USPS Board Approves Tryout of Magazine Ride-Alongs

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The U.S. Postal Service's Board of Governors last week approved the filing of an experimental rate case with the Postal Rate Commission to provide a lower ride-along mailing rate for periodical mailers who polybag or bind catalogs or promotional materials such as CDs and product samples with their magazines.


Ride-along pieces currently cost periodical mailers a Standard-A rate of 20 cents or more. The potential two-year test would allow one ride-along piece to accompany a periodical for a flat fee of 10 cents. If approved by the PRC, the service could be available in a few months.


According to the publishing industry, the cost for these mailings -- which are either sold like advertising space in magazines or used as promotional opportunities for publishers themselves -- is prohibitive. As a result, mailer copies of magazines often don't carry the inserts included in newsstand editions and magazines can't work cost-effectively with catalogs -- a golf catalog included with Golf Magazine, for example -- to reach similar audiences.


"The new rate is somewhere in the middle," said Rita Cohen, vice president of economic and legislative analysis at the Magazine Publishers of America, Washington. "The idea is that we can get more advertising that we normally wouldn't have because the price would be prohibitive."


The ride-along piece can weigh no more than 3.3 ounces, can't exceed the weight of the host periodical, and must not change the shape or processing category of the periodical. The rates increase if the ride-alongs don't meet these specifications.


"We just want to make sure that we are not putting too many things in a magazine so that it dilutes its value," Cohen said.


Jerry Cerasale, senior vice president of government affairs at the Direct Marketing Association, New York, said the rate will help DMers reduce the cost of reaching magazine subscribers. "It also helps the magazine industry [and] the USPS will get more revenue than just what they get for sending the magazine, but they do not have to incur any additional costs," he said.


Indeed, the USPS said the test classification -- which it is using to determine the cost and demand for the service -- is expected to be much easier to administer and to generate more revenue. The lower ride-along rates could potentially have a devastating effect on list companies or lettershops with catalog and magazine customers since catalogers could potentially eliminate a separate mailing by having a magazine publisher do it for them. However, Cohen said, the magazine industry does not want to cannibalize Standard-A mail.


"The idea is really to enhance the value of advertising so magazine publishers can do more creative things with their advertising. Right now, we are very limited as to what we can do, and this would give us a little more flexibility," she said.


The postal service plans to file the experimental test with the PRC in the next few weeks -- and while cases can take a long time to complete, "since the filing is for an experimental test and since people are generally supportive of it, they might be able to do it more quickly," Cohen said.


While the board of governors did not address any financial issues at the meeting, postal insiders are confident the USPS will surpass its surplus goal of $200 million by Sept. 10, when its fiscal year ends, because of its "lifestyle" changes that have been in effect since spring. Nevertheless, another postal rate increase is inevitable, and the filing may take place as early as November. This could amount to a 35-cent First-Class stamp and average increases of up to 4 percent for the various mail classes. Some expect the Standard-A catalog rate to go up as much as 7 percent.


The board also approved a service that will let cosmetic, hosiery and continuity club mailers absorb return merchandise postage costs for opened and returned parcels by customers. Standard-A mailers who sign up for the service will pay a flat, per-piece fee of $1.75 for each parcel weighing less than 16 ounces returned as unwanted or undeliverable under the USPS' Bulk Parcel Return Service. Merchants would pay an annual permit fee of $100 plus the per-piece fee for mail returned. Qualifying merchants are also required to have a minimum of 10,000 returns annually through the system. The service will be available Oct. 3.


BPRS mailers currently use the service when customers return parcels that aren't opened. However, some customers open packages, realize they don't want the products, tape them up and send them back. In these cases, the USPS requires the customer to pay the postage or the packages end up as abandoned materials, or in what is known as the "dead letter shop."


"The new service will allow us to get more parcels returned timely, and they are not going to end up at the mail receiving center," said Aaron Horowitz, director of government affairs at Cosmetique, Vernon Hills, IL, a cosmetics mail-order company.

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