Software Group Expresses Alarm Over Drop in Mail Volume

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After one quarter with the exigent rate, a publishers group takes issue with the notion of postal rate inelasticity of demand.

Exigency saps the volume of the press.
Exigency saps the volume of the press.

The Software & Information Industry Association (SIIA) issued a statement yesterday expressing “significant concern” over Q2 results from the U.S. Postal Service showing a 7.8% drop in the volume of periodicals mailed.

“It is troubling, but not surprising, that the exigent rate increase has led to a steep decline in volume of periodicals mailed in the U.S. and a significant drop in postal service revenue,” said SIIA President Ken Wasch. “This data provides evidence consistent with an SIIA member survey in 2013, which found that significant rate increases would lead to a reduction in mailing of periodicals.”

The SIIA, a trade association of digital content providers in the publishing industry, is one of the first official bodies of mail stakeholders to formally challenge a report from the Office of the Inspector General of the Postal Service claiming that mail rates are inelastic. A good or service is said to be inelastic if changes in price have a relatively insignificant effect on the demand for it.

Standard Mail for the quarter edged up half a percentage point, and revenue from the class increased 4.3%—not coincidentally the same percentage of the exigent rate increase that took effect in January. Periodicals revenue, meanwhile, decreased by 5.3%.

“SIIA has been actively calling for postal reform proposals that maintain a rate framework providing for reasonable and predictable increases going forward,” Wasch said. “Such increases must be coupled with increased USPS efficiency and appropriate right-sizing of the Postal Service, while preserving service standards. Without these steps, the significant declines in volume and revenue can be expected to continue.”

SIIA member companies include Google, Kiplinger Washington Editors, McGraw Hill, Reed Elsevier, and Thomson Reuters.

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