Dead Tree Edition

Mailers Rallying Against Rumored 10% Postage Hike

2013-06-10T17:16:00.000-10:00

Mailing-industry leaders fear that the U.S. Postal Service is on the verge of requesting emergency rate increases of up to 10%.

After lying dormant for a couple of years, the multi-industry Affordable Mail Alliance was reorganized on Friday to fend off expected "exigent" (higher than inflation) rate increases for the ailing Postal Service. The group started rallying mailers today to contact members of the USPS Board of Governors, which is rumored to be discussing such rate increases when it meets next week.

The alliance was formed in 2010 when USPS sought to solve its financial problems by sidestepping the inflation-based cap on rate increases for First-Class, Standard, and Periodicals mail. That attempt failed, but this time the Postal Service is in more dire circumstances, perhaps only months from running out of cash.

When the Board of Governors backed down in April from a money-saving plan to curtail Saturday delivery, it asked postal management to examine options for increasing revenue. It specifically mentioned the possibility of exigent increases, especially for supposedly unprofitable classes like Standard flats and Periodicals.

One scenario being discussed among mailers is an exigent increase of 5% to 7% for all market-dominant classes plus an additional 3% for the unprofitable classes. That's on top of the usual inflation-based increase, which could be close to 2% in January.

Annual rate hikes for the market-dominant classes are generally capped by changes in the Consumer Price Index. But the law also has a provision “whereby rates may be adjusted on an expedited basis due to either extraordinary or exceptional circumstances.”

The law, however, does not provide the Postal Regulatory Commission clear guidelines as to what constitutes "extraordinary or exceptional circumstances" justifying a special rate hike.

Mailers have questioned whether exigent rate increases would actually backfire by shaking confidence in USPS and the stability of postage rates, which would accelerate the shift to other media.

In a related matter, the PRC today rejected the Postal Service's proposal to use a one-time "Technology Credit"to justify rate increases, a gambit described in New Postal Incentive Could Backfire for Mailers.

Related articles:

Invitation to Extinction? Newsstand Professionals in an Up-roar

2013-06-05T16:47:00.002-10:00

Those of us on the print side of the publishing industry tend to get a bit touchy about comparisons to dinosaurs, which usually come amidst discussions of e-this, digital that, and print-is-dead pronouncements.

Especially touchy are the people responsible for “newsstand” marketing, who are perhaps the most endangered species in the Printosaurus genus.

Ad pages and print subscriptions have stabilized, but newsstand sales keep declining at an annual rate of about 10%. (“Newsstand” is a misnomer because most retail sales of magazine occur at supermarkets and bookstores, with a tiny percentage at actual newsstands. And none occur online.)

So it was a bit surprising when the main trade group promoting U.S. retail sales of magazines chose to illustrate an invitation to its annual dinner with a photo of several large, extinct reptiles. That’s hit a raw nerve for some folks in the newsstand field.

"Is that supposed to show the museum or the dinner's attendees?" one invitee to the IPDA dinner asked.

The depicted dinosaurs are part of a display at Drexel University’s Academy of Natural Sciences, where the event is being held. But some people in the business fear they will soon be the ones on exhibit in the Hall of Extinct Species.

Cheer up, folks. Scientists now tell us that not all dinosaurs went extinct. Some survived the great die-off and evolved into what we now call birds.

Survival is possible, but watch out for falling meteors.

Other Dead Tree Edition articles about newsstand sales include:

A Troubling Sign for Tablet Magazines?

2013-05-29T17:29:00.000-10:00

A study that purportedly shows tablet users' "preference for digital magazines over print magazines" actually suggests that people really don't like tablet magazines.

"23% of tablet users prefer digital magazines on tablets over print," says a blog post from Mequoda about its new study "How American Adults Consume Magazines on Tablets." The blog post and trade-media coverage interpret the data as meaning that tablet magazines are about to enter a boom period.

But here's the real news: Three-fourths of U.S. tablet users do not prefer digital magazines to print magazines. Read that sentence again: It doesn't say three-fourths of U.S. Luddites or of adults or of magazine readers; it says three-fourths of tablet users.

Isn't that a bit like people with Blu-Ray players preferring to watch VHS tapes?

In the same study, 51% of tablet users prefer streaming video to broadcast and 39% prefer e-books to printed books.

Yes, tablet use is growing. Mequoda found that a majority of U.S. internet users have access to a tablet. And yes people are learning to do more and more with them. Tablets are displacing laptops for many people.

But tablet owners apparently haven't fallen in love with reading magazines on their tablets.That may be why Newsweek has reportedly gone from 1.5 million subscribers to 470,000 less than six months after dropping print to go digital-only.

Despite all the hype about iPads and Kindles, U.S. magazine publishers are making far more money on the web and generally wondering when their tablet investments will pay off.

In fact, though no one seems to talk about it, the real game-changing technology for subscription magazines has been browser-based editions -- that is, digital replicas that can be read on any computer. Many a B2B publication has shifted 50% or more of its subscription base to these simple page-flip editions, but few print-and-digital publications get even 10% of their circulation from tablet editions.

Other recent Dead Tree Edition commentary on the magazine industry includes:

FSS Postage Pricing Will Affect Magazines, Catalogs, and Printers

2013-05-28T13:13:00.002-10:00

The U.S. Postal Service’s growing confidence in the troubled Flats Sequencing System may lead to an overhaul of postal rates and significant changes at printing plants in January.

Postal officials have said recently that they plan to implement new postage rates for the Standard and Periodicals classes (and perhaps First-Class Mail) early next year that include “an FSS pricing structure.” Details have not been released, but discussions indicate the plan will include significant incentives for mailers to create FSS-optimized bundles for ZIP codes served by the giant machines while continuing to make traditional carrier-route and 5-digit bundles for non-FSS areas.

A Flats Sequencing System machine

The move would take aim at a major reason the $1 billion-plus FSS investment so far has increased USPS’s mail-handling costs more than it has reduced delivery expenses: The vast majority of flat mail is still prepared in the traditional manner, which creates extra preparation work at FSS facilities.

Most Standard and Periodicals class flat mail is currently placed in carrier-route bundles, with each bundle containing pieces destined for the same carrier route. A Periodicals carrier-route bundle may have as few as six magazines or newspapers and be only a fraction of an inch thick.

An FSS-optimized bundle, by contrast, is at least four inches thick and contains pieces from multiple carrier routes and often from multiple ZIP codes. That will mean far less handling prior to loading mail into the FSS, but also introduces a new risk: FSS machines have no “Plan B”.

Working traditional bundles on an FSS machine is somewhat inefficient but still works. The converse is not true, however. If the machines break down or are otherwise over capacity, there is no easy way to shift FSS-optimized bundles and pallets to traditional processing.

In recent meetings, such the Mailers Technical Advisory Committee (MTAC), postal officials have described the extensive work they have put in to making the FSS machines more reliable and predictable – such as studying and standardizing best operating practices, tweaking the equipment, and implementing more aggressive preventive maintenance.

Making larger bundles should increase bindery and co-mail efficiency for printers. But now they will also have to follow two very different sets of rules for bundling and containerizing flat mail – a new rule set for FSS ZIP codes and the current rules for non-FSS zones.

The FSS rules and pricing may end up being optional next year, but the incentives are likely to be high enough that commercial printers will not be competitive for producing catalogs, magazines, and circulars unless they can follow the FSS rules.

Related articles:

How Google Is Becoming the Magazine Industry's New Best Friend

2013-05-16T20:15:00.002-10:00

After siphoning off billions of dollars that used to go to print advertising, Google’s practices in recent months have provided a huge boost to many magazine publishers. The search giant is about to provide even more help for publishers' web sites -- except perhaps for those that have jumped onto the “native advertising” bandwagon.

Google revealed this week that it is close to deploying “the next generation of Penguin.” The original round of Penguin algorithm updates last year ruined some spammy web businesses but apparently jacked up search-related traffic to the web sites of many legacy publishers.

“We expect it to go a little bit deeper and have a little bit more of an impact than the original version of Penguin,” said Google executive Matt Cutts. “We’re doing a better job of detecting when someone is sort of an authority in a specific space . . . and trying to make sure that those rank a little more highly,” he said in a video released Monday.

He made no specific reference to legacy publishers. But with Google’s continuing bias toward bylined articles that are written by subject-matter experts, “Penguin 2.0” sounds like good news for magazine publishers that are active on the web (and who isn’t these days?).

Cutts’ advice to those preparing for Penguin 2.0 certainly shouldn’t scare traditional publishers, who for the most part have never really learned to write for bots because writing for real people is in our DNA: “Try to make sure you make a great site that users love, that they’ll want to tell their friends about, bookmark, come back to, visit over and over again, all the things that make a site compelling,” he said. “As long as you’re working hard for users, we’re working hard to try to show your high quality content to users as well.”

Upended by Penguin and Panda
In the past year or so, Google’s Penguin and Panda updates have already upended best practices for search-engine optimization (SEO), putting the kibosh on sleazy tactics like keyword stuffing and questionable links.

“It’s 2013 – nobody wants to read SEO content, not even the search engines,” says a recent infographic created by ContentVerve called SEO Copywriting:10 Tips for Writing Content That Ranks in 2013”. “Everything points to the fact that Google prefers natural content to obvious SEO stuff.”

ContentVerve’s tip #5 should warm the hearts of magazine publishers and other organizations with high standards for their web content: “Write LONG, in-depth, quality content. The average web page ranking on the first page of Google has over 2,000 words. Moreover, evidence points to the fact that in-depth articles get more shares and links than short, superficial ones.”

18 million experts
It’s no wonder that so many publishers have been celebrating record traffic to their web sites lately. And it’s no wonder that non-publishing companies are spending more and more dollars on content marketing that mimics the look, feel, and articles of traditional publishers’ web sites.

(Unfortunately, this trend means that the 18,134,377 self-appointed SEO experts in the U.S. who morphed into 18,134,377 self-appointed social-media experts are busy transforming/rebranding themselves into 18,134,377 self-appointed content-marketing experts.)

Cutts also warned that Penguin 2.0 will address native advertising (a term open to much debate and interpretation), especially for paid promotions made to look like editorial content.

“Now there’s nothing wrong inherently," he said, "with advertorials or native advertising, but there should . . . be clear and conspicuous disclosure so that users realize that something is paid, not organic or editorial.”

For further reading:

Cheesy porn: For a truly amazing look at how sleazy web sites can still game the search engines, be sure to check out Digiday’s recent expose of non-porn sites using sex-related searches to drive traffic to their sites: . Don’t miss the image of Velveeta sponsoring gang rape videos, a classic fail that belongs in the Marketing Hall of Shame. (Yes, it’s possible Kraft is trying to turn Velveeta into more of an “adult” product, but the porn experts I checked with were not aware of any pasteurized prepared cheese products being used in porn videos. One of them with an overly active imagination did, however, manage to dream up a plot for a proposed video to be called “Velveeta Spread.”)
Craze-y: Dead Tree Edition recently examined why content marketing has become so popular among non-publishing brands in Publishing Without Profits: What's Behind the Content Marketing Craze? Content marketing could become a real threat to traditional publishers, except right now most of it sucks.
Thank you, oh large Chinese marsupial: Google’s first Panda algorithm update, in 2011, had an immediate favorable impact on the number of visits to Dead Tree Edition: The Google Panda Update Is a Change I Can Bear. Since then, this site’s search-related traffic continues to grow despite its criticism of Google’s greenwashing.
A tale of two bit.lys: Publishing Executive has a related article I wrote about how the non-magazine ventures of many magazine publishers are thriving. I also shamelessly rip off Charles Dickens.

USPS Backs Off From Price-Hike Gambit

2013-05-08T02:55:00.000-10:00

The U.S. Postal Service is apparently backing away from an attempt to use one-time payments to mailers as justification for permanent price increases.

As Dead Tree Edition reported last month, USPS proposed to offer large mailers a one-time “Technology Credit” and then to have those credits considered a price decrease for purposes of calculating its inflation-based rate cap. That would result in permanent price increases that would eventually cost mailers far more than the maximum $5,000 credit per mailer.

USPS clarified – or changed – its position this week in response to questions from PRC Chairman Ruth Goldway:

“Revenue forgone from the Technology Credit Promotion for each class of mail will be subtracted from revenue in calculating price cap authority in the upcoming annual price change, and then the same amount will be added back to revenue in calculating price cap authority in the subsequent annual price change,” USPS wrote. In other words, any price increases resulting from the Technology Credits would be temporary.

I’m told that postal officials have claimed during a meeting with mailers that the Dead Tree Edition article misinterpreted the price-cap issue. But several private-sector postal experts have told me they agreed with my interpretation of the Postal Service’s original request, which said nothing about reversing the price increase. And Goldway apparently agreed as well.

“The Postal Service appears to propose the creation of permanent price cap authority,” Goldway wrote to USPS last week. “However, the Technology Credit Promotion is proposed as a temporary, one-time offer. How does the Postal Service intend to reflect the expiration of the Technology Credit Promotion in subsequent . . . rate adjustments?”

The PRC’s Public Representative staff had a similar interpretation, warning the commission about “the danger of creating permanent price cap authority from temporary price reductions” because that could lead to “price cap avoidance tactics.”

USPS estimates it will pay out $61.6 million (down from the original $66 million estimate) in Technology Credits to major mailers that use the Full-Service barcodes during the 12 months that begin June 1. Both Goldway and the Public Representative noted that USPS’s original filing did not show how the payouts were calculated.

In fact, the Public Representative indicated that USPS tried to game the system by presenting “bare bones initial filings without the data necessary to evaluate its request,” making it difficult for anyone to challenge the proposal before the PRC must decide the case.

The Postal Service has already admitted to significant math errors in that initial filing. It now estimates the potential price increase for Standard mail will be 0.231% instead of 0.158% and for Periodicals will be 0.165% instead of 0.244%. It also tweaked the estimated increases for First-Class Mail (0.084%) and Package Services (0.015%).

Because the PRC is requesting so much additional information from USPS on the proposal, it has extended the deadline for commenting until May 17.

New Postal Incentive Could Backfire for Mailers

2013-04-20T19:46:00.000-10:00

Mailers should beware of postal officials bearing gifts.

The U.S. Postal Service announced a few days ago a “Technology Credit” of up to $5,000 for mailers who use Full-Service Intelligent Mail Barcodes. But if the Postal Service gets its way, the one-time credit would result in a permanent and ultimately far more expensive price increase for senders of First Class, Standard, Periodicals, and Bound Printed Matter mail.

And it would set a precedent for similar efforts to circumvent the inflation-based price cap on most postal rates.

“The purpose of the Technology Credit is to offset a portion of the investment by mailers in the hardware and software changes necessary to support Full-Service mailings,” the USPS filing said. Mailers already have another incentive to go Full Service by Jan. 26, 2014: After that, only mail with Full Service IMbs will receive automation discounts.

At an estimated cost of $66 million, USPS will provide credits to mailers that have mailings containing at least 90% Full-Service pieces between June 1, 2013 and May 31, 2014.

Here’s the catch: USPS is asking the Postal Regulatory Commission to consider the credits a price decrease for purposes of calculating the price cap for the next round of rate changes. Without such consideration, USPS claims it would be discouraged from offering future credits that promote more efficient mailing practices.

The logic of the request seems to be that the Postal Service would be paying out credits of $66 million to mailers in the coming months, so it should be able to balance that with $66 million worth of price increases next year.

But consider the case of a major magazine that now pays $10 million annually in Periodicals postage and earns the $5,000 Technology Credit. If the Consumer Price Index doesn’t change during the course of 2013, the magazine normally would not face a postage increase next year.

With the Postal Service’s request, however, even with no inflation the Periodicals rate cap would increase an estimated one-quarter of a percent. That increase would cost the magazine almost $25,000.

And if the inflation rate remained zero percent for another year, again the magazine’s postage bill would be $10,025,000 – instead of the even $10 million it would be if the USPS's request is denied

In other words, if the Postal Service is successful, the magazine would get a $5,000 credit this year and in return pay a recurring charge of almost $25,000 annually. With a return on investment like that, no doubt postal officials would look for other one-time credits they could “give” mailers.

The PRC has set a deadline of May 6 for comments on the Postal Service’s proposal.

Other articles about postal price-cap controversies include:

The Worst Postal System in the World, Except . . .

2013-04-15T18:47:00.000-10:00

Complaining about the postal system is a national pastime in the U.S., but looking at the rest of the world can put things into perspective.

"The USPS, even with its vast problems, is still the best and cheapest postal system in the world," wrote an unnamed subscriber in a comment published today on Morning News Beat, a grocery industry news site.

The writer, who frequently sends mail overseas, says "most European countries charge between $2.00 and $3.00" to send a one-ounce letter to the U.S., while the comparable rate for an international letter from the U.S. is only $1.10.

(The U.S. Postal System often charges much less than its international counterparts for domestic mail as well. While most magazines in the U.S. are delivered by mail, in many developed countries high postal rates mean that publications are typically delivered via the newsstand system.)

"Even though there is some pilferage stateside, there is nothing like the level of mail theft in other countries," the writer adds. "Yes, I have had delivery problems and things that have disappeared into a black hole, but I still think they do an amazing job with what they have to handle."

This reminds me of a Winston Churchill quip that "democracy is the worst form of government except all the others that have been tried."

Of course, most foreign postal services do have one big advantage over the USPS: They're solvent.

Publishers May Pay To Preserve Saturday Delivery

2013-04-10T15:10:00.002-10:00

Publishers and other mailers celebrating today’s news that Saturday mail delivery will be continued should take another look at the announcement’s ominous words.

“The Board has also asked management to evaluate further options to increase revenue, including an exigent rate increase to raise revenues across current Postal Service product categories and products not currently covering their costs,” today's statement from the U.S. Postal Service’s Board of Governors said.

Translated from Beltway Babble into plain English: The board wants to hit Periodicals publishers and mailers of Standard-class flat mail, such as catalogs, with an extra rate hike. Increases in most postal rates are limited to the inflation rate, but in emergencies USPS can seek “exigent” rate hikes.

USPS estimated its plan to end most Saturday deliveries would have added $2 billion annually to its beleaguered bottom line. Now the governors are looking for other ways to get that money, and instead of an across-the-board increase they’re suggesting that the hikes be targeted at allegedly unprofitable mail.

Despite extensive downsizing by the Postal Service and better preparation of catalogs and magazines by mailers, USPS claims its costs of handling flat mail have risen rapidly in recent years. Some postal experts blame USPS’s cost-accounting system, which tends to allocate the costs of “automation refugees” and other inefficiencies to the Periodicals class and to Standard flats.

Adding insult to injury, the $1.3 billion investment in the Flats Sequencing System (FSS) – which was supposed to revolutionize the handling of such mail – so far is costing more money than it is saving.

USPS claims the Periodicals class (magazines and newspapers) pays only 72% of its costs, meaning that a 39% rate hike would be needed to bring the class to theoretical breakeven. For “Standard flats” – the portion of Standard-class flat mail not in carrier-route bundles – the increase would be 24%. The most efficient Standard mailers would be largely shielded from an exigent rate hike because most of their mail is in carrier-route bundles.

Here’s some background information on the relevant postal issues:

USPS's plan to end Saturday delivery for all mail except parcels: 5 Myths of Saturday Mail Delivery
Exigent rate increases: PRC Decision Only a Partial Win for Mailers
Questionable cost accounting for Periodicals and Standard mail: Increased Efficiency Led to Higher Periodicals and Catalog Costs, Goldway Says
Automation refugees: For Periodicals, The Postal Service’s Math Doesn’t Add Up
FSS Problems: USPS Admits FSS Is Losing Money
The "Washington Monument" Strategy: Do Postal Execs Want To Lose Money on Periodicals?

5 Myths of Saturday Mail Delivery

2013-04-06T12:07:00.001-10:00

Misunderstandings abound regarding the U.S. Postal Service’s proposal to end Saturday delivery of all mail except parcels later this year. Here some of the most common myths:

1) Congress recently put a stop to the plan. That’s the story told by the news media, Congress, and the Government Accountability Office, but it’s not necessarily true. Congress did indeed put the requirement to continue six-day mail delivery into a recently approved appropriations bill. But the USPS’s Office of Inspector General says that if the Postal Service merely refuses the pittance in such appropriations (which are mostly for free mail for the blind), it would not be blocked from ending Saturday delivery. And it’s not even clear whether USPS’s plan – which would continue Saturday delivery of certain types of mail – would violate the legislation.

2) Ending Saturday delivery would save USPS $2 billion per year. Even the Postal Service talks about $2 billion in savings, but in reality its position is that its profitability (cost savings minus lost revenue) would grow by $2 billion. The calculations have been subject to debate and competing interpretations, partly because of different assumptions about how much business would be lost. Also, the $2 billion estimate was for full cessation of Saturday delivery, not for the latest plan to have mostly non-career employees delivering profitable parcels on Saturday.

3) The loss of customers would hurt the Postal Service. Actually, it could be a blessing. The customers who care most about Saturday delivery are daily newspapers and certain weekly publications; few other mailers care so much about getting delivery on a specific day of the week. Newspapers may be USPS’s most unprofitable product because they are often inefficiently prepared for mailing, can be difficult to sort, and sometimes get special treatment. Even highly presorted and dropshipped weekly magazines – though not as unprofitable as USPS alleges – are no big money maker. And most will survive without Saturday delivery.

4) Letter carriers oppose ending Saturday delivery. Yes, the main carrier’s union, the National Association of Letter Carriers, is vehemently opposed to the Postal Service’s plan. But many rank-and-file carriers would be happy to get Saturdays off. The NALC is “fighting a battle the majority of its members do not want,” writes Tom Wakefield, a city carrier and NALC member who runs PostalMag.com.“Five-day would be such a benefit to letter carriers. Today, because of shortages of letter carriers in many districts, many, many carriers are being mandated to work on their days off against their wishes, often with less than 24 hours notice,” adds Wakefield, mirroring frequent comments by rank-and-file carriers to Dead Tree Edition and other sites. “Today, the ‘daily grind’ is stretched to six days, with a Sunday off and one day during the week for many carriers. Five-day would allow two days off in a row and the daily grind would only be five days.” Many carriers are also hoping that five-day delivery would cause USPS to thin its carrier ranks by offering retirement incentives.

5) Ending Saturday delivery is the key to saving the Postal Service. No one who has looked at USPS’s finances believes five-day delivery is a cure-all, regardless of their position on the Postal Service’s plan. Because of declining mail volumes, $2 billion alone is not enough turn around the Postal Service even if the accounting games with postal pensions and “pre-funded” retiree benefits are corrected. More cost cuts or, less likely, significant new revenue sources are needed to keep USPS afloat.

Related articles:

Using Recycled Paper in Magazines Protects the Environment

2013-03-20T04:04:00.000-10:00

New Life Cycle Analysis study shows that in 14 of 14 environmental impact categories studied there is an environmental benefit to using recovered fiber as a substitute for virgin tree fiber.

Frank Locantore, with Stella and Schofield

A study commissioned by the National Geographic Society found overwhelming environmental benefits to using paper containing recycled content, it was announced today. Frank Locantore, Project Director of the Green America Better Paper Project, which for more than a decade has helped publishers switch to recycled paper, joins us as a Guest Columnist to explain and interpret the study's findings (which are summarized here).

Recently, National Geographic Society changed course on recycled fiber, walking away from its long held belief that using recovered fiber in its publications has negligible environmental benefit and agreeing to explore recycled paper options. We are encouraged by National Geographic Society’s initial indication that they may begin printing on recycled paper soon. If they do so, they will join the growing list of other magazines that have been using recycled paper for a decade or more like, Fast Company, Audubon, YES!, and Ranger Rick.

As a big fan of Dead Tree and his efforts to foster a dialogue within the industry about this topic, I wanted to share this information with him and his followers to help advance this discussion. As a proud “paper geek,” I look forward to productive conversations with any of you about the best ways to promote environmental paper use that can help the industry prosper in an environmentally and financially sustainable manner.

In the case of National Geographic, Green America and many other NGOs encouraged the venerable publisher to re-examine its beliefs regarding recycled paper. In response, National Geographic hired an independent consultant, ENVIRON International Corporation, to determine if it made environmental sense for them to use recycled paper in their magazine. The results (shown below) clearly indicate that in 14 out of 14 environmental impact categories studied, the production of deinked pulp is environmentally superior to the production of virgin fiber pulp.

ENVIRON International Corporation was asked to answer three questions: 1) Is it better for the environment to use recovered fiber for magazines versus virgin fiber in isolation? 2) If so, can we show that it is better to use recovered fiber in an alternative product? and 3) Do supply limitations exist such that the use of recovered fiber in magazines would displace its use in an environmentally preferable alternative product?

Decision Chart

Question 1: Is it better for the environment to use recovered fiber for magazines versus virgin fiber in isolation? Yes.

In Figure 5 of the study (see below), it is clear that deinked pulp (green) has substantially lower environmental impacts relative to a 50% Kraft/50% Mechanical virgin pulp mix (blue) in all fourteen impact categories.

Relative Impacts

The central environmental question that all paper purchasers must ask is: “Which paper options provide the greatest environmental benefits and fewest negative impacts?” This Life Cycle Analysis (LCA) compared the environmental impacts of paper production between deinked pulp and virgin pulp. When compared to kraft and mechanical pulp, deinked pulp always has a smaller negative environmental impact.

Question 2: Can we show that it is better to use recovered fiber in an alternative product? No.

The fact is that magazine publishers are not choosing between printing on containerboard or newsprint or printing/writing papers for their publication. They are only considering paper options within the “printing/writing” grade.

National Geographic did not want to make the study “mill specific” to the mill they source their paper from, Verso Paper's Jay, Maine mill. Rather, they wanted the results to be applicable for the entire magazine industry. However, this question can only be answered for a specific mill.

Lisa Grice, Sustainability Practice Area Leader for ENVIRON, wrote in her summary of the LCA:

[We cannot determine if there is a better use for recovered paper] because the sensitivity analysis shows that, because of the range of mill specific characteristics regarding fuel mix and energy efficiency, we cannot distinguish between impacts of alternative products produced from any combination of the mechanical or kraft pulp studied. It is possible that a future analysis at the individual mill level may indicate that a specific grade of deinked pulp used to displace a similar grade of virgin fiber pulp for one product may have greater or lesser impact than displacing virgin fiber pulp for another product, but this would be only applicable to the specific mills involved and not more broadly applicable.

While possible, it seems highly unlikely that virgin pulp production could have an overall environmental benefit considering the tremendous environmental advantage for deinked pulp that is demonstrated in this study. ENVIRON’s answering the question, “no,” indicates that it can’t be shown that recovered paper and deinked pulp would be better used to manufacture other products over printing/writing grades.

Question 3: Do supply limitations exist such that the use of recovered fiber in magazine would displace its use in an environmentally preferable alternative product? No.

I should reinforce that no environmentally preferable product has been identified. We all know that some industry stakeholders believe that there is a limited supply of recovered paper available to produce deinked pulp for recycled paper. While true, that “limited supply” is far from exhaustible and nowhere close to being adequately used.

It is difficult to predict how the market will react to increased recycled paper use in the US. Will increased demand create higher prices for recovered paper? Would potential higher prices for recovered paper drive better and more collection of valuable printing & writing paper, separated from the mixed grades where most of it currently ends up? Would increased demand for recycled content printing and writing papers reopen some of the shuttered capacity in recycled mills, potentially enabling even more customers to specify recycled content printing and writing papers? Would the US ship less recycled paper to China? Would more paper companies increase the supply of recycled papers?

What we know is that 9 million tons of printing & writing grade paper remains uncollected each year. And much of what is collected ends up mixed into lower grades that find their way into packaging or other non-printing & writing paper products. We also know the U.S. is behind a number of countries in collecting recycled paper, and that higher recovery rates are possible.

And, we know that National Geographic has their paper made by the Verso paper mill in Jay, Maine – only about 31 miles from Cascades' Auburn Fiber deinking plant.

According to the supply study completed by ENVIRON and done in conjunction with the LCA, Tony Newman, the plant manager for Cascades, indicated that, they “currently have excess capacity, and if demand for paper with recycled content were to increase they would increase their capital investment, produce more, and meet the increased demand.”

From "The Availability of High Grade Paper with Recycled Content for Magazine Use," prepared by ENVIRON, commissioned by National Geographic Society:

[I]t is likely that if demand for magazines with recycled content were to increase, then sufficient supplies of magazine-quality recycled fiber would be available. For a very large magazine, however, the state of world markets is not as important in terms of availability. It is likely much more regionally based. And the fiber they need is already available from a regional supplier [Cascades].

Could National Geographic’s demand for recycled paper simultaneously help boost the profits of Maine’s Cascades plant and reduce pressure on the environment? Based on the study provided by ENVIRON, such a move would benefit the environment, and it is hard to see how sourcing more pulp from Cascades could do anything other than increase profits and provide more employment opportunities for the plant’s community in Maine.

Conclusion

Going back to the questions in the “decision chart” at the beginning of this blog, all the arrows point toward “National Geographic to consider availability and cost of using recovered fiber for their magazines.”

1) The relative environmental impacts for deinked pulp are better than those for kraft or mechanical pulp in all environmental categories studied.
2) It isn’t demonstrated that it is better to use recovered fiber in non-magazine paper.
3) There are currently no significant limitations on recovered paper supply.

We applaud National Geographic’s effort and work to come to this conclusion, and look forward to their use of recycled paper in the near future.

Paper production – both recycled paper and virgin fiber paper – has an impact on the environment. However, using recovered paper has much lower impacts than virgin fiber, which should be the only comparison end users are making when considering paper choices – not pointing fingers at where an imagined limited supply of recovered paper is “best used.” If we want to avoid painful environmental consequences, we must act together so we can all succeed. Unfortunately, we have been going around in circles on this conversation for years – mainly, we talk past one another. I find that tiresome and unproductive, and consider the results of this study as an opportunity to now move forward together.

As Winston Churchill once said, “The era of procrastination, of half-measures, of soothing and baffling expedients, of delays is coming to its close. In its place we are entering a period of consequences.”

The paper industry as a whole has made some strides towards sustainability, but we’ve still got a long road to travel. We should have an honest conversation about the key metrics to determine how to make and use the most environmentally responsible paper. Collaborative efforts will achieve the best results.

National Geographic demonstrated a good model for collaboration and deserves recognition for committing to a process that was transparent, actionable, and inclusive. Green America, Natural Resources Defense Council, and World Resources Institute were stakeholders throughout this entire process. The participation of all the parties resulted in a study with a high level of integrity and value.

Now the question is whether or not others in the paper and magazine industry can employ the same model of collaboration in order to solve critical environmental consequences associated with paper production and use?

Please contact me if you would like to be part of this conversation: frank@greenamerica.org, 202-872-5308.

Related Dead Tree Edition articles:

What Magazine Publishers Can Learn From "The Da Vinci Code" Giveaway

2013-03-18T17:43:00.001-10:00

They did it again.

At least once a year for the past dozen years, a magazine I have never even seen sent me a direct mail piece asking me to subscribe.

And, as usual, amidst all of the breathless marketing copy in the elaborate package, this year’s missive contained no actual content from the magazine. No one-page excerpt of an article. No highlighted paragraph. Not even a pithy quotation.

So I’m supposed to pay money for a magazine I know almost nothing about when I can download a free copy of one of the biggest best-sellers of all time, The Da Vinci Code? Or get a 30-day free trial to the tablet edition of any Conde Nast magazine? Or read various free issues, free previews, free book chapters, and even free excerpts I'm allowed to reuse in my own newsletter or blog?

No wonder the print magazine business is struggling. Even if people prefer print, we publishers don't make it easy for them. In a try-before-you-buy, get-it-now world, we're still trying to sell "Buy it now and wait six to eight weeks for delivery to try it."

Once upon a time, a decade or so ago, if you published a magazine that focused on a particular topic and you put your promotion in front of someone interested in that topic, you had a decent chance of getting her to subscribe.

It helped if she had seen your publication in a store, in a waiting room, or at a hair salon. If not, she still might take a chance on a subscription, knowing that even a mediocre magazine devoted to her hobby, industry, or passion would be worthwhile.

Not any more. In case you hadn’t noticed, we publishers no longer have a monopoly on information. Pick any topic, and you can probably find plenty of mediocre content about it for free with a bit of Googling. And with newsstand sales declining about 10% per year and free “public place” circulation shrinking, it’s becoming increasingly unlikely your target consumer has ever bought or even examined your magazine.

Trot out your best purple prose about “must-have articles and exclusive interviews,” and today’s consumer will reply, “Show me.” She’s still willing to shell out a few bucks for a well-written publication that’s attractively and conveniently packaged.

But to prove you’ve got something worth paying for, you may have to give her something free.

Other Dead Tree Edition commentaries on the magazine industry include:

Print vs. Digital: The Great Mr. Magazine vs. BoSacks Tweet-Off

2013-03-12T17:35:00.000-10:00

Two of the U.S. magazine industry's leading pundits, Dr. Samir Husni and Robert Sacks, held an impromptu but insightful debate via Twitter tonight about the extent to which digital media will displace print media.

Husni, AKA "Mr. Magazine", director of the Magazine Innovation Center at the University of Mississippi, started the friendly argument with this comment about the hilarious French toilet paper ad that Adweek posted yesterday (shown below): This video reminds of a debate I had with my friend Mr. Magazine: some years back. Enjoy

Sacks, AKA BoSacks, took up the gauntlet: I'm glad you remember the good 'ol days. I agree paper has some important & vital uses. But digital reading will be predominate

Mr. Magazine: at least paper never leaves your side when you most needed, below and above 10,000 ft, with or without the cabin's door
open or not

BoSacks: Those minor restrictions will be a faint memory soon. Technology is transitional & as good as it is paper is merely a technology

Mr. Magazine: technology that everyone is trying to replicate.I love digital,I love the web, I love my iPads (yes, iPads), but they are not paper

BoSacks: It is true paper is unique. No matter how hard you press on paper it will not refresh nor update its old & ancient information

Mr. Magazine: Good writers create timely and timeless stuff that becomes an experience in no need to refresh or update? Think War & Peace?

Mr. Magazine: By the way, let the world know that is the first BoSacks/Mr.Magazine™ Twitter Debate. Join in fellow debaters.

BoSacks: Let us agree that War & Peace would be good on any substrate. I'm sure its the words & thinking that matter not the dead trees.

Mr. Magazine: Those trees are alive and happy every time a person holds the books and magazines between their hands and read their pages.

BoSacks: Agreed trees are good to carry thought. But so are other media. Print will not go away,it just won't be the way most people read

Mr. Magazine: Tell that to the WSJ, POLITICO, Hearst, Condé Nast, TIME, National Geo, Meredith and the 10,000 other magazines on the stands...

BoSacks: Print will soon be a luxury item for only those that can afford it.For print to survive it needs to be of excellent quality only

BoSacks: That fate of the newsstand is happening before our eyes. A downward trend for a decade. There is a plateau but not there yet

BoSacks: All newsstand sales are down with limited exception. Niche or big guy, it is currently headed south. trends tell all

Mr. Magazine: I heard the above more than few years, back."In the next 5 years.." famous Bob's quote. Print + Digital is the Future. Not one way.

BoSacks: nowhere in this conversation did I say 5 years,The future is digital with print as a smaller medium it is now the most expensive

Mr. Magazine: Have you checked the prices of the magazines? Have you checked the state of the economy? We don't need magazines, we want them?

Mr. Magazine: I was quoting previous conversations my friend... the one that Bo always used: In the next five years this or that will take place

BoSacks: five years ago I was right as the current market conditions have proven. I will be right in the next five and ten years too.

Mr. Magazine: did I hear plastic logic? where do I buy it today? the better than paper, paper?... Cheers and until Sept. All the best

BoSacks: Cheers & good night to all. A delightful debate on twitter. I will now finish watching the Hobbit. An act no paper device can do

Mr. Magazine: Good night. Heading to my bed with six magazines I bought from the newsstands - pure heavenly delight. Experience making @ its best

Related articles:

Postal Workforce Is Both Shrinking and Growing

2013-03-10T16:49:00.000-10:00

The U.S. Postal Service added more than 4,000 jobs in February, but the postal workforce is actually shrinking.

USPS’s payroll had 607,600 people in February, up 4,600 from January, according to data released by the federal Bureau of Labor Statistics on Friday.

“The US Postal Service continues to lose money as it is bleeding cash,” responded Jon C. Ogg of 24/7 Wall St. “So can someone please manage to explain how the USPS added jobs at a time that Saturdays are being dumped for delivery days?”

Yes, I can explain: USPS hired the newbies to take up the slack from a massive wave of retirements. And perhaps to save money.

The Postal Service reports that it had 468,000 full-time employees in late
February, a decline of almost 35,000 (7%) in one year. Half of the loss occurred after Jan. 1, spurred by early-retirement incentives for APWU-represented employees.

More part-timers and temps
While the full-time workforce has been shrinking, the number of other employees (such as part-timers and temps) has been growing. In late February the number of non-full-timers had increased by 8,500, or more than 6%, in the previous 12 months.

USPS has made no secret of trying to reduce costs by gradually shifting more work to employees who are lower paid, have less expensive benefits, and can be scheduled flexibly depending upon the workload.

Here’s where the cost savings come in: Though the postal workforce has been shrinking, the workload has barely budged: So far this fiscal year, “total work hours” are down only 1% versus a year ago. As a result, overtime hours are up 18%.

So not only do the new hires start at the bottom of the scale, some of the work they accomplish would otherwise have to be done by more senior people at time-and-a-half rates.

And as for Ogg's question about Saturday delivery, ending that isn't a done deal. If it does come to fruition, cutbacks are more likely to affect the new hires than career employees who are protected by no-layoff clauses.

Related articles:

Mainstream Media Miss: Postal Service Will NOT Sell Clothing

2013-02-25T17:02:00.000-10:00

Contrary to many recent news reports, the U.S. Postal Service has no plans to get into the clothing business, a USPS official confirmed today.

Even reputable news organizations botched the announcement last Tuesday that the Postal Service has entered into a licensing agreement allowing a clothing company to sell the “Rain Heat & Snow brand of apparel and accessory products.”

“Strapped for cash and obviously desperate, the United States Postal Service is launching a new line of ‘smart apparel' — also known as wearable electronics," wrote The Atlantic, which also said USPS would "get into the outdoor gear business."

“The federal government's mail transport and delivery agency this week said it will roll out a line of apparel and accessories it plans to sell in department and specialty stores,” wrote Reuters, also confusing the words “licensing” and “selling”. Other reports (including commentaries from The Washington Times and the Boston Herald) completely missed the mark, questioning how the Postal Service could compete with private-enterprise apparel companies.

USPS quietly took down the press release from its web site a day or two after issuing it (I have reproduced it below), then issued the following statement to Dead Tree Edition today in response to a query:

Today's USPS statement
“To clarify a press release issued recently, the Postal Service is not entering
the apparel business. For a royalty, the Postal Service is licensing the words ‘Rain, Heat & Snow’ and other Postal Service trademarks for commercial use by a clothing manufacturer. By agreement, the manufacturer will be able to use these words and trademarks on clothing or clothing labels, and in advertisements, in ways approved by the Postal Service. Other than this licensing agreement, the Postal Service has no relationship with the manufacturer. The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.”

In other words, the Rain Heat & Snow brand will not put USPS into the clothing business any more than Tesla bragging about being the Motor Trend Car of the Year makes Source Interlink (publisher of Motor Trend) a car company. Or any more than having so many brands using the Good Housekeeping Seal of approval makes Hearst a purveyor of consumer products.

Or any more than publishing an ad disguised as an article defending the Church of Scientology puts The Atlantic into the religion business. (Oh, did I touch a raw nerve?)

It’s times like this that make me ashamed to say I work in the U.S. publishing industry. Nowhere does the original USPS press release say anything about the agency making or selling clothes. The press release’s headline is somewhat misleading, but the press release’s text makes clear that the deal is a licensing agreement, pure and simple.

As with other licensing agreements, the licensee (The Wahconah Group) bears all the costs and risks, while the brand owner (USPS) gets a share of the proceeds. Financially, there is no downside for the Postal Service.

Here, for the record, is the query I submitted to USPS spokesman Roy A. Betts last night that prompted today's USPS statement: “You were listed as the media contact on the Feb. 19 press release headlined 'U.S. Postal Service to Introduce New Product Line' and were quoted by some news organizations on the subject. Can you explain why the news release has been taken down from the Postal Service's web site? Also, can you confirm that this is merely a licensing agreement for the Postal Service, where it would benefit from sales of the clothing but would not bear any such costs as manufacturing or marketing? I ask because some coverage of the announcement suggested that the Postal Service was competing with private industry or that it could lose money on the venture.”

If a semi-professional “blogger in his pajamas” grasped what the Postal Service’s news release meant, how come so many real reporters and editors in the mainstream media couldn’t get the story right?

Judge for yourself; here’s the original USPS news release:

U.S. Postal Service to Introduce New Product Line
Licensing Agreement Signed with Fashion Apparel Company
February 19, 2013
Release No. 13-026
WASHINGTON— Neither snow, nor rain nor gloom of night has taken on a different meaning at the U.S. Postal Service with plans to launch a new product line of apparel and accessories under the brand name, “Rain Heat & Snow.”

The Postal Service’s unofficial motto, “Neither snow nor rain nor heat nor gloom of night stay these couriers from the swift completion of their appointed rounds,” serves as a backdrop for a licensing agreement the organization has signed with Cleveland-based fashion apparel company Wahconah Group, Inc. The agreement leverages Postal Service intellectual property by introducing the Rain Heat & Snow brand of apparel and accessory products.

“This agreement will put the Postal Service on the cutting edge of functional fashion,” said Postal Service Corporate Licensing Manager Steven Mills. “The main focus will be to produce Rain Heat & Snow apparel and accessories using technology to create ‘smart apparel’ — also known as wearable electronics.”

“The Wahconah Group is excited to be working with the U.S. Postal Service in launching this all-weather line of clothing,” said Chief Executive Officer Isaac Crawford. “The products will build on the rich American history of this iconic brand, creating specialized apparel for consumers, at affordable prices, delivering something new and exciting that retailers can offer their customers.”

Wahconah Group, Inc. is a minority-owned company based in Cleveland, OH, with extensive experience in the fashion apparel industry. The firm designs, sources, manufactures and sells apparel with a focus on the men’s apparel market. The company is establishing a showroom in the garment district of New York City to showcase their apparel lines to the fashion industry.

Under the licensing agreement with the Postal Service, Wahconah will initially introduce Rain Heat & Snow apparel and accessories for men with future plans for a women’s line. The goal is to sell this product in premier department and specialty stores..

The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.

Other examples of Dead Tree Edition taking on the Mainstream Media include:

My Heartfelt Apology to the Publishing Industry

2013-02-21T03:15:00.002-10:00

Let me offer my deepest apologies to everyone who, like me, works in the magazine publishing industry. I’ve been committing an unpardonable sin without even knowing it.

From time to time when I wasn’t covering my usual obsessions – like the U.S. Postal Circus, black liquor tax credits, and greenwashing – I have actually written about and even opined about our industry, often focusing on major New York publishers. I thought somehow that having worked many years (too many years) in the industry and having the benefit of insights from a host of brilliant and well-informed insiders qualified me to speak about the business occasionally.

But I’ve discovered in the past few days that all wisdom about magazines emanates from the New York publishing elite. And I’ve learned about the unwritten rule that only members of that elite may pontificate about the publishing industry.

Rosie's salute to NY publishing

The revelations started last week with coverage of the proposed Meredith merger/takeover of most Time Inc. publications. Hick that I am, I saw real potential in the move. Meredith, a smart company that uses its strength in publications for women as a springboard into new ventures, would take on Time brands serving a similar audience.

How foolish of me! New York media reporters soon set me straight, pointing out that Meredith is based in Des Moines. Like, Iowa. Like, in the middle of The Flyover (which is how the Beautiful People refer to that cultural wasteland you
have to cross when jetting between the real cities, New York and Los Angeles).

Country bumpkin
How could the “country bumpkin” Meredith possibly fathom the sophisticated world of New York publishing, the cognoscenti hinted. After all, publishing breakthroughs like Pathfinder, the conversion of McCall’s to Rosie magazine, and MagHound were certainly not incubated in Des Moines.

Sure, the simple Midwesterners do fine when publishing about gardening, baby care, and potluck supper recipes. But how, the New York media writers hinted, could they ever cover weightier matters like art, fashion, and the Kardashians? Ad Week openly questioned whether low-budget Meredith would be able to maintain the “high-end standards” of some Time-produced titles.

Silly me, I used to think that another heartland publisher, Reiman Publications, had one of the industry's most successful business models.It was doing user-generated content, big time, before the concept even had such a high-fallutin’ name. With its passionate fan base and sophisticated direct-marketing efforts, Reiman made selling books and launching new publications look easy.

But New York publisher Reader's Digest Association saw that Reiman needed to be fixed. (My God, the Reiman magazines didn’t even sell advertising!) And fix it RDA did. RDA bought Reiman in 2002, dropped the respected (in red states, anyway) Reiman name in 2007, went Chapter 11 in 2009, then "Chapter 22" (second time in bankruptcy court) this week.

OPM
Ah, so that’s the sophisticated New York way of making money in publishing: Forget about giving readers what they want. Just pump up the perceived value of your company so you can borrow lots of OPM (Other People’s Money), then bail out when reality sets in -- leaving the OP holding the bag. Badda bing, badda boom!

I’m not the only one who needs to apologize. Publishing Executive (Philadelphia, 97.0 miles from the Time-Life Building) had the audacity last week to publish a scathing critique of Time, Inc.’s “half-hearted” digital efforts written by an innovative but geographically challenged publisher, Ron Matejko. Objections to the article poured in faster than a New York minute, reports editor Jim Sturdivant.

“Some readers felt that, being located in Arizona, Matejko was not qualified to comment on the digital strategy of a New York publisher,” Sturdivant writes. The outrage! Some guy from Ari-freakin’-zona dares to think he can grasp the intricacies of New York publishing when he’s probably never had lunch at Elaine’s!

The moral of this story is, to paraphrase Chief Joseph: Judge not a New York publishing executive until you’ve walked a mile in his moccasins – or ridden 10 miles in his limousine.

For further reading, here are Seven Sins (commentaries on New York publishing) of Dead Tree Edition:

How the Postal Service Subsidizes The Wall Street Journal -- and Why It Should Stop
2 Major Magazine Publishers Reportedly Join Forces To Buy Paper: Time Inc. and Meredith supposedly started an alliance more than three years ago.
8 Questions About Newsweek's Future
9 Differences Between a School System and a Publishing Company: Lessons for Cathie Black
Harper's Bizarre: Attacked by Pterodactyls?
I Got "mine", But I Don't Get It
Here's Why We Avoid Four-Color Body Type

Affordable Postage A Key To Printing Industry's Future, Quadracci Says

2013-02-15T04:04:00.000-10:00

U.S. printing prices have failed to keep pace with inflation during the past 25 years, the CEO of the country’s second largest printing company told a Senate panel this week.

“During that same time period, the price of postage has continued to increase and as a result the single largest expense of printing is now the postage associated with delivering the final product,” Joel Quadracci, Chairman, President & CEO of Quad/Graphics Inc., testified Wednesday during a Senate hearing on the “Crisis Facing the U.S. Postal Service.”

“Over the last 25 years, through technological advances and process changes resulting in productivity gains of more than 4% annually, the printing industry has been able to actually reduce the price for printing (adjusted for inflation),” Quadracci said. “The Postal Service should address its problems by achieving the same cost control success,” but instead it is saddled with “extreme excess costs.”

“If the Postal Service can manage its costs and maintain an affordable pricing structure, its business can remain sustainable and ours, in turn along with it.”

“There are three main components to printing a magazine, catalog, retail insert or direct mail piece: the cost of the physical printing of the item, paper and postage. It may be tempting to address the Postal Service’s financial situation by simply raising postage rates to “cover the costs,” but I cannot stress enough how damaging postal rate increases are to our industry,” he told the panel.

“There is a direct negative correlation between rate increases and volume. Our customers demand predictability and affordability and if prices
suddenly increase more than expected they react by reducing their volume to cover the extra postage or move away from print altogether.”

“We are encouraged with the direction we have seen the USPS take over the last year-and-a-half,” Quadracci said, but a number of legislative changes are needed so that the Postal Service can manage its costs more effectively.

Quadracci noted the “tremendous capital expenditure” Quad and other publication printers have made in co-mailing and other “work sharing” activities that save the Postal Service money and earn mailers greater postal discounts. If not for those efforts “to help clients manage their postal costs through work sharing, mail volumes would have been reduced to an even greater extent over the last decade.”

Quadracci did not take a stand on the current hot postal issue – Saturday delivery – but noted the importance of USPS continuing to accept shipments and to process mail on Saturdays.

USPS Admits FSS Is Losing Money

2013-02-09T10:08:00.001-10:00

The U.S. Postal Service acknowledged this week that the Flats Sequencing System has increased the agency's operating costs.

On the same day it very publicly announced the planned cessation of most Saturday delivery, USPS released data confirming what Dead Tree Edition speculated about two weeks ago. (See So Far, FSS Is A Step Backward, USPS Data Indicate.) The data show that two of the three major types of mail processed on FSS machines – Standard (non-carrier-route) Flats and Periodicals – had experienced larger increases in processing costs the past two years than they had gained in delivery savings.

As in the case of the other major category, Standard carrier-route flats, FSS apparently caused the spikes in mail-processing costs, USPS documents added.

“It appears that in FY 2012, FSS raised costs for these three products as compared with FY 2010 costs,” the agency said in responding to a Postal Regulatory Commission question. But the results don’t mean that the
$1.3-billion investment in the 100 FSS machines was not worthwhile, USPS indicated.

“FSS is a long-term initiative and FY 2012 is only the first fiscal year of full FSS operation,” the Postal Service's response said. “Long-term initiatives often mean additional costs (capital and additional operating costs) have been incurred while the associated savings take longer to realize.”

“Second, the large decline in flats volume has impacted FSS operations, as the lower FSS volume per 5-digit zip code has caused lower FSS productivities than anticipated. Work is underway with Engineering to accommodate the lower volumes, to thereby boost FSS productivity.”

FSS has managed to decrease delivery costs, as intended, by automating “in office” work that used to be done manually by letter carriers. But mail-processing costs have risen far more than the delivery savings have declined for all three types of mail. The USPS answers indicate that FSS is the main culprit.

What USPS officials have not indicated is whether FSS’s negative contribution is primarily from it not yielding as much delivery savings as expected or from it increasing processing costs more than anticipated – or whether they knew all along that FSS would still be a money loser at this point.

In another response to the PRC, the Postal Service also revealed that it processed 3.16 billion pieces, 58% of all flat mail, during calendar year 2012 on FSS machines. Also, the proportion of flat mail not processed on any machine dropped from 45% in 2011 to 27% in 2012.

The Law Is On Donahoe's Side Regarding Saturday Delivery

2013-02-06T23:07:00.002-10:00

Postmaster General Patrick Donahoe confused both the news media and fuming Congress members today with his explanation of why Saturday mail service can be ended without Congressional approval. But he appears to be on solid ground legally. In fact, the case for the U.S. Postal Service making this move was laid out more than three years ago.

Here is Donahoe's somewhat cryptic statement at today's press conference on the legal question: "Is it legal? Yes it is. It is our opinion that the way that the law is set right now with the continuing resolution that we can make this change. The good news is that the continuing resolution that governs the Postal Service that way expires on the 27th of March, so there is plenty of time in there so if there is some disagreement we can get that resolved. I encourage Congress to take any language out that stops us from moving to this five-day mail schedule."

That was interpreted in some circles as meaning that Donahoe was basing his claim on the federal government not currently operating under an approved budget. But some reporters managed in the question-and-answer session to untangle, at least partially, Donahoe's case.

Bloomberg News, for example, reported that Donahoe "said the service decided it can ignore language, first placed in appropriations law in 1981, requiring it to deliver mail six days a week, because it receives its money from Congress differently than other U.S. agencies do."

Rep. Gerald Connolly, an influential Virginia Democrat, accused Donahoe
of "directly violating Public Law 112-74, the Consolidated Appropriations Act of 2012, which states that '6-day delivery and rural delivery of mail shall continue at not less than the 1983 level.'" That quotation, however, takes on a different meaning when read in context.

The law Connolly cites calls for "payment to the Postal Service Fund for revenue forgone on free and reduced rate mail, pursuant to subsections (c) and (d) of section 2401 of title 39, United States Code, $78,153,000, which shall not be available for obligation until October 1, 2012: Provided, That mail for overseas voting and mail for the blind shall continue to be free: Provided further, That 6-day delivery and rural delivery of mail shall continue at not less than the 1983 level."

A small price to pay
What Donahoe was apparently saying today was the same thing the USPS Office of Inspector General pointed out in 2009: The six-day requirement is a condition of the Postal Service receiving a measly $78 million appropriation. If it chooses not to accept the money, it doesn't have to abide by the requirement, as explained by a 2009 article in Dead Tree Edition.

In the words of the OIG report, opting out of the appropriation "would be a small price to pay for cementing the financial independence of the Postal Service and would free it from riders to appropriations acts." (Emphasis added.) Given the Postal Service's estimated savings of $2 billion annually, that would indeed be a small price. (But note that curtailing Saturday delivery is not a question of savings but of additional profit -- that is, cost savings minus lost revenue.)

Congress still has the power to prevent the ending of Saturday delivery (for all but parcels) by passing legislation that specifically requires six-day delivery. But lately Congress hasn't been able to pass much other than the naming of post offices.

What Happens If the Postal Service Runs Out of Cash?

2013-02-03T17:49:00.000-10:00

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
entity our size would typically have minimum liquidity sources totaling $7 to $10 billion to allow for sufficient variations to plan and to invest.”

Richardson believes that even a temporary disruption of service could be “catastrophic” for customers, employees, and suppliers because “if mail customers cannot rely upon mail delivery and thus flee the Postal Service in short order, most never to return, they would critically reduce the Postal Service’s revenue stream.”

Richardson said the Postal Service’s only statement on the subject is overly vague: “In the event of a projected liquidity shortfall, we will prioritize payments to our employees and suppliers to help ensure that the Postal System continues to operate in a quality manner.”

He fears USPS, in a pinch, would resort to cutting back service more for some customers (presumably the most unprofitable ones) than for others, though such discrimination would be illegal.

Related articles:

Publishing Without Profits: What's Behind the Content Marketing Craze?

2013-01-30T01:00:00.000-10:00

American Express web site for small businesses

Since when do insurance company web sites look like this?

Though the publishing industry isn’t exactly booming these days, the hottest trend in marketing is for non-publishing companies to act like publishers.

Consider that Citibank is posting articles like “5 Healthy Snacks Your Kids Will Actually Eat” – not what you expect to find on a bank’s web site.

Or that retailers like Walmart, Target, and Walgreens recently launched or are launching magazines primarily to enhance their brands.

Or that content marketing – AKA brand journalism – is taking a growing share of what non-publishing companies are spending on marketing.

It’s no accident that one of the leading books on the trend is Content Marketing: Think Like a Publisher. It explores how non-publishing companies can use “words, images and multimedia to systematically enhance consumer engagement and conversion rates.” (Note: It does not address such key publishing tactics as stating inflated prices on a ratecard, debating whether print is dead, or blaming all problems on the circulation department).

Many content marketers follow the 4-to-1 rule of thumb: publish four non-promotional items for every one that mentions the company’s products or services. But some eschew any promotional copy and focus only on establishing their companies as “thought leaders”: You have to look closely to see who is sponsoring sites like OPEN Forum (American Express), HouseLogic (National Association of Realtors), or especially Brighter Life (Sun Life Financial).

National Assoc. of Realtors site has a Target ad.

Publishing Executive just published in its January 2013 issue my article, The Content Marketing Craze: 7 Ways Publishers Can Fight Back, which explores how traditional publishers can respond to the challenges presented by so many companies vying for our readers' attention.

But why are profitable non-publishing brands emulating Newsweek – pouring millions of dollars into creating content without much of a revenue model? Here are seven reasons content marketing, which has been around in various forms for decades, is suddenly booming:

The Web: In the pre-internet days, freedom of the press applied mostly to those who owned a printing press. Now everyone can be a publisher.
Social media: Who would think of turning to an insurance company to read about The Year’s Most Inspiring Athletes or a deodorant to see Seriously Dangerous Snowboard Stunts? It doesn’t matter. With Facebook, Twitter and other social media now rivaling search engines as the means for discovering information on the Web, relevant content can find an audience that wasn’t even looking for it.
Search engines: Algorithm enhancements have made search engines less prone to being tricked by keyword stuffing, link baiting, and other gimmicks. Now they look for quality, which means real people spending time on a page, sharing it with others, and linking to it. Acting like a publisher has become one of the best ways to get “Google love.”
Consumer changes: With so much information at their fingertips, both consumers and businesses are doing more research these days before making purchasing decisions. When considering potential vendors, I often look at their blogs, news releases, Twitter feeds, etc. to get insights on their expertise and mindset.
Banner blindness: Ads in print publications tend to be part of the reading experience; they’re noticed without being intrusive. But, unless they're really obnoxious, Web ads are easier to block out, causing many brands to look for more engagement with consumers rather than just shouting “Buy!” at them.
Measurability: Determining whether branding efforts are working is a notoriously difficult process. After all, what value did the U.S. Postal Service gain from the $30 million or so it spent sponsoring Lance Armstrong and his teammates? (Maybe USPS should get Lance to do ads promoting mail-order drugs.) At least with content marketing, companies have metrics like page views and social-media shares that enable them to figure out which content reaches the most people.
It’s hot: "Clients come to me saying they need a content campaign -- that's a solution. When we ask, ‘What's the problem?,' often it's that every other CMO [Chief Marketing Officer] has one," Kyle Monson, founder of a content strategy agency, told Ad Age recently. Bob Hoffman, a content-marketing skeptic who blogs as “The Ad Contrarian”, puts it more succinctly, "There's no bigger sucker than a gullible marketer convinced he's missing a trend."

Footnote: My friend BoSacks has some interesting commentary on this article, including the question of whether "content marketing" has become such a broad term that it no longer means anything. It's a valid point: I've seen the term applied too broadly, including to what was basically just an ad campaign. I'm defining the term very narrowly, to mean non-promotional articles, graphics, videos, and other content published by non-publishers.

For other Dead Tree Edition commentary published in conjunction with my "View from the Tree" columns for Publishing Executive, please see:

So Far, FSS Is A Step Backward, USPS Data Indicate

2013-01-26T18:47:00.000-10:00

The Flats Sequencing System is costing the U.S. Postal Service more than it is saving, information submitted by USPS this week indicates.

USPS's response to a question from the Postal Regulatory Commission showed that FSS has pushed up the costs of mail processing far more than it has decreased delivery costs.

USPS invested more than $1 billion in the huge FSS machines to automate the labor-intensive process of handling catalogs, magazines, and other flat mail, but so far the results have been mixed at best. Meanwhile, the agency continues to seek special rate increases on some types of flat mail, such as Periodicals, on which it claims to be losing money.

The cost of delivering Carrier-Route-sorted Standard-class mail rose 2.32 cents per piece, from 16.54 cents to 18.87 per piece, in just two years almost solely because of a 48% increase in mail-processing costs, USPS told the PRC.

"An examination of mail processing costs by cost pool shows that the bulk of this rise is due to FSS sorting. Specifically, FY 2012 FSS sorting cost per piece for Carrier Route is 1.84 cents while the amount for FY 2010 is likely fairly small [because few FSS machines were operating then]," USPS wrote.

"Delivery costs (both city and rural carrier) have declined by 0.06 cents
[from 10.98 to 10.92 cents] per piece." the agency added. "Included in this overall change in delivery cost per piece is a decline of 0.49 cents per piece for cost segment 6 in-office city carrier labor costs between FY 2010 and FY 2012, despite a 5.9 percent rise in city carrier cost per workhour. This likely reflects the benefits of FSS sorting."

Not rocket science
In contrast to carrier-route pieces, the mail processing cost of non-carrier-route Standard flat pieces has risen only 6% in the past two years, according to USPS data. The reason for the contrast is not rocket science.

For ZIP codes not served by FSS, carrier-route bundles are nearly ideal and therefore result in the lowest rates, except for saturation mailings. Such bundles move through the postal system without being opened until they reach the letter carrier who will actually deliver them. Bundles containing pieces for multiple carrier routes or ZIP codes require additional handling and are therefore more expensive for the Postal Service.

But for ZIP codes served by FSS machines, carrier-route bundles are of little benefit to USPS. Like other bundles, they have to be opened and fed into a machine. In fact, the ideal bundle for FSS is supposedly four to six inches thick, many times larger than the typical Standard or Periodicals carrier-route bundle.

The big benefit of FSS is at the delivery units. When the process is working, a carrier receives all flat mail in delivery sequence, which cuts down on the time they spend preparing the mail.

USPS has not broken out mail-processing costs for Periodicals in the same way as for Standard. But the two mail classes' pieces and carrier-route bundles are so similar that the mail-processing costs for Periodicals carrier-route copies most likely have seen a dramatic increase as well.

And with carrier-route Standard and Periodicals pieces probably representing more than half of all FSS mail, it seems unlikely that FSS is saving enough on delivery costs to counter the system's impact on mail processing.

Related articles:

FSS Is Increasing USPS's Costs, Expert Says: "There must have been far too many manhours spent on a system that was supposed to be highly automated," an industry expert wrote a year ago.
FSS Machines Running Far Slower Than Planned
8 Reasons USPS Productivity Is Declining: The Employees Speak Out

I Knew I Was in the Production Department When . . .

2013-01-23T18:24:00.000-10:00

I toured a publishing company recently that had no signs marking the various departments, but I didn't need a sign to know when I was among the folks who buy paper and plan print projects.

Most departments looked pretty much the same -- people sitting at computers. OK, you could spot the designers because they had Macs and big monitors, but otherwise the differences were subtle -- a bit more phone chatter in ad sales, more arguments in editorial, more gossip in circulation.

As an environmentalist, I noticed that every department had recycling bins. And whether people worked mostly in old media or new media, they used those bins the same: as garbage cans.

Then I rounded a corner and saw it -- a recycling bin with a cover that had two holes, indicating it was for bottles and cans. And it actually contained only bottles and cans!

"For paper only"
Nearby was another recycling bin with a sign saying, "For paper only." And people were actually obeying the sign!

I knew right away I was in the production department. (Some of my colleagues in the industry like to call it the operations department because these days they're also doing things like preparing mailings, building web pages, or selling reprints. And some like to call it the manufacturing department, which really throws off the people who cold-call on behalf of factory consultants, only to find that American magazine publishers outsource all of their manufacturing.)

Anyway, this was not an isolated incident. I consistently find that the people in the industry who really care about environmental issues are the ones who buy paper or put ink on it.

They're the only ones you'll hear talking about sustainable forestry, carbon footprint, and the differences between pre-consumer and post-consumer waste (a distinction unique to North America). They understand that forestry industries can benefit the environment, or harm it, and they often wrestle with how to make their companies' paper purchases and other practices more sustainable.

The "print is dead" gang
Meanwhile, the "print is dead" types ignorantly assume they're saving trees, oblivious to the environmental footprints of the web and digital devices. And they rarely lift a finger to make their work any greener.

A similar dichotomy shows up in government. It's no accident that the U.S. Postal Service, the nation's primary distributor of printed pieces, has been far more active on the sustainability front than any other federal agency. There's something about handling printed products that makes people and organizations more environmentally aware and inspires them to take responsibility

As I noted last week, the dichotomy occurs even at Hearst Corporation, arguably one of the world's greenest large companies. (See Killah in Manilla: Hearst's Green Reputation Tarnished by Subsidiary.)

Hearst's traditional publishing people have meticulously documented the fiber sourcing of the company's magazine paper, pressured paper suppliers to use more sustainable forestry, led industry efforts to make the supply chain greener, and even installed a worm farm at one office. But then an all-digital subsidiary called Manilla ignorantly claimed that its involvement in the "Paperless 2013" campaign will "help improve the environment."

You wanna bet which part of Hearst -- the production department or Manilla -- makes the best use of its recycling bins?

Related articles:

The Takeover of Paperless 2013: How a grassroots guerrilla army is fighting back against the greenwashing sponsored by Manilla, Google and other companies.
Who is Really Behind #Paperless2013?: Can the anti-greenwashing forces claim partial victory?
OK, Johnny, Now Greenwash Your Hands: Another anti-paper effort based on false premises. And speaking of drying your hands, don't miss this gem: Increased Incidence of Gastroenteritis and The Flu - Could the Solution be Hand Drying With Paper Towels?

Killah in Manilla: Hearst's Green Reputation Tarnished by Subsidiary

2013-01-17T02:19:00.000-10:00

Hearst Corporation has earned a reputation as a truly green company by systematically measuring, revealing, and minimizing its environmental impacts – until now.

A subsidiary of Hearst – one of the world’s largest buyers of publication papers – is among seven corporate sponsors along with Google of the controversial Paperless 2013 promotion. That campaign has come under criticism (See The Takeover of Paperless 2013) for unsubstantiated claims that organizations become more environmentally friendly when they switch to cloud computing and other paperless processes.

Manilla, a Hearst unit that offers an online bill-management process, is not just guilty of greenwashing by association. Manilla’s CEO said this month that the company’s sponsorship of Paperless 2013 is “truly representative of Manilla’s overall mission ... to help improve the environment by reducing the overall use of paper.”

Manilla ad

Like Paperless 2013, Manilla presents no evidence that its processes help the environment. In fact, its web site reveals nothing about its environmental footprint or programs. That’s a far cry from the practices of the parent company, which owns such leading media brands as Good Housekeeping, Cosmopolitan, Road & Track, A&E Network, and the Houston Chronicle.

Hearst doesn’t just claim that its headquarters “is the most environmentally friendly office tower in New York City history.” It underwent the stringent process of having the innovative building LEED-certified with a Gold rating.

Hearst paper policies

Dead Tree Edition cited Hearst in 2009 as one of “the real leaders in making U.S. magazines greener” because of its multi-faceted work on such matters as encouraging sustainable forestry and promoting the recycling of magazines.

Documentation and transparency have been hallmarks of Hearst’s efforts. When it set up the Hearst Sustainable Forestry Initiative in 2004, it says it found that 38% of the fiber for its magazines was from certified fiber.

“By modifying our purchasing strategy and working proactively with our suppliers, we were able to increase this level to 75% by December 2009. We continue to have a goal of 80%,” says the company’s annual “Being Green” report. It also says it is not averse to “changing mills or suppliers when certification percentages and targets are unacceptable.”

Methinks that Manilla’s vague, self-serving claim about helping the environment does not represent the new Hearst philosophy but is rather a case of the startup division not absorbing its parent's culture. Manilla could learn a few lessons from its not-so-paperless sister companies about business practices that promote healthy forests and other measurable environmental benefits.

Methinks, to paraphrase a Manilla ad, that when it comes to environmental claims Manilla needs to get its “s**t together.”

The Takeover of Paperless 2013

2013-01-13T17:10:00.000-10:00

A group of companies including Google recently created the Paperless 2013 campaign to promote the use of online solutions, but unsubstantiated environmental claims caused the program to backfire.

The campaign went viral in the past few days, with hundreds of Twitter messages a day using the hashtag “#paperless2013.” But the tweets are running roughly 10 to 1 against the campaign, with most criticizing it for implying that digital media are always greener than paper-based media without providing any facts.

Welcome to a protest tool for the 21st Century – the hashtag takeover. I didn’t invent the concept, but I think I’m the first to use the term (which is ironic given my lack of social-media savvy. My Facebook page has cobwebs from neglect.)

The tactic sprang up in June as one of the grassroots responses to Toshiba’s ill-fated No Print Day. Toshiba was using "#NoPrintDay" to promote its gimmick, but defenders of print turned that hashtag into a
rallying point for anti-Toshiba efforts. (See 9 Lessons From Toshiba's No-Print Day Debacle and Toshiba's No-Print Day As Popular As a Turd in the Punchbowl for the story of how Toshiba backed down.)

Two Sides brought the Paperless 2013 greenwash to light this past Tuesday when it sent an open letter to Google's
CEO, challenging the campaign as "another example of a self-interested organization using an environmentally focused marketing campaign to promote its services while ignoring its own impact upon the environment." The letter cites chapter and verse about Google's own environmental impact.

Deborah Corn, a ringleader of the opposition to No Print Day, rallied the troops this time around with her article, Going Guerrilla Against Google's #Paperless 2013 Campaign. (Yes, she quoted me accurately, including the key point about sending a message to corporations: "If you make false environmental claims about electronic media always being greener than print, expect backlash.")

Here's how the hashtag takeover works: People supporting (or paid to support) the Paperless 2013 campaign have been sending out tweets beginning “My New Year’s resolution is to go paperless in 2013” and including “#paperless2013”. The “#” turns the phrase into a search term that’s supposed to make it easy for people to find fellow pledge takers.

But those who used the hashtag were barraged with replies pointing out that the campaign is misleading, demanding data to back up the vague claims, or highlighting more objective assessments of when to use digital or print media.

Searching Twitter for #paperless2013 has turned into a wonderful way to connect with others who object to the demonization of print and to discover articles and resources about how to make green media choices, including this great infographic: http://pxandpt.com/. It's also become a forum for exploring what else can be done to fight paperless-is-good greenwash: A hashtag takeover is an effective opening salvo but it won't win the war.

If you want to get in on the action, here's a hint: When "Mr. Greenwash" tweets a message bragging about going paperless, don't just hit "Reply" and write your response. Put a colon, period, or other character at the beginning (so that, for example, it starts ":@Mr. Greenwash") and include the hashtag "paperless2013" (no spaces) to ensure your message is seen by as many people as possible.

Related articles: