Magazines Try To Trim Costs After Postal-Rate Increase

by Paul Gough, Jul 18, 2002, 12:00 AM

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With double-digit postage increases taking effect this month, the magazine industry is finding ways to cut costs without raising advertising or subscription rates.

Postage rates are among a magazine’s top costs, accounting for about one-third of production expenses. Periodicals postage rates have jumped an average 22% in the past 18 months. And another rate increase could be in the works for early 2004.

“Whenever the rates increase, we look for ways to try to save money,” said Rita Cohen, senior VP/legislative and regulatory policy at the Magazine Publishers of America. “It has been a challenge for our members.”

Key ways to save money include reducing the paper weight, the size of the magazines and changing mailing practices.

Paper weight could be the first cost-cutting measure, as it would reduce the weight of each magazine and, as a result, how much it costs to mail. Some national magazines have already done this; city and regional magazines are considering this as a response to the postage-rate increases.

“No one likes to give up the gloss and the heavy feel, but the postage is determined by weight and that’s going to have an impact,” said Jim Dowden, executive director of the City and Regional Magazine Association. The Los Angeles-based trade group represents 85 regionals coast-to-coast.

Less likely are moves to reduce the magazine sizes. But changing paper weight and size could help publishers control the costs of paper, which have fluctuated wildly in recent years.

City and regional magazines don’t generally have the circulation of national magazines – Los Angeles Magazine has a base rate of 140,000, compared to many hundreds of thousands to millions for many magazines – but postage is a factor for them, too. And because of their volume, regionals can’t take advantage of the post office’s discounts that other publishers can when they explore other delivery options.

The magazine industry is trying to do that by delivering as much of their magazines as possible bundled and ready to be delivered by carrier. Cohen said the Magazine Publishers of America is trying to extend its chain of distribution as far as it can go privately before it ends up with the postal service.

“We’re working on private distribution to get magazines closer to where the readers are,” Cohen said. This takes several forms, including sharing between magazine publishers to combine shipments; bundling magazine issues to regional spots where they can shipped; and using private companies to do the distribution up to the point where the post office takes over, as close to individual mailboxes as possible.

It’s possible that advertising and subscription rates could go up thanks to the postal rates, although industry officials say they’re trying to avoid it.

“Publishers are looking for ways to decrease costs without having to pass them off to their customers,” said Dowden.

Cohen said the Postal Service has assured the Magazine Publishers Association that it won’t raise rates again until the spring of 2004. A new proposal may be introduced in 2003, which would take about a year to go through the approval process.

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