Periodicals Are Valuable to the USPS

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Periodicals Are Valuable to the USPS

• Periodicals Have Always Been Important to the
  USPS
• Our First Postmaster General Was a Publisher and
  a Printer
• Periodicals Will Continue to Be Important in the
  Future

Periodicals - The Anchor Store in the Mailbox
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Periodicals Are Valuable to Society
Educational
Cultural
Scientific
Informational
Entertainment
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Mail Moment Research

• Periodicals Provide Essential and Personal
  Anchors That

• Better Homelife and Self
• Help You Unwind from Lifes Pressures
• Connect You to Whats Happening

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Impact on the Economy
Printing Publishing Industry Contributes

• 99 Billion 1.1 of GDP
• 1.6 Million Jobs

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So Why Do We See Headlines Like
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You Cant Just Look at Periodicals Alone
Multiplier Effect
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Periodicals Revenue Generation
Over 6 Billion
Total Revenue
Periodicals - The Anchor Store in the Mailbox
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What Were Doing in Core Business Marketing
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What Were Doing in Core Business Marketing

• New Product Innovations

Promotes Value of Mail
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Vision
Elements for Success

• Improved Service
• Competitive Rates
• Enhanced Ease-of-Use

• Increased Circulation

Periodicals - The Anchor Store in the Mailbox
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The Next Two Days Are Critical
Agenda

• Delivering the Promise

• State of USPS Finances
• Rate Strategy
• Flats Automation
• Joint USPS/Industry Opportunities
• Future of Periodicals

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The USPS/Magazine Industry Partnership

• Jim OBrien,
• Director, Distribution
• Postal Affairs, Time, Inc.

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The USPS/Magazine Industry Partnership
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Past Perspective

• Magazines represent 3 of our revenues and 99
  of our headaches.
• Former PMG

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Past Perspective

• Re-Education Process
• Dont view us as JUST magazines
• Standard A 38 (direct mail / renewal notices)
• Periodicals 36
• BPM 12 (book clubs / one shots)
• First Class 14 (bills)

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Past Perspective

• Mail Begets Mail
• One Weekly magazine subscription generates 90
  pieces of mail
• Magazines
• Bills
• Premiums
• Renewal Notices
• List Rentals

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Past Perspective

• Periodical Mailers cant agree on anything
• Red Tag
• Reclassification
• Consumer Magazines / Business Magazines /
  Newspapers

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Transition

• R-97 Industry Coalition
• 1998 Periodicals Operations Review Committee
• Maybe we all bleed the same color of red ink
• Maybe we have a little more in common than we
  think
• Maybe we can achieve more if we work together.

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Present

• USPS now views Periodicals as the Anchor in the
  mailbox.
• A critical component of the Mail Moment
• Were united on controlling mail processing
  costs.

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Present

• Just absorbed a 9.9 rate increase
• The BOG just hit us for an additional 2.6.
• USPS is preparing another case with a 20 30
  potential increase.
• Hearing about phased rates.
• Attributable costs need to be covered, so a 5
  on average increase may be higher for flats.

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Present

• Working on controlling costs
• AFSM 100 feeding test
• Bundle breakage videos
• Future Flats Strategy Workgroup
• POAC, PAG, MTAC
• And a lot more!!!
• But its not enough. WHY???

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First Class Mail Volume
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Present

• The crisis has arrived!!!
• First Class volume is increasing at a decreasing
  rate.
• Mail Processing costs continue to rise.
• Rate increases will become larger and more
  frequent.
• The USPS and mailers need to drive costs out of
  the system, but HOW???

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Future

• First, define the flats strategy.
• Should the USPS or private industry process
  flats?
• Should we enter at SCF or pursue the last mile?
• Do machines process all flats or will some always
  require manual processing?
• How should we prepare flats to minimize mail
  processing costs?

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Future

• Next, test some assumptions.
• AFSM 100 packaging test
• Why not loan or lease some mail processing
  equipment to mailers and let us give flats
  processing a try? We may learn that mail
  processing is harder than we think. The USPS may
  learn that private industry can develop new ideas.

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Future

• Third, align pricing and mail processing.
• Rate Grid
• Other incentives to get mail prepared most
  efficiently.
• Supply chain management (lowest possible overall
  cost).

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Future

• Need to resolve core problems.
• Labor costs continue to rise.
• Costs are outpacing revenue.
• Over one million more addresses to deliver.

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Future

• Postal Reform may be the solution, but how do we
  get it?
• Presidential Committee (12 months).
• New legislation (2-3years).

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Bottom Line

• The USPS and the publishing industry are working
  well together.
• Very tough issues are ahead which require
  straight talk.
• Rate Case
• Flats Strategy
• Postal Reform

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Bottom Line

• We must take advantage of every opportunity to
  generate positive change.
• MTAC, POAC, PAG, Focus Groups, Conferences.
• Need to move VERY quickly. Less talk and debate,
  more action.
• Need to start TODAY at this conference.

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Thank You!