Wednesday, April 14, 2010

Bad news for U.S. periodicals: USPS business model said to be "not viable"

Periodicals in the U.S. account for more than a third of the enormous loss that the United States Postal Service (USPS) has suffered; delivering magazines and newspapers has steadily been losing money for the past 13 fiscal years and reached $642 million in 2009, according to a story in Audience Development. It reports that  a General Accounting Office  (GAO) report says the post office's business model is "not viable".

Like Canada Post, the USPS is attempting to get its rates up and its costs down and to move away from favourable rates for periodicals, which do not cover costs (one calculation sets the necessary increase to reach breakeven on handling costs at about 31%). The scale of the problem in the U.S.may necessitate annual rate increases well above the rate of inflation which would have the effect of driving publishers to seek more digital alternatives or alternative delivery systems.



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