ABM believes MPA and Time Inc. proposals will hurt small and mid-size publishers.
With a postal rate increase imminent, the publishing industry’s two biggest associations and its largest consumer magazine publisher are debating over which proposed increase would least impact periodicals.
The U.S. Postal Service in May proposed a system-wide postal rate increase of 8.5 percent, with magazines looking at an average 11.4 percent jump in rates. While American Business Media wishes the increase was lower, it supports the postal service’s proposed rate structure over alternative rate case proposals made by Magazine Publishers of America and Time Inc., David Straus, postal counsel for ABM, said this week.
In their separate proposals, which were filed with the Postal Regulatory Commission in opposition to the postal service’s proposal, Time Inc. and MPA advocate for greater incentives for publishers and printers that co-mail and co-palletize. But Straus says the proposed increases are too big and would unfairly hurt small publishers that are unable to co-mail and co-palletize. The Postal Regulatory Commission is expected to make a decision on the impending increase in early March.
In a reply brief filed January 4 with the Postal Regulatory Commission on behalf of ABM, Straus estimates that under Time’s proposal small publishers are facing an average increase of 18.38 percent, while large publishers face an average increase of 9.94 percent. MPA’s proposal, ABM estimates, would raise rates for small publishers an average of 16.48 percent and an average of 9.49 percent for large publishers, he says.
Straus, in his brief, says both ABM and the postal service support greater incentives for companies that co-mail and co-palletize, but disagrees with MPA and Time Inc. in their assertion that the larger the incentives the more likely it is that co-mailing and co-palleting offerings will increase industry-wide.
"Larger incentives will do little more than enlarge a demand for services that is already in excess of the ability of the industry to meet it," the reply brief says. Straus goes on to write that VNU has unsuccessfully tried to persuade its major printers to co-mail volumes below 5,000; Crain Communications cannot obtain co-mailing services for its tabloids and weeklies; and Hanley Wood is able to co-mail just 2 of its 15 monthlies.
MPA, Time Inc. Defend Briefs
Both MPA and Time Inc. officials defended their briefs this week in separate interviews, saying their proposals seek to lower the impact of the postal rate increase on all publishers. "Our proposal is about paying for what you use," said Jim O’Brien, Time Inc.’s vice president of distribution and postal affairs. "We want to encourage people to use more efficient ways to prepare their mail. Our proposal says that if you prepare your mail efficiently, you’ll pay a lower rate. If you prepare it inefficiently, you’ll pay a higher rate."
O’Brien said Time Inc.’s brief also gives the regulatory commission the tools to modify the impact of Time’s proposed increase if it believes it will have a large impact on smaller publishers. "We don’t want to see anyone go out of business as a result of a new rate structure," he said. "We’re trying to establish a rate structure where people will have the right incentives to operate more efficiently."
Rita Cohen, senior vice president of legislative and regulatory policy for MPA, says the association’s proposal would decrease the impact of a postal rate increase on small publishers. "Our proposal was designed with the needs and benefits for the entire periodicals community in mind," she said. "And we did several things to protect small publishers. In fact, our proposal cuts in half the maximum rate increase that small publishers face. Under the postal services proposal, small publishers could face as much as a 40 percent increase. Our proposal puts the maximum increase in the low 20’s."
Both Cohen and O’Brien disagree with ABM’s belief that greater incentives will not lead to an increase in co-mailing offerings. "Interest is growing," Cohen said. "But there are some providers that don’t do it because it doesn’t currently work for them on a cost-benefit basis. So we want to up the incentive so that there will be more money for providers and more money for publishers that engage in these services. A lot of printers and publishers want to do this. We want to give them the incentive to move forward."
O’Brien agreed. "It’s a chicken and egg situation," he said. "People don’t want to change because there is not a rate structure that says here’s the incentive to change. And, in our opinion, you have to start somewhere. So we want to ratchet down the impact so the providers have the tools and the support to make the change."