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Big Publishers Urge 'Bottom-Up' Periodicals Rates

A coalition of large commercial publishers filed a proposal with the Postal Rate Commission this week calling for a radical revamping of the rate structure for periodicals.

In the filing, publishers such as Time Warner, Conde Nast Publications, Reader's Digest Association, Newsweek and TV Guide Magazine Group proposed to study periodicals rates, conduct hearings on the topic and issue a plan for an alternative periodicals rate schedule to the U.S. Postal Service's Board of Governors.

The structure the publishers advocate is often referred to as “bottom-up” pricing, said Neal Denton, executive director of the Alliance of Nonprofit Mailers in Washington.

“Instead of constructing an all-inclusive postal rate and then applying discounts depending upon work sharing and drop shipping, etc., some have advocated the creation of a stripped-down basic rate structure that would then allow for the addition of requested services [such as sortation or transportation],” Denton said.

The proposed rate structure would reward the most efficient mailers, the publishers said.

“[Currently], people who prepare their mail efficiently end up picking up the tab for those who don't,” said Jim O'Brien, director, distribution and postal affairs at Time Inc. “In the current system, there is no penalty for creating sacks with one or two publications [in them]. But with the system [that we have proposed], if you decide to do that, you pay for what you use.”

The proposal could be controversial, however, because smaller publishers have resisted bottom-up pricing structures in the past.

“Small-circulation periodicals that have to change the way they enter their mail into the mail stream could be hurt very badly by this,” said David R. Straus, attorney for American Business Media's postal counsel. “It's clear that this is designed to discourage the kinds of practices that smaller publishers typically use, like using mail sacks with relatively few pieces in them.”

American Business Media is the association for business-to-business information providers, including producers of print publications, Web sites, trade shows and other media.

Denton agreed that many small publishers might oppose such a bottom-up rate structure.

“Some might consider this to be the first volley in the battle for postal reform,” he said. “But whether it's the beginning of a revolution that will lead to improved postal pricing and more work-sharing opportunities or a civil war that pits periodical mailers against each other — larger publishers and printers vs. smaller publications — is yet to be seen.”

O'Brien said that the USPS has 30 days to respond to the complaint, and that the PRC likely will ask other mailers and interested parties to respond in that time as well. Then the PRC will look at the responses and decide whether it wants to hear the case.

“If the postal service elects to file a case this fall, we'd certainly like to have fleshed out this issue prior to the filing of that case, and I think this complaint will let the industry flesh out this issue,” he said.

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