The U.S. Postal Service is having some serious financial trouble that could result in a 5% or 6% postal rate increase for magazine publishers next year. The USPS lost $1.1 billion in the third quarter and expects to continue losing until the year's end.
This leaves circulators puzzling over what to do next since the marketplace hasn't been kind to magazines in the past five years and every publisher has seemingly already done everything possible to save cash.
The first step circulators seem to be taking is putting a greater emphasis on digital editions. At Access Intelligence, Sylvia Sierra, senior VP-corporate audience development, plans on offering more digital editions. “One idea is offering digital-only ... [or creating] a low-cost subscription rate that covers the manufacturing and distribution, and offer it to those who really do not want digital delivery,” she said. “Direct mail offers will continue to decline in favor of electronic promotions.”
Gloria Adams, corporate director of audience development at PennWell Corp., said that the uptick in prices will force more and more content to digital. “I hope the USPS knows that they are working to put themselves out of business,” she said.
However, when it comes to digital, Laura Wieringa, circulation manager at Allured Publishing Corp., reminded circulators to consider what advertisers think when pushing digital editions. “Some advertisers embrace the value of digital; for others, there is a longer learning curve,” she said.
David Straus, legal counsel for American Business Media, who is heavily involved with postal issues in Washington, D.C., encouraged publishers to co-mail as much as possible. “It's just going to have to be self-help to make sure that they are co-mailing to the maximum extent permitted by the practicalities of doing so and are not being held back by reluctant printers,” he said, referring to printers that don't want to spend the money to create full co-mailing facilities.
At Reed Business Information, Michael Cohen, director of manufacturing and distribution purchasing, said the company is looking to the usual suspects to save money: reductions in trim size, paper weight and grade changes, and tightened press runs to reduce noncirc copies. “We have been successful in optimizing our title specifications and gaining incremental savings through our co-manufacturing and co-mailing programs,” Cohen said.
But postal is just one of the straws being loaded onto the proverbial camel's back: paper-price increases, diminishing ad pages, oil surcharges on distribution and an unstable economy are among the forces making life miserable for circulators. That pressure “really takes a toll and challenges our ability to maintain the bottom line,” said Kim Clothier, director of circulation at the Fabricators and Manufacturers Association. “Digital will continue to grow,” she added, “and we probably will see publications go digital to try to survive.”
But, Clothier warned, fellow circulators should not depend too much on digital: “We have to continually search for every little way to possibly save money and/or generate revenue,” she said. “Once in a while, you might hit a home run, but the majority of these opportunities will probably generate small returns. All of those little bits add up.”
The little bits Clothier mentioned include selling banners on the sub form/thank you pages, partnership opportunities to co-market to customer lists, any kind of service a circulator can offer and trading resources for services.
Michael McShane, national distribution director at Reed Business Information, suggested that publishers take advantage of any co-opportunity in distribution: co-mailing, co-manufacturing, co-stitching, co-binding or co-shipping. He also recommended trying to save on transportation, trucking and airlifts. “The more weight you combine, savings will show on pickup and delivery” he said. “Freight companies will work with you.”
McShane advised publishers to monitor their deliveries. RBI uses Red Tag News Association, he said. “Hold the USPS accountable. How can you ask for rate increases when my delivery is so poor? Get yourself out there. Pick up a phone. Make sure USPS facilities where you drop know your books, know who you are. It makes a difference,” he said.
Meanwhile, unlike pretty much everyone else in magazine publishing, executives at Tabor Communications, publisher of GRID today
, don't seem to be sweating the postal uptick at all. “As our titles are all digital, we won't be affected by this news,” said Deb Walsh, director of audience development for Tabor. M