay for the portion of a magazine’s circulation distributed via tablet editions. As Madame Marie put it, while meditating on a 1978 copy of High Times with the BoSacks centerfold, “Magazine advertising executives will stay up all night wondering whether to grow a pair and tell MediaVest it needs a rectal-cranial extraction.”

15) With tight supply, rising prices (for now), and strong dollar, the U.S. will be the market of choice for manufacturers of coated paper around the world. Because of low energy costs and the recent shuttering of inefficient mills, North American producers will be able and willing to protect market share by cutting prices.

16) As usual, “that damned newsstand” will be a frequent utterance of magazine publishers. But in 2015 the phrase will refer to the long-neglected Apple Newsstand for marketing iPad editions of magazines. The regular newsstand system – the one that sells printed magazines – will actually register gains in 2015 after years of declining sales.

Google What?

17) The content-marketing bubble will burst when non-publishing companies realize how few people are viewing their content and that it's not generating actual sales. Some will find it more efficient to use -- perish the thought -- paid advertising.

18) Trying to ride the next big wave, a former content-marketing/social-media/SEO consultant will publish a book called How Publishers Can Profit From Chris Christie-sized Data.

19) Web advertisers will have a radical idea: Only pay for ad impressions that are seen by actual human beings.

20) Google will pull the plug on Google Plus. No one will notice the difference.

The next big thing in social media

21) The big news in social media will be a simple new app that lets people share their pain and disappointment by sending out messages saying, simply, “Oy!”

22) Magazine publishers will pour lots of resources into cool new ancillary enterprises that they will brag about at industry conferences. A few of these ventures will actually turn a profit.

23) Some magazine ads will still include QR codes. And consumers still won’t bother scanning them.

24) “Oh, one last thing,” added Madame Marie, still clutching her sacred copy of High Times. ‘Linkbait’ headlines designed to exploit people’s curiosity will take over the Internet. Even your blog will join the trend.” She’s already been proven right on that one.

Nine Ways the Postal Service Is Not Like a Real Business

The hand wringing about the U.S. Postal Service’s broken “business model” doesn’t fool us. The “dot com” at the end of “usps.com” doesn’t fool us. The nagging of politicians and pundits who say USPS should operate more like a business doesn’t fool us.

Despite all the talk about the Postal Service being a business, regular people understand it has the soul of a government agency and in fact is not allowed to act in a businesslike manner. Here are nine examples of how USPS is not like a real business:

1. Real businesses underfund their pensions. The Postal Service overfunded its pension plan (to the benefit of the federal government, not postal employees).


2. When a too-big-to-fail business gets into financial trouble, the federal government often props it up with interest-free loans in the name of economic stimulus. When the Postal Service ran into financial trouble, Congress insisted that it continue lending interest-free money to the federal government in the guise of prepaid retiree health benefits. 


3. A real business with thousands of employees might pay its CEO $50 million a year, and no one bats an eyelash. But if the Postmaster General, who oversees 600,000-plus workers, earns 1% of that amount ($500,000), watch the politicians fall all over themselves lambasting the Postal Service’s lavish spending.


4. Real businesses are governed by a board of directors, generally consisting of about a dozen leaders who are or soon become intimately familiar with the enterprise. But the supposedly independent Postal Service in reality is governed by a 535-member board known as Congress, whose members generally know nothing about the USPS’s operations except how to get a post office named and how to prevent it from closing.


5. Board members of a real business have powerful incentives, like stock options, to make the company run more efficiently. But a member of the Postal Service’s real board (that is, a Congressman) only has incentives to preserve inefficiencies that maximize the number of postal employees and facilities in his district.


6. When the board of a real business fails to act, board members get punished with a lower stock price and the prospect of not being re-elected. When the Postal Service’s real board of directors fails to act, postal customers get punished with higher prices.


7. Real businesses make money on monopolies – at least until the trust busters come along. The Postal Service has a government-protected monopoly on the mailbox, but it comes with such onerous conditions that the monopoly is unprofitable.


8. Real businesses make campaign contributions and use lobbyists to curry favor with members of Congress. The only “campaign donation” USPS makes is the franking privilege, which enables Congress members to send free mail to constituents (usually just before election time). USPS's lobbying efforts are limited severely by law.


9. A real business that is billions in debt, has too many locations and employees, and is subject to strong union contracts would have declared Chapter 11 by now. The law would be on its side as it tried to walk away from most of its debts, scale back its operations, and even slip out of its union contracts. The Postal Service, however, apparently cannot turn to the bankruptcy courts – one more example of how the law treats it as just another government agency even though it’s supposed to operate like a business.

Do you know of other ways in which USPS is not like a business? Add a comment to this blog post or email them to me at dead.tree.edition@gmail.com. I can keep your comments anonymous if you'd like. And please see the follow-up article, 17 More Ways USPS Is Not Like a Real Business, which is based on insights from Dead Tree Edition readers.

For background information on some of the items listed above, please see:

• Overfunded pensions: Pensions: Another Government Rip-off of the Postal Service
• Prepaid retiree health benefits as interest-free loans to the federal government:Postal Relief? How About No More Congressional Thievery?
• Punishing the customers: Why the Exigent Postal Rate Increase Will Backfire
• USPS bankruptcy: Could Forever Stamps Become Worthless? What Bankruptcy Might Mean for USPS

Four Print-Related Giants That Have Defied Bankruptcy Predictions

So much for crowd sourcing.

Exactly 18 months ago, 79% of voters in a Dead Tree Edition poll predicted that at least one of four major U.S. print-related companies would be in bankruptcy court by the end of 2012. All four companies – the country’s largest magazine distributor, the largest seller of magazines, and the #2 printer and paper maker for the industry – are still afloat. Two of the four are even profitable.

Print, it turns out, isn’t dead. Maybe comatose, but definitely not dead yet.

The 743 voters in that January 2012 poll couldn’t agree which of the four would go belly up, but the vast majority thought at least one would. Here’s another look at those four organizations and where they are today:

Barnes & Noble was chosen Most Likely to Expire, with 30% of the voters saying it would be in bankruptcy by the end of the year. Pundits were dubious whether B&N’s Nook venture would be sufficient to save the big bookseller from the rapid shift to digital media.

The bookstores, however, continue to be profitable, keeping the company afloat despite continuing losses in the Nook business, which has turned out to be more of an anchor than a lifeboat. The company seems likely to spin off the Nook business or at least to de-emphasize sales of Nook tablets.

What’s not clear is what would take the place of the huge Nook department in the typical brick-and-mortar B&N store. Books? Event space? Food service? Kindles and iPads? In any case, Barnes & Noble’s stock price is up 45% since Jan. 31, 2012 when the Dead Tree Edition poll ended.

Quad/Graphics was #2 on the See-You-In-Chapter 11 list with 21% of those January 2012 voters saying it wouldn’t survive the year. Meanwhile, its stock has risen 131%, it gobbled up another major competitor (Vertis) in January, and it’s apparently on pace for a profitable year.

It’s not that catalogs, books, and direct mail are suddenly growth businesses, but those who predicted the sort of catastrophic declines that devastated the newspaper industry have so far missed the mark. Quad has been able to grow market share with acquisitions and to battle declining demand and prices with efficiency-improving plant consolidations.

A close third to Quad was Verso Paper, which has continued to defy predictions that bankruptcy reorganization was just around the corner. Its stock price is down 14% since the January 2012 poll, and “profit” is still not part of Verso’s lexicon.

The heavily indebted paper maker seemed too fragile to survive a major disaster like the May 2012 explosion that led to the closing of its Sartell, MN mill. But an insurance settlement and sale of the mill property have provided cash infusions, and prices for coated paper have remained remarkably stable despite eroding demand.

And then there’s the U.S. Postal Service, which brought up the rear with only 20% of the voters predicting a 2012 bankruptcy despite suffering by far the largest financial losses. Commenters noted that USPS was on a financially unsustainable path but said Congress would eventually do something because a shutdown of the Postal Service would be politically unacceptable.

But, so far, Congress has done little except to prevent USPS from curtailing Saturday deliveries and to extract projections from postal officials about the exact hour and day when USPS will run out of cash. Oh, and of course to name more post offices – a task so crucial to national security that even one of the most do-nothing Congresses in U.S. history would not shirk it.

If the Postal Service were a real business, its stock price would be zero now. Then again, if it were a real business it wouldn’t have loaned the federal government billions of dollars interest-free in the form of “prepaid” retiree health benefits. And Congress would probably have bailed it out by now.

Related articles:

• Is the Postal Service Really Broke? 
• Congress Is Fixin' To Fix the Postal Service
• Weak Demand Will Mean Higher Paper Prices  
• Yankee Invasion: Quad/Graphics' Jonesboro Closing Marks End of an Era 
• Verso Changes Course -- Why?

What Happens If the Postal Service Runs Out of Cash?

The U.S. Postal Service’s cash crunch could cause a “catastrophic” disruption of mail service this year, according to a government official who wants USPS to reveal its crisis-management plans.

The Postal Regulatory Commission “should request a description of the Postal Service’s priorities and plans for providing service across the Nation and across classes in the event cash shortages require services to be reduced,” PRC staffer Kenneth E. Richardson told the commission Friday.

“Although the Postal Service survived FY 2012 without running out of cash to operate, continuing operations for a second year at such low cash levels . . . is risky, not only from a financial standpoint, but from the standpoint of potential service disruptions and the impact on mailers,” Richardson, a PRC public representative, wrote.

During four months of FY2013, Richardson noted, USPS projects it will have less than $1 billion of liquidity, which is four days of expenses. If actual results are only slightly below those projections, the Postal Service will lack “sufficient working capital to pay its employees and suppliers,” and “its ability to provide effective and regular postal services will be in jeopardy.”

Slim margin for error
USPS has acknowledged that its “margin for error is slim – a commercial

A Surprise Leader in the Print-Media Bankruptcy Sweepstakes

Which would you rather own: paper mills, large printing plants, a leading e-tablet platform, or the U.S. postal system?

Here’s another way to look at it: Which of those assets does not have to contend with overcapacity in a shrinking market.

In both cases, I thought the answer overwhelmingly favored tablets, which is why the results so far of the current Dead Tree Edition poll (in the right column, just below the first ad) surprise me so much. The 30% of voters who think Barnes & Noble (owner of the Nook tablet platform) will go bankrupt this year is well ahead of the number voting for Quad/Graphics (23%; printing presses), the U.S. Postal Service (22%), and Verso (paper mills, 20%).

Update: Final poll results are at A Major Print-Media Bankruptcy Is Likely in 2012, Voters Say.

Financial markets seem to have pegged Verso as the most likely to succumb among the three private companies. Its market value has dropped precipitously in the past year, to 84% below its peak and less than 1/30th of annual revenue. B&N and Quad both have market values of about 1/10th their annual sales.

The comments about the article introducing the poll, both on this site and in various LinkedIn groups, are some of the best I’ve ever seen. I extended the voting deadline by a week to 3 p.m. Hawaii time (8 p.m. Eastern) this Tuesday because I find the comments and the voting so interesting. As they say in Chicago, vote early and vote often.

Here are some of the best comments:

Could Forever Stamps Become Worthless? What Bankruptcy Might Mean for USPS

With news reports of the U.S. Postal Service talking to restructuring advisors and being close to bankruptcy, it’s time to ask what might seem like a silly question: Are Forever Stamps really forever?

In the past two weeks, Reuters described USPS as “on the brink of bankruptcy”, the Associated Press explored what happens “in the event of a shutdown”, and the San Francisco Chronicle says postal executives are meeting with corporate “restructuring” (AKA bankruptcy) advisors.

Canceling the $2.5 billion worth of unredeemed Forever Stamps held by tens of millions of Americans is a political non-starter. The same goes for the couple of billion dollars worth of other USPS liabilities held by postal customers, such as money orders, non-Forever Stamps, and box rent.

The Postal Service would never propose walking away from those obligations, and Congress would never approve it.

But they might not be given the choice.

When a private business goes through bankruptcy reorganization, it cedes to the court control over which liabilities get paid. Unsecured creditors (like owners of Forever Stamps) are in line behind secured creditors and often end up with nothing, as you might know if you’ve ever owned a gift card for a retailer that went Chapter 11.

No one has spelled out what a “bankruptcy” or “reorganization” would mean for the Postal Service, though clearly there are thoughts in some quarters about how to void the Postal Service's labor contracts and selected financial obligations.

The point is that, whether liberal or conservative, you should be wary of any effort to present bankruptcy court as the answer to the Postal Service’s mounting debts and financial losses.