Rethinking the "Green" Magazine Issue

Finally! A magazine publisher is doing a “green” issue on paper that truly is environmentally friendly.

The usual approach to environmentally themed issues is to use paper with a bit of recycled content without regard to any other environmental issues or whether the recycled content is being used appropriately. But for its April issue, the “Energy and Environment Guide”, U.S. News & World Report has actually put some thought into (and dollars behind) making the issue’s paper earth friendly.

As a result, all of the issue’s body stock will be on carbon-neutral paper with fiber that has been certified as being sourced from sustainably managed forests, the publisher says. The body stock will be Electracote, a coated-mechanical paper from Catalyst Paper’s Port Alberni, British Columbia mill. Dead Tree Edition has already noted the product’s ill-advised name but has no qualms about Catalyst’s low emissions of carbon dioxide and other gases that have been linked to global climate change. Its environmental record has earned it recognition from the World Wildlife Fund and other environmental groups.

“U.S. News has been looking for ways to reduce our carbon footprint," said Mark W. White, the publisher's Vice President of Manufacturing (and a member of my LinkedIn network.) "We applaud the efforts Catalyst has made to reduce its carbon footprint while maintaining the quality of its paper.”

Like most other Catalyst products, normal Electracote has a low carbon footprint because the vast majority of the mill’s energy comes from such carbon-neutral sources as hydroelectric dams and forestry waste (bark, for example). A groundbreaking study from The Heinz Center, “Following the Paper Trail,” found that a majority of American consumer magazines’ carbon footprint came from energy used to make the paper.

U.S. News is going a step further by participating in the Catalyst Cooled program, which was pioneered by Rolling Stone magazine but has had few other participants. Through Catalyst Cooled, U.S. News pays a small premium to offset what few greenhouse-gas emissions occur at the mill to make the paper. The publisher has been using Catalyst Cooled for more than a year, but this is the first time the paper will appear throughout an entire issue of the magazine.

Catalyst is careful to call Catalyst Cooled paper “manufacturing carbon neutral” because the offset only covers mill emissions, not what occurs elsewhere, such as transport to and from the mill. U.S. News says it minimizes the transport-related emissions by having paper shipped to its printer in full railcars.

Carbon offsets have been controversial because some are of questionable environmental value and because they have been seen as a license to pollute. But Catalyst has one of the best records in any industry for reducing greenhouse-gas emissions. And the offsets pay for a park-reforestation program that clearly results in carbon sequestration.

What about recycled content? Here is U.S. News' answer: “Catalyst is one of the largest manufacturers and users of post-consumer recycled pulp in North America. All of that pulp goes into lower-brightness products like newsprint. The yield (the amount of recycled pulp that ends up in the paper) is more than 85% for such products but would be less than 70% for the brighter coated paper that will be used in our April issue.” In other words, U.S. News avoided the environmentally questionable practice of upcycling.

What U.S. News does not mention is that Electracote uses far less virgin fiber than any allegedly eco-friendly coated freesheet with 30% post-consumer recycled fiber. That’s because of its light weight and the use of mostly mechanical (groundwood) pulp, which consumes far less wood fiber than does chemical (kraft) pulp.

And for those who advocate recycled paper because of its supposedly lower carbon footprint, here’s an interesting tidbit from a recent Catalyst financial report: “The Company’s overall carbon footprint increased in 2008 with the acquisition of the Snowflake mill, which is located in a heavily fossil fuel-dependent jurisdiction and whose primary energy source is coal.” The Arizona mill makes newsprint solely from recycled fiber.

There’s a place for both recycled content that is used appropriately and for virgin fiber from sustainably managed forests. Catalyst’s approach is a good model to follow – processing lots of recycled paper into pulp, using that pulp in the most environmentally appropriate products, obtaining most of its virgin fiber from sawmill residuals, supporting sustainable forestry, working to reduce its energy consumption, and trying to get more of that energy from carbon-neutral sources.

Is Catalyst really more virtuous than most other profit-driven paper companies? (And when was the last time you saw “profit” and “paper company” in the same sentence?)

Enlightened management is part of the story, but for the most part its location in British Columbia shapes its environmental outlook. Native peoples there have been practicing sustainable forestry for centuries. Hydroelectric power is abundant. Vigorous debates and boycotts shook its paper and forestry industries in the 1990s. BC has probably the strictest forestry regulations in North America. And there’s little debate in the province about whether global climate change is real – not when a plague of beetles spurred by unusually warm winters is chewing up its stunningly beautiful forests.

“Recycled content” may be an easy sell to consumers. But let’s hope more publishers (and other users of paper) start doing something about their carbon footprints as well.

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.

Source Interlink Was Almost in the Drink

Before Time Inc. and Source Interlink kissed and made up today, their lawyers each made some interesting statements about the other company.

Source is behind in its payments to Time to the tune of about $120 million, Time's attorney said during a hearing last week. "We had a very real concern that we were never going to collect any meaningful portion of that amount of money," Rowan D. Wilson continued. The transcript is at http://amlawdaily.typepad.com/SourceTROtranscript.txt.

Source didn't deny that it was in financial trouble: "Your honor, our client, Source Interlink, is going under, and it is going under as we speak." Source attorney Marc E. Kasowitz said. "And the reason it is going under is that it is a magazine wholesaler and the defendants who have been supplying it with magazines -- People magazine, Time magazine, Sports Illustrated and the like -- for seven uninterrupted years have now abruptly cut it off from 80 percent of the supply of magazines that is the lifeblood of its business."

"As a result, Source's business is being destroyed," Kasowitz continued. "Its customers are leaving. Its employees are being raided by competitor wholesalers. Its bank credit is evaporating. Its vendors are threatening to demand cash in advance or cash on delivery. And if things continue the way they are going, Source will not be able to make its payroll this Friday. The result of that, your Honor, will be that the company will have no choice but to lay off thousands of employees."

The two companies announced today that they had settled Source's antitrust lawsuit against Time and its newsstand-distribution arm and that the two sides had "reached a multi-year agreement securing Source's access to Time Inc. magazine products." There was no mention of what happens to the money Source owed Time or of any settlement talks between Source and the other defendants, which include national distributors Curtis and Kable.

Shootout at the Newsstand

Several people have asked for my take on the current turmoil in newsstand distribution. OK, here is Dead Tree Edition's exclusive analysis: The U.S. newsstand distribution system is a mess. (Please see the Feb. 19 update to this article.)

Trade publications have been writing about problems with newsstand distribution in the U.S. since Ben Franklin was a teenager, and just today Audience Development posted an interesting piece called "A Printer's View of the Newsstand Chaos". I won't rehash what's already been published, but here are a few tidbits that might provide some perspective:

• The crash in the market for recycled paper has helped precipitate the crisis. A year ago, a pound of unsold magazines was worth more than 6 cents in the recycled-paper market; today, it would be less than 2 cents, according to Pulp & Paper Week. That represents millions of dollars in lost revenue for the big wholesalers like Source Interlink.

• One of the best (and most entertaining) ways to keep up with the Source Interlink vs. Time/Curtis battle is on Yahoo!’s Source Interlink message board . It has all kinds of nasty comments and juicy rumors, some of which have turned out to be true. With a click or two, you can even track Source’s stock price, which bounced up to a whopping 10.5 cents per share today, and see that its current liabilities exceed its current assets. (Not a good sign.)

• Because of a temporary restraining order obtained by Source Interlink, newsstand distribution in much of the country is at a standstill until a court hearing on Monday (Feb. 23). Some magazines, especially weeklies, have been shredded without ever being sent to market, and some monthly magazines are likely to go on sale late.

• Something that hasn’t been explained well in the trade press is the role of the wholesalers and national distributors. The wholesalers don’t just deliver publications to stores, they provide all the merchandising – removing old copies, putting new copies on display, counting and accounting for returns, etc. They collect money from the retailers and pay it to the national distributors like Curtis, which in turn pay their publisher clients. Two of the four big national distributors, Time Distribution and CoMag, are owned by magazine publishers.

• And something that hasn’t been mentioned in the trade press is who owes what to whom. When some wholesalers got into trouble a few years ago (before the waste paper market bailed them out?), there was talk that some were behind in their payments to the national distributors; at least one sizable wholesaler went bankrupt. It’s not clear this time around what the accounts payable/receivable situation is.