US Publishers Take Another Look At Private Delivery

After being hit with back-to-back postal rate hikes, publishers are exploring alternate delivery options as a way to sidestep the USPS.

Still reeling from the May 8th announcement that postal rates are going up another 2.6 percent this month, publishers are taking a hard look at delivery options that would allow them to bypass the United States Postal Service.

Publishers say they are considering a wide spectrum of options including using private transportation companies and joining together with other mailers. Some publishers, however, are quick to point out that alternate delivery tactics have been tried before, and have failed miserably.

Leading the charge for change is the Magazine Publishers of America. After a $10 million lobbying and public relations blitz that unsuccessfully sought to keep postal rates under control, the MPA is furious over the latest rate hike.

Rita Cohen, senior vice president of legislative and regulatory affairs for the MPA, says that her organization, as well as the industry as a whole, is fed up with the USPS. Its chief inefficiencies, she says, are linked primarily to mail processing and transportation–and in both areas, private companies could easily pick up the slack. Because of this, the MPA is "seriously exploring other options)" she says.

"We're looking to expand on existing projects," Cohen explains. "We're talking to some of the transportation companies and printers and seeing if maybe we can band together with mailers somehow. It may be a little early on for this, but a lot of people are looking into it."

Randall Publishing is an example of one publishing company that has, in part, already taken matters into its own hands. The Tuscaloosa, Alabama-based publisher of Overdrive and Trucking Co. distributes its transportation-industry titles via 16-wheelers to about 1,700 truck locations across the country. In an effort to save even more money, the company also hauls competing magazines. Doing so, says president and COO Mike Reilly, has made such delivery "almost a break-even system."

He adds, "If the Postal Service continues to implement rate increases that outpace inflation, it's just a matter of time before the whole industry finds a better way to do things. For a lot of magazine publishers, the Postal Service is their most unappreciative partner. Most businesses wouldn't put up with that from any company–it's almost insulting."

Been there, done that

This isn't the first time publishers have threatened to pull business from the Postal Service. In fact, alternate delivery actually got some traction about a decade ago when a number of private delivery companies sprang up around the country and began offering magazine delivery services in select pockets across the country. These companies helped distribute magazines in high-density subscriber areas much like a paperboy would-by carting magazines, usually wrapped in plastic or polybagged with other materials, door to door.

However, a postal rate reclassification case in 1996 substantially reduced postal rates for larger titles and encouraged many publishers who were using these companies to turn back to the Postal Service. The two leading players in the market, Alternate Postal Delivery (APD) and Publishers Express, were forced to change their focus to advertising, and to fold, respectively.

Now some of the more vocal Postal Service opponents are rallying for the defunct companies to make a comeback. "We have received many inquiries by publishers wondering if we would be participating in this market again," says Philip Miller, chairman and CEO of Alternate Marketing Networks (formerly APD), which at its peak handled about 50 titles in 30 markets. "As we said in the nineties, and we still say now, if magazines are truly committed to a long-term plan, then we are always interested in that business." Miller adds, however, that the company is not interested in functioning solely as a "postal-rate increase deterrent."

Others, however, aren't banking on the resurrection of alternate delivery services just yet. The alternate delivery companies that experienced fallouts in the last decade simply did not make money on magazine distribution, says David Straus, postal counsel to American Business Media. They never got enough "ride-along" advertising to put them in the black. "I don't see alternate delivery happening again in the near future," he says. "My guess is that most of the companies that have tried the model already are reluctant to try it again."

Jim O'Brien, who is now Time Inc.'s director of distribution and postal affairs but was formerly the CEO of Publishers Express, says alternate delivery doesn't stand a chance until private companies can gain access to mailboxes. (Mailboxes are the property of the U.S. government and therefore cannot be used by any service other than the USPS.) "And it will be years until that kind of postal reform happens," he says. "All the talk of alternate delivery now–that's purely a tactical thing, a knee-jerk reaction to rising postal rates."

Page 18;Volume 30;Issue 9

THIS IS THE FULL TEXT: COPYRIGHT 2001 Intertec Publishing Corporation

COPYRIGHT 2001 Gale Group

FOLIO: THE MAGAZINE FOR MAGAZINE MANAGEMENT, 01st July 2001