Maybe it's time to take another look at alternative delivery

The largest printing company in the U.S., R. R. Donnelly, is looking at ways to provide alternative delivery of magazines in most major urban centres in the country. In an article in Publishing Executive, Thomas J. Quinlan, the CEO, says Donnelly is interested in a recent proposal in Congress that would allows periodicals, newspaper and unstamped mail to be placed in mailboxes on days when the US Postal Service (USPS) does not deliver. Right now, the USPS has a  monopoly on the nation's mailboxes. But it doesn't deliver Sundays and, pretty soon, it may not be doing Saturday deliveries either.

Now it makes a certain amount of sense for someone who depends in part on the mailing industry to look at gaining some advantage over other printers. The increases in the price of postage and the reductions in service open an opportunity.

“Look what USPS is doing to the mailing industry. It's just not sustainable. There's significant cost increases that they've put through. They're shifting cost to the players in the mailing industry, Quinlan said. “All these things, these are costs for the mailing industry that, quite frankly, we and other people like us have to go ahead and mitigate to our customers because our customers can't go ahead and aren't going to take the additional cost and look for people like us to, again, go ahead and mitigate those.” 

“You look at Ladies' Home Journal that was announced by Meredith earlier this week [would be shutting down]. I mean, 40 to 47 percent of their cost was related to postage. It was nothing to do with electronic content.”

Read more »

Canada Post announces service changes and price increases for next January

Canada Post has announced that next January it will introduce service and pricing changes, including a simplified preparation and pricing for Unaddressed Admail, new specs for machineable mail. For instance, letter carrier presort (LCP) national rates up to 200g are increasing by 4.3% to 49 cents. Prices will be going up for Addressed Admail, Unaddressed Admail, Publications Mail and Business Reply Mail / International Business Reply Mail.The corporation has already introduced customized indicia for publications mail. Here are the 2014 price sheets effective January 13, 2014:

• Publications Mail
• Addressed Admail 
• Business Reply Mail 
• Unaddressed Admail

Concurrently, the Conference Board of Canada has issued a report on the future of the postal service in Canada and projects financial losses of close to $1 billion a year by 2020 unless major changes are made. These include wage restraints, alternate-day delivery, elimination of door-to-door delivery and reduction in service standards. 

Magazines Canada has responded to the Conference Board report by saying that it has tried over many years to work with Canada Post to establish acceptable margins for Publications Mail, but that there is an increasing gap between the volume (Canadian magazines represent 70% of CPC's publications mail volume) and average rate increases. 

The average rate increases of  publications mail over the last decade have dramatically eclipsed all cost increases magazines have had to absorb from other suppliers, and have far outstripped any recognized inflationary measurements. In the same context, the challenges to Canada’s economy in the last few years have had less-than-positive revenue challenges for most businesses, including magazines. 

The magazine association says in a memo to members that changes to delivery schedules could have a serious impact on time-sensitive magazine delivery, particularly for some weekly and bi-weekly titles. If centralized points of delivery are the way CPC is to go (e.g. "super boxes") then MC says they would like to be consulted so that these better accommodate magazines.

Announcement by Canada Post CEO clarified: No change in maximum weight for a magazine

Deepak Chopra

The keynote at the Magazines Canada luncheon as part of the MagNet conference early last month featured the affable President and CEO of Canada Post, Deepak Chopra. And while most of his address was a feel-good ramble about partnerships and the digital way of the future for his organization and the publishers there gathered, he had brought one announcement:  The weight of enclosures in a magazine would be going up from 100 grams to 250. What a lot of the people in the room thought that meant was that maximum weight  for Publications Mail would be going up commensurately, from 1.36 kg to 1.51 kilos. Not so. 

Magazines Canada has now published a clarification, provided by Canada Post. The weight increase only applies to Sample Promotional Novelty Items (for instance, an enclosed a pen or a CD) but the current maximum item weight for an issue using Long Carrier Presort (LCP) remains the same at 1.36 kg.

The bottom line is that publishers will be able to send heavier samples enclosed with magazines, increasing potential for including advertiser promotional items with magazines.

Bloomberg Business Week plunges ahead with alternative delivery

In the wake of our recent post about the need for Canadian magazines to get cracking on alternative delivery comes word that Bloomberg Business Week magazine since December has been working on a strategy to get its magazine delivered by daily newspaper contractors in metropolitan markets. 

Right now, 9% (about 75,000) of the magazine's 860,000 circ is delivered this way, according to a story in Folio: and the company has plans to see 1 out of 3 issues (250,000) delivered this way by year's end. It's not just because of the cost of mailing, apparently, but because of the delivery problems with the USPS.

Right now, the weekly magazine achieves about a 60 percent cumulative delivery rate between Friday and Saturday with the Postal Service. The remainder of subscriber copies arrive sometime between Monday and Wednesday-the latest arriving almost a week after the issue ships.

By partnering with a major newspaper and/or a private carrier, the magazine has a guaranteed Friday delivery by 6 am.

Bloomberg Business Week's director of manufacturing and distribution identified regions where there was a combination of problems with delivery, sufficient entry points and congenial delivery partners. Though he declined to specify costs, he said that overall they were comparable with traditional delivery.

"I don't have a budget to increase my costs, I can tell you that." 

Customers are given the option to stay with postal delivery or take alternative Friday morning delivery and so far only .01% have asked to go back to mail delivery. The magazine is delivered in its own polybag, soft folded and handled separately from the newspaper. 

In Canada, smaller-scale example is set by the Guardian Weekly, which delivers some copies on Thursday mornings, bundled in a plastic bag with the Globe and Mail. (Previous to this , the mailed copy could sometimes arrive as much as five days late (it wasn't unheard of to receive two copies at once).

US Postal Service announces no increase in magazine mailing rates

This seems a day for postal news. U.S. Postmaster General John E. Potter has sent a letter to customers officially announcing there will be no rate hike for "market dominant products." Magazine publishers had been expecting a 2 to 3 percent increase in May and some had even speculated about 10 percent.

"We want to end all speculation," said Potter who, on Wednesday, told a conference in New York that the USPS had an "extreme prejudice" against a 2010 rate hike.

According to a story in Audience Development, first-class mail, standard mail, periodicals and single-piece parcel post will not have a price increase—"there will be no exigent price increase for these products," said Potter in the letter.

Would that Canada Post -- which is imposing a 3% increase as of January, citing "increased costs to serve" -- took the same view as the USPS. The cost of mailing the average magazine in Canada has gone up 38% in six years.

Canada Post: No time for Canadian mags, but lots for U.S. competitors

We find it interesting that Canada Post, which has generally treated the magazine industry as something between a nuisance and a "rounding error", is so cozy with other industry organizations.

For instance IDEAlliance, which is a U.S. organization representing the publishing,information technology and direct mail sector. Canada Post has four staff sitting as members of its Canada Mail committee, rubbing shoulders with the likes of RR Donnelly, Conde Nast, Time, and Publishers Clearing House.

Yet Canada Post refuses to sit on a committee with the Canadian magazine industry. Three years ago it sat down ad hoc with the industry trying to find ways to cut its costs (but not mailing rates). But we asked Mark Jamison, the president of Magazines Canada whether they've agreed to do so since. He said:

"We have proposed that we return to an ongoing committee process since the cost reduction workshops some three years ago, but it does not seem to have met with much enthusiasm."

Magazines Canada recommends a new deal with Canada Post

A federal panel reviewing the operations of Canada Post has met with a Magazines Canada delegation and the message the panel heard was that Canadian magazines want to be delivered by the post office, if they get a fair shake. Delivering magazines by mail is not an accident, the panel was told, but the result of 150 years of federal government policy.

According to a release from the magazine association, a series of key submissions were made at the meeting last Thursday:

• There should be a “postal contract” between Canada Post and the Federal Government which clarifies the crown corporation’s roles and responsibilities.
• An independent regulator should be created to ensure compliance with the “postal contract” and provide for arbitration of disputes.
• Lettermail Rates should rise with actual delivery costs.
• Rate increases should be transparent, timely and predictable.
• Competition should be introduced in magazine delivery.
• Distance- Related Pricing should be put on hold pending the Panel’s report.

Canada is a huge land mass with a dispersed and relatively small population [the release said]. Few other jurisdictions in the world face the same challenges in moving mail and magazines.

From an industry point of view, our proximity to the US magazine and entertainment industry is a truly unique situation found no where else in the world. This has been a defining aspect of magazine policy for years and for good reason. The US is the world’s largest exporter of magazines and Canada is its largest export market.

The three-member independent advisory panel, headed by Dr. Robert Campbell, President of Mount Allison University,was set up in April. The other panelists are Mrs. Nicole Beaudoin and Daniel H. Bader. It is to complete its review by December 2008.

The Magazines Canada delegation that was invited to meet the panel were:

• Terry Sellwood, General Manager, Quarto Communications, publishers of Cottage Life and explore magazines, and Vice Chair, Magazines Canada;
  
• François Blondin, Business Manager, Production & Information Technology, Transcontinental Media and Chair, Magazines Canada Postal Committee;
  
• Michael Fox, Senior Vice President, Rogers Media Publishing and member of the Magazines Canada Public Affairs Committee;
  
• Mark Jamison, CEO, Magazines Canada; and
  
• Jim Everson, Executive Director, Public Affairs, Magazines Canada.

Business reply fees hiked 9%

For those publishers who are reeling from the distance-related pricing coming in January from Canada Post, you may or may not have noticed that business reply mail rates are going up by 9% at the same time. If you rely on postage-paid reply envelopes to increase response in your direct mail, brace yourself to pay 72 cents for every one that is delivered to you starting January 12, 2009. This year it was 66 cents. Within quite recent memory it was 56 cents. More reasons, if you are doing direct mailings, to make it easy for subscribers to reply online.

We guess it's a good thing that they don't charge BRM fees based on how far away the responding customer mails from. [Don't give them any ideas -- ed.]

Real costs of distance related pricing for postage may whack editorial

Good story today on Masthead's website about the real costs of Canada Post's distance-related pricing on one national magazine, The Beaver. It will increase its mailing costs 6.2% and, if those costs can't be mitigated, the difference will come out of the editorial budget. And it may cost a Manitoba printer a contract.

“The first thing that’s going to go is we’re not going to pay writers as much and maybe not hire as many people to write,” says publisher Deborah Morrison, “which is counterintuitive to what we’re trying to do with our magazine. Our editorial staff will probably not get that cost of living increase. What hurts is the editorial content first, because all these other costs—getting it out there, distribution—are beyond our control. We have to manage those and respond to those first. We’ve got to get the magazine out the door.”

The magazine's printing contract, now held by LGM Transcontinental in Winnipeg, expires at the end of the year.

“We’ve made it very clear to anyone bidding on the contract that Canada Post is a factor for us,” Morrison says.

Like many other national magazines with 50% of their circulation in Ontario, there may be irresistible pressure to get regional and local mailing rates by printing in Ontario.

Related posts:

• Magazines Canada provides "calculator" to help titles figure out postal increase
• Secret postal code for Gateway is L4W 1S2
  
• MagsCan urges members to blitz MPs and Canada Post about distance-based pricing
• Canada Post intent on implementing distance-based pricing
• Feds announce panel to review mandate, responsibility of Canada Post
• Strategic review imminent for Canada Post?

Magazines Canada provides "calculator" to help titles figure out postal increase

Publishers of Canadian magazines now have a tool to help them find out how much trouble they're in with Canada Post's switch to distance-related pricing (starting January 2009).Magazines Canada has created a downloadable, do-it-yourself calculator that will give publishers a clearer sense of the inflation of their mailing costs under the new scheme. The calculator, based on an Excel spreadsheet, is also available on the organization's website under "Public Affairs".

Of course, the national lobby organization has a clear motive for publishing the calculator; it is hoping that publishers will do the math and let the organization know how hard they will be hit before writing to their member of Parliament to protest.

Canada Post will be releasing its new official rate card on July 14, at which time it will release the correct postal codes to use for mail entry points. As discussed in an earlier post, many publishers were finding that their LCP software was not producing accurate counts because CP was providing incorrect codes which counted all outgoing mail as national in nature. Under DRP, magazines are expected to pay no increase for delivery of "local" copies, up to 1 cent for regional and up to 3 cents for national. In effect, national distribution may cost many magazines an unprecedented increase in delivery costs of up to 8%.

"Many titles not based in large urban centres but that have mostly national reach could be at serious risk,whether or not they are eligible for the Publications Assistance Program (PAP)," said MagsCan in a release. "On top of the negative impact, the Government of Canada is rejecting its own cultural policy concerning access to content.

Related posts:

• Secret postal code for Gateway is L4W 1S2
  
• MagsCan urges members to blitz MPs and Canada Post about distance-based pricing
• Canada Post intent on implementing distance-based pricing
• Feds announce panel to review mandate, responsibility of Canada Post
• Strategic review imminent for Canada Post?

Secret postal code for Gateway is L4W 1S2

Today's announcement by Canada Post of its proposed rate increases for 2009 -- released, naturally, just before a long summer weekend -- says that for Publications Mail, local mailed copies will see no increase in 2009; for regional, rates go up 1 cent; for national, rates go up 3 cents. The problem is knowing what proportion of your mailed copies are in each category. As a friend writes:

In Canada Post's pursuit of more creative ways to raise rates, in 2007 it first proposed implementing distance-based pricing for magazines that use LCP sortation. After it was pointed out that publishers had no way of knowing how many copies are local, regional and national, CPC said that it would implement the new system in January 2008 but keep the rates the same for local, regional and national. Well, it's now half way through 2008, and some of the biggest publishers are still not sure how many copies are local, regional or national.

It turns out that there's a problem with the postal codes of the CPC facilities. If you use the published postal codes for the CPC facilities, then all copies are reported as national -- even the ones that should be local or regional. To fix this software bug, you need to use a different postal code, except that CPC hasn't finalized the list yet.

For Gateway in Mississauga, Ont., where many Ontario-based magazines mail, the secret is to use L4W 1S2. That's the postal code that needs to be plugged into both the LCP software for the reports, and the Statement of Mailing. From that, you get your quantities. CPC claims the overall weighted average increase of the Publications Mail hikes will be 3.1%, but then who really knows? CPC itself hasn't figured out yet how to make this work.

The import of the rate hikes may be lost in a flurry of media comment about costs for regular stamps going up from 52 to 54 cents, starting in January. (The spin being applied by the post office is that Canada will continue to enjoy the 3rd lowest rate of postage in the developed world. What it doesn't say is that, compared with those who are lower (Australia and the United States), the cost to mail a letter in Canada is already 15% higher.)

"We have done our best to shield our customers as much as possible from the full impact of rising fuel, energy and labour costs." said Canada Post president Moya Greene. "The overall pricing strategy has been designed to ensure no one segment of our customer base carries an unfair share of burden of these rising costs."

Magazines Canada president Mark Jamison issued a statement soon after the Canada Post announcement saying:

Distance-related pricing could be a potential disaster for the industry. Many titles, not based in large urban centres but who have mostly national reach could be at serious risk whether they have PAP (Publications Assistance Program) eligibility or not.

Make no mistake, large or small , many titles could be badly hurt or worse. On top of this impact, we are looking at a total rejection of the Government of Canada's own cultural policy concerning access to content. Does the Government of Canada have any say in the behaviours of its agencies in the context of the delivery of its own policies ?

MC and its members will continue press MPs across Canada to take action

[More detailed analysis of the postal increases to follow as it becomes available.]

Related posts:

• MagsCan urges members to blitz MPs and Canada Post about distance-based pricing
• Canada Post intent on implementing distance-based pricing
• Feds announce panel to review mandate, responsibility of Canada Post
• Strategic review imminent for Canada Post?

MagsCan urges members to blitz MPs and Canada Post about distance-based pricing

In a bulletin to its members, Magazines Canada is urging publishers to blitz their MPs and Canada Post, objecting to expected proposals to implement "distance related pricing" and increase rates by as much a 8% in 2009. The actual rate increases won't be known until released by Canada Post in July, but MagsCan is not waiting.

Its position is that this is a revenue grab, that far from being revenue neutral, rates for "local" delivery won't go down while rates for "regional" and "national" will go up significantly. Also, that distance-related pricing runs counter to Canada's cultural policy and denies many Canadians equal access to Canadian publications.

In recent weeks, our public affairs team, composed of industry leaders and senior staff, has met with many officials: MPs from many regions; Canadian Heritage officials; senior policy advisors to a number of key Cabinet Ministers and senior executives at Canada Post. In addition, Magazines Canada is working with our regional association partners to ensure that the message goes to Ottawa from sea to sea to sea. The association is preparing a submission to the Canada Post review panel.

Related posts:

• Canada Post intent on implementing distance-based pricing
• Feds announce panel to review mandate, responsibility of Canada Post
• Strategic review imminent for Canada Post?
  

Canada Post intent on implementing distance-based pricing

(Even at the risk of treating readers like postal nerds and overloading them with the minutiae of postal policy and politics, we think this is an important issue for the delivery of magazines. So bear with us.)

Canada Post seems intent on moving to "distance based pricing" for Publications Mail starting in 2009, no matter what its customers say. Until now, it has cost the same to mail a magazine across the country as it did to mail it across town.

Already this year, Canada Post has laid the groundwork by requiring that publishers using Letter Carrier Presort (LCP) have had to declare local, regional and national volumes for their mailings.

The post office said customers would be allowed time to "assess the new structure" and therefore the earliest the new system would come in was 2009. Well, the customers have assessed it and they don't like it. But it looks like they're going to get it anyway. Magazines Canada is lobbying on this, but it is fighting a war on several fronts, given that it is also trying to deal with the jeopardy threatening the Canada Magazine Fund and the possible disappearance of the Publications Assistance Program.

Knowledgeable sources in the industry say that over all costs in 2009 are expected to go up by about 4% for regional and perhaps as much as 8% for national presorts. For every 2%, this increase represents about $0.01 on an average $0.50 cost of mailing a magazine. It shouldn't be assumed that this won't affect smaller magazines because some of them strive, against the odds, for every economy by trying to use the LCP presort.

The most direct impact on small publishers may well be to decide they simply can't be bothered with LCP anymore. Their often rudimentary software programs may not be able to provide the 11 subtotals necessary when filling out statements of mailing, so they do what -- start using a mailing house if they were doing it themselves? Switch to costlier NDG if indeed hitherto they were trying to prepare their own LCP mailings? Send everything out at the National LCP rates?

For larger magazines, the new policy would help some and hurt others; whether it is a wash for a big company like Rogers or Transcontinental is unknown. We somehow doubt it.

Magazines which already stop at sorting at the NDG level -- which already effectively is structured as distance-based pricing (cheap local, steps up for regional and national)-- are probably not going to notice as big a difference.

In the L/N/R formula, ostensibly created to more closely match prices to costs, there is no price reduction planned for low-cost "local" delivery, to offset the price increases for costly "regional" or "national", so it's just another way of increasing Canada Post's prices.

This creates a conundrum for some kinds of magazines. For instance, a company like Canada Wide (BC Business) prints and mails its magazines in Ontario, but delivers mostly to BC addresses. And should Toronto Life and Saltscapes, since they are largely regional, be expected to carry part of the load for The Beaver or Canadian Geographic, which have far-flung and diffuse circulations?

One of the bigger questions is whether printers/mailing houses will be adversely affected ... e.g. if Canada Wide has a good printing or mailing contract with an Ontario-based company, then will the increased postage cost under L/R/N pricing be significant enough to cause them to reconsider using a BC-based printer/mailer?

As an industry, magazines some years ago started taking for granted Canada Post's increased dedication to basing Publications Mail pricing on its attributable direct costs. Within living memory, the Publications Assistance Program (PAP) picked up the difference between those costs and a fixed rate per copy. But around the time when Canada Post started trying to analyse its costs more precisely, PAP also got changed to a percentage-based formula, with a sliding scale percentage relating to size of mailing. That put the onus on the mag industry to try and help Canada Post reduce the cost of mailing a magazine (and we stepped up to try and oblige), but it also means that nowadays, since Canada Post has decided they need to keep raising PubMail prices to maintain profitability by mail category, publishers take it on the chin each time.

(Of course PAP is under review and is probably going to disappear within a year as a separate support program...but that's a story for another day.)

It's not as though magazine publishers can respond to all of this by charging for subscriptions based on distance. We can't charge out-of-province subscribers more than in-province subscribers, so it's not like we can match our pricing with our costs either.

Related Posts:

• Meanwhile in the USA...
• Feds announce panel to review mandate of Canada Post
• Decline in general mail volume in U.S. threatens magazines hard-won agreement
• Radical funding overhaul by Heritage proposes merger of CMF and PAP
• Size matters -- too much -- in U.S. postal rates...

[UPDATE: Big changes at Canada Post [Magazines Canada bulletin to members]

Meanwhile, in the USA...

Interesting article in the New York Review of Magazines about postal rates for periodicals in the USA. I can't put my finger on it, but something about this whole "efficiency vs. public good" bit sounds, I dunno, vaguely familiar.

[hat tip to Boing Boing]

Feds announce panel to review mandate, responsibilities of Canada Post

In an announcement that may have implications for the magazine industry in this country, the federal government has launched a limited review of Canada Post. The Minister responsible for Canada Post, Lawrence Cannon, announced the appointment of a three-member independent advisory panel, headed by Dr. Robert Campbell, President of Mount Allison University. The other panelists are Mrs. Nicole Beaudoin and Daniel H. Bader. It is to complete its review by December 2008. Interested parties are asked to submit their comments by September 2, 2008. The review is limited to consultations with key stakeholder groups (like magazine associations) and receiving individual briefs. There are no plans for cross-country hearings.

The review focuses on four areas:

• market and competition;
  
• public policy objectives and responsibilities;
  
• commercial activities; and
  
• financial and performance targets.
  

The review is to be guided by four, key principles:

• Canada Post will not be privatized and will remain a Crown corporation;
• Canada Post must maintain a universal, effective and economically viable postal service;
• Canada Post will continue to act as an instrument of public policy through the provision of postal services to Canadians; and
• Canada Post will continue to operate in a commercial environment and is expected to attain a realistic rate of return on equity.

Magazines Canada and other interested observers have expressed concern that CPC has wandered too far from its policy responsibilities in recent years. This is particularly true for magazines. Large postal rate increases in recent years and its abandonment of the Publications Assistance Program (PAP) have demonstrated a disregard for its continuing public policy responsibilities, the organization said.

Strategic review imminent for Canada Post?

The Canadian Marketing Association (CMA) has told its members in a bulletin that it expects the federal government next week to announce a panel to conduct a strategic review of Canada Post. This is interesting, coming on the heels of Canadian Heritage's proposals to consider funding of alternative delivery. And in light of word that the European Union, after 16 years of study and discussion has finished drafting legislation that would fully liberalize the European postal sector. Under the legislation, EU members states would be required to end their domestic mail monopolies and fully open postal markets for competition by 2010. If the Canada Post monopoly goes the same way, there are huge implications for alternative delivery of magazines.

Decline in general mail volume in U.S. threatens magazines' hard-won agreement

U.S. magazine publishers are getting nervous that falling volumes and revenue from first class and other non-publications mail are threatening an agreement they only recently hammered out with the US Postal Service (USPS). According to a story in Folio: First Class Mail volume declined in the first fiscal quarter of 2008, while Standard Mail, which typically makes up for the decline in First Class, also fell, raising a red flag of warning about the stability of the entire USPS rate structure.

First Class Mail, made up of personal letters, most bills, and Standard Mail, which includes catalogs and direct mail, combined accounts for about 94 percent of the total mail processed by the United States Postal Service. If those categories continue to decline, the billions in revenue they produce will decline too, forcing the USPS to raise rates, probably across the board, including for magazines.

Standard mail declined by 2.6 percent to 27.7 billion pieces in the first fiscal quarter of 2008, and First Class declined by 3.9 percent, to 24.4 billion pieces.

Revenue was up 3.5 percent to $20.4 billion in the first quarter and the USPS posted a profit of $672 million. However, the revenue was $500 million less than forecast for the first quarter (October through December), which is typically the best-performing financial period for the USPS because of the holidays.

U.S. magazines' agreement last spring with USPS set a cap on rates for publication mail, governed by volume and other considerations, to give these frequent mailers stable and predictable forecasts of price increases. At the time, Nina Link, president and CEO of Magazine Publishers of America, said: “Having the next increase, which is likely in the spring, and all future increases under the CPI system will literally save publishers billions of dollars in postage costs in the coming years.”

The idea was that magazines would pay for only the incremental increases in the actual costs of mailing their own publications, with First Class and Standard Mail paying for the USPS's basic infrastructure. At least that was the deal, and it is similar to what Canadian publishers have been arguing for years with Canada Post, although CPC is much more secretive about its business than USPS.

We asked Michael Fox, Senior Vice-President, Circulation & Development at Rogers Publishing Limited in Toronto and chair of Magazines Canada's postal subcommittee, to comment on the differences between the situation north and south of the border:

To me one thing this highlights is the huge difference in disclosure between the USPS and CPC. The US post office is much more transparent in reporting trends in volumes of mail and the revenues on a regular basis throughout the year. By contrast CPC is secretive and only releases volume and revenue data once a year in its annual report. Why does this matter? If you are a mailer you have a basis to compare what all mailers collectively are doing. It becomes a relevant economic indicator.

In terms of the US magazine deal, they argued along the same lines that we do. The infrastructure should be paid for by the big volume of Lettermail and Admail with the rates for publications linked to incremental costs.

I can't speculate on the US situation. I just wish we had ongoing trend data rather than the CPC paternalistic "we know what's best" approach to transparency.

Radical funding overhaul by Canadian Heritage proposes merger of CMF and PAP

[This post has been updated.] The Department of Canadian Heritage is proposing a radical overhaul of its funding programs, combining the Canada Magazine Fund (CMF) and the Publications Assistance Program (PAP) into one, new program called the Canada Periodical Fund. It proposes that funding be used to encourage the development of digital and online intiatives of print publishers. [And it indicates that the $1 million program called Support for Arts and Literary Magazines (SALM) would be gone, a major hit for the hundreds of very small cultural magazines in this country.]

The department has launched a consultation process by posting a discussion paper, a PowerPoint presentation and various background documents on its website and asking for public and industry consultation and reaction by April 25. Individuals may respond and there will be roundtable discussions by invitation to stakeholder groups in the industry.

[UPDATE: Concern is already being expressed that the time allowed for consultation is extremely short in reviewing and commenting on such a sweeping change in policy, particularly one which, like the PAP postal subsidy, has been around for more than 100 years. While the proposals suggest that they are freeing magazines to be compensated for using alternative forms of delivery, for many smaller, independent magazines in this country this is not a reasonable or likely alternative. (Canadians have delivered to them more than 700 million copies of magazines every year through the mail.) The proposal, in effect, lets Canada Post off the hook from its long responsibility to allow Canadian publishers to reach Canadian readers in a cost-effective way.]

This review is not considering whether the Government should fund magazines and non-daily newspapers, [says the DCH document] but how they should be funded. Having considered the current environment and the history of the programs, Canadian Heritage has developed a proposal for discussion during these consultations: the development of a new, combined program tentatively called the Canada Periodical Fund.

All publications which now receive PAP or CMF funding -- that includes all consumer and trade magazines and community newspapers -- can expect to be affected by the proposed changes, says the ministry. No dollar figures are attached; the two programs together were worth $60 million to Canadian magazines in 2006-07 , although the PAP is set to lose $15 million effective March 31, 2009 when Canada Post withdraws the last of its financial support.

If the Canada Periodical Fund were to retain all of the current funding for CMF and PAP (less the departing Canada Post contribution), the merged program would have $60 million to spend, of which about $45 million (about 78%) could conceivably go to magazines. But there are no suggestions in the consultation documents of how much money the new fund may be getting. It could be less than it gets now; it is unlikely to get more.

Scott Shortliffe, the Director of Periodical Publishing and Programs bluntly told a Canadian Business Press meeting last June:

"Frankly, I think the idea of spending more is extraordinarily lofty. This government has been very consistent in saying it has new spending priorities and that more money will be allocated to the cultural industries. Even if someone came forward with a brilliant program that would cost $300 million, it's not going to happen."

Whatever the budget, the proposal is that 95% of the new Fund would go to periodical publishers (magazines and non-daily newspapers) and 5% to industry initiatives. Right now

• a fixed program budget would be allocated by formula to eligible publishers to reimburse magazine content and distribution expenses. Such a formula could be weighted by profitability, proportion of Canadian content, the ad:editorial ratio and whether the publication serves official and other language minorities, aboriginal or rural communities..

• The formula would be adjusted and refined annually.
  

• Publishers could apply and receive payment once a year for all their titles. In other words, application would be made by publisher rather than by title -- so Rogers Media and Transcontinental Media would make one application for support for their dozens of different consumer and trade magazines.The entire program budget would be allocated at one time.

• Eligible distribution expenses could be for either Canada Post or alternative delivery methods, a major change for the industry, which has already explored delivering magazines outside of the traditional and increasingly unaffordable mail system.

Somewhat ominously, the discussion document muses about "whether the relatively large share of program spending received by a relatively small number of large publishing companies is an appropriate and effective use of public funds". This can only be a reference to the postal subsidies and editorial content support being received by large companies like Transcontinental Media and Rogers Media Publishing and large circulation titles like Chatelaine and Maclean's or Canadian Living. DCH notes that 75% of the CMF goes to the 20 largest publishing companies.

It also questions whether the current funding regime is benefiting writers, photographers, illustrators and other creators. And whether federal government support for magazines should be focussed in areas that complement its Advantage Canada strategy to cut taxes and reduce the national debt.

The benchmarks for success of the program could be:

• Increased Canadian content in periodicals, measured by the number of pages of Canadian magazine content produced annually, the incomes of Canadian creators, and the diversity and number of Canadian magazines and non-daily newspapers;
• Greater access by Canadians to Canadian periodicals, measured by market share of Canadian magazines, circulation and access by in smaller communities;
• Greater stability and predictability in program delivery by establishing and adhering to service standards.

The discussion paper says that proposals, which are an outcome of a wide-ranging review over more than a year and a half, are intended to provide optimum value to Canadian readers and predictability and streamlined program delivery to publishers and DCH by merging two programs and delivering them by publishing company rather than by title. It also says that there will be greater flexibility in the type of distribution publishers may use now that Canada Post is withdrawing its last support from PAP effective March 31.

One of the most dramatic departures suggested by the discussion paper is that it contemplates directing money to support and encourage online and digital delivery of Canadian content.

The proposed approach offers opportunities to address changes in the way Canadians are consuming news and entertainment: through joint initiatives on industry-wide projects and by exploring the possibility of opening funding to new forms of publications or to online content produced by print publications.

DCH poses questions that people in the industry will undoubtedly want to answer, among which are (we're paraphrasing):

• Where should the government target its support?
• What types of publications should receive support and which should be excluded?
• Should the program support web-only magazines as well as digital ventures of online publishers?
• Should good environmental practices be rewarded within the program?
• Should appropriate compensation for writers and other contributors be a factor in the program?

There are probably a bunch of other questions to come, including the most compelling:

• Will there be more money, the same money spread differently or less money?

[Statement about consultation, from Magazines Canada.]

[More to come]

Information about undeliverable magazines will now come electronically

Starting January 14, the old system of magazines receiving a bundle of covers and address blocks torn off undeliverable magazines will be going the way of the dodo. After consultation with the industry, Canada Post is instituting an electronic reporting system.

Publications currently pay for the undeliverables service as part of their publications mail agreement. Now, though they'll have to register for it, they can receive a weekly electronic report showing the address and keyline (subscriber account) information from undeliverable copies by e-mail, at no extra charge. The undeliverable magazines will be disposed of by Canada Post.

[UPDATE] The sharp-eyed Shoestring blog for small magazines (Magazines Canada) spotted that returned copies for magazines that don't register will now cost $1 apiece! Yikes.

Canada Post creates virtual community; what a crock

We wonder what portion of its inevitable forthcoming increase in rates to deliver magazines will be required to cover the costs of Canada Post's loopy venture into Second Life. According to a story in Media in Canada:

Canada Post has founded the virtual city of Maple Grove, an online community where this holiday season's online shoppers will be able to browse in the 3-D cyber stores of the national mail carrier's retail partners. While visiting the cyber locale, consumers can order gifts and merchandise from the Canadian and American retailers who are featured in Canada Post's annual lookbook catalogue. They include SkyMall, Toys 'R' Us, the Shopping Channel, Brookstone, Red Canoe and Everything Olive.

The official launch of Maple Grove will be celebrated tomorrow, November 3, with a six-hour virtual live music festival. As well, throughout the holiday season, the virtual city will host concerts, film screenings and shopping events.

No advertising is being sold on the site; apparently Canada Post is being paid in "buzz". Sometimes, we just wish they'd deliver the mail, on time and at a reasonable price. And we could do without the hypocrisy of the following rationalization:

Why did Canada Post choose to set up shop in Second Life's worldwide virtual community of more than 8 million registered users? "Today's net-savvy consumers value convenience and relevance, and there are hundreds of thousands of Canadians in Second Life," explains Laurene Cihosky, SVP for Canada Post's direct marketing division. "Maple Grove is our way of meeting those expectations; a virtual place for friends to meet, shop and enjoy the culture that Canada has to offer.

"The post office is the centre of many communities across Canada," notes Cihosky. "And just like your local post office, visitors to Maple Grove can visit Canada Post and send packages, buy stamps, cards, gift cards and send them to anyone, anywhere in Canada."

The post office is not only not the centre of many communities, it is often hard to find either a mailbox or anyone knowledgeable working at the proliferating franchised kiosks hidden in the back of drugstores.

Just do a better job at your main job is what we say and cut the crap.