PRC Eyes Deal on USPS Paid Circ Proposal

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The Postal Rate Commission authorized settlement proceedings July 11 for a U.S. Postal Service proposal designed to ease standards of when a magazine's circulation counts as paid.

On July 6, the USPS proposed that for magazines to qualify for a paid-periodical rate, only 30 percent of subscriptions would need to be sold at the basic subscription rate rather than the current 50 percent.

The PRC appointed the USPS counsel to serve as settlement coordinator, asked the postal service for more information by July 25 and directed the agency to report on negotiations by Aug. 4.

The proposal affects the definition of a nominal rate subscription but does not alter a requirement that more than 50 percent of copies of a publication be circulated to people who paid more than a nominal rate.

"The proposal, if passed, will basically allow publishers to put their magazines on sale," said Howard Schwartz, executive director of distribution sourcing and postal affairs at Conde Nast, who also leads the Periodical Advisory Group, a group of major publishers that works with the USPS on new rules and regulations. "It helps, given the fact that we can't get the rates we used to get because of competition in the digital world, and things like that."

In general, Mr. Schwartz said the proposal "allows publishers to sell subscriber copies at what the market will bear, and not be penalized by the postal service for some law that has been buried in the (Domestic Mail Manual) for maybe 80 years. It just modernizes the language so that publishers do not fall into a gray area of having too many copies that didn't qualify for paid under USPS requirements."

The change would let publishers take advantage of the elimination of a similar nominal rate definition in the bylaws of national audit bureaus that was designed to offset subscription losses from sweepstakes legislation, the USPS said.

These Audit Bureau of Circulations and BPA Worldwide rule changes abolished the "50 percent" rule holding that no copy sold at less than half the basic price could be counted as paid circulation, regardless of the USPS rule. As a result of the changes, which took place in 2001 and 2000 respectively, copies can be sold at any price as paid circulation, but publishers must make greater disclosures of how much money is being charged for subscriptions.

"After the sweepstakes legislation, it's been very difficult to sell subscriber copies," Mr. Schwartz said. "We used to be able to use the sweepstakes to make our rate base when it was needed. Now, you just can't find enough new subscribers, so this a way to help mitigate that."

Mr. Schwartz added that the audit bureaus and USPS rules are "at opposite ends of the totem pole, but this moves them a little closer together."

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