• by Erik Sass  @eriksass1, September 22, 2011

USPS May Raise Rates, After All

A year after an industry alliance helped defeat a proposed exigent rate increase by the U.S. Postal Service, the price hike may go through after all, as part of a larger plan to save the troubled institution, which is rapidly approaching insolvency.

The rate hikes, including an increase of 8%-9% for periodicals and 5.8% for other types of mail, were rejected last year by the Postal Regulatory Commission. But they have been dusted off by the Obama administration as a possible, partial solution to USPS financial woes.

Periodicals are one of the least profitable mail classes for the USPS, partly because of repeated rejections by the PRC of proposed rate hikes. Catalogs and other types of direct-marketing solicitation, classified as "standard," are also less profitable than first-class mail, requiring about three pieces of standard mail to equal the profit from one piece of first-class mail.

The USPS has nonetheless resorted to periodicals and standard mail as a way of maintaining delivery capacity when first-class mail volumes dropped, in effect subsidizing delivery of first-class mail with increased volumes of standard mail.

This worked until the current economic downturn caused marketers to sharply cut back their direct-mail campaigns, alongside further reductions in first-class mail demand. From 2007-2010, the volume of standard mail delivered by the USPS plunged from 103.5 billion to 78.9 billion. The volume of first class mail dropped from 108.7 billion pieces to 87.2 billion pieces over the same period.

As noted, the collapse of mail volumes of both classes prompted the USPS to request an "exigent" rate increase, which can be justified only as a response to emergency conditions, arguing that the economic downturn constituted such an emergency. But the PRC rejected the request, countering that USPS financial woes were the result of structural inefficiency and failure to compete effectively with private delivery services.

Monthlies' Ad Pages Sink In October

April may be the cruelest month, but October was none too kind to monthly magazines, according to MIN Online, which says total ad pages for monthly titles dropped 7.9% in October compared to the same month last year. Removing a couple of titles with anomalous comparisons, the total is still down 5.8%. MIN Online has more numbers, including data on specific titles, here.

Smithsonian Raises Rate Base

While many big magazines have posted declines in overall circulation, the flagship publication of "the nation's attic" is bucking the trend. Smithsonian revealed that it is raising its rate base 5% from 2 million to 2.1 million, effective this coming January. The publication attributed its growth to strong sales via its national network of museum gift shops, as well as a big direct marketing push highlighting the magazine's editorial content.

Spin Releases Dance App

Spin has partnered with Shapemix, the mobile music-mixing studio, to release "SPINshapemix," an exclusive free dance remix app for iPhone to celebrate SPIN's October dance issue. The dance app is available for via the iTunes App Store.

Family Circle Boosts Rate Base

Another big publication is raising its circulation guarantee: Family Circle will increase its rate base 5% from 3.8 million to 4 million, effective at the beginning of 2012. The publication is also trimming its frequency, from 15 times a year to 12 times a year.