The day before announcing that the U.S. Postal Service will not increase most postal rates in 2010, Postmaster General John E. Potter urged industry leaders attending the Magazine Publishers of America's Innovation Summit to step back and look at the big picture.
“We have to have a national debate about what this great institution is going to do in the years to come,” he said during an on-stage interview conducted by Cathie Black, president of Hearst Magazines.
The summit kicked off at the Grand Hyatt hotel in New York on Oct. 14, with breakout sessions at the Hearst and Time & Life buildings the following day.
Declining mail volume has been at the root of the USPS' financial woes, Potter told the MPA audience on the summit's opening day. Total pieces of mail declined from 213.0 billion in 2006 to 212.2 billion in 2007, then dropped to 202.7 billion pieces in 2008—the largest volume decline since the Great Depression. Potter estimated that mail volume totaled well under 200 billion pieces in fiscal 2009, which ended Sept. 30.
“In reacting to the recession, we're doing everything we can to draw our costs down and keep our service up; but we have to look forward and think about changing customer behavior,” Potter said. “The real challenge is to get everyone thinking 10 years out. What percent of magazines are going to be online as opposed to hard copy? Similarly, what percent of credit card bills are going to go through the mail versus online?”
After thanking MPA members and lobbyists for helping to communicate to Congress and the White House the importance of the USPS to the magazine business, Potter said, “We need to keep these issues at the forefront.”
Congress must authorize any changes in the business model that can help solve systemic problems, he said, such as reducing the days of mail delivery from six to five, allowing products other than U.S. stamps to be sold in post offices or contracting out work from the USPS to private companies.
In an advisory issued the next day, Potter stated that “there will not be a price increase for market-dominant products, including first-class mail, standard mail, periodicals [and] single-piece parcel post” for 2010.
The two-day Innovation Summit was a newly created event held in the same month that the association has traditionally held its American Magazine Conference, a resort-style conclave that was canceled this year.
“This conference will be unlike other annual magazine fall conferences,” said Nina Link, MPA president-CEO. “This year, we're all-business.”
Other general-session topics included the latest printing technologies, the evolution of e-reading devices, opportunities to deliver magazine content and make money with portable devices, and paid content as a business model of the future.
The event attracted more than 400 magazine company executives, sponsors and other participants.
Last month, American Business Media reported that recent developments affecting the USPS would contribute to an overall savings of about $25 million for its 300 members. The association cited in particular Congress' decision to absolve the USPS from paying $5.4 billion to its retiree health care fund.
ABM estimated that without these association-supported developments, the USPS would have been forced to raise postal rates 7% to 8% in 2010.
Senior Reporter Christopher Hosford contributed to this report.