Canada Post intent on implementing distance-based pricing
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.
- 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...