.bodytext {float: left; } .floatimg-left-hort { float:left; margin-top:10px; margin-right: 10px; width:300px; clear:left;} .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 10px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 10px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 10px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} The U.S. Postal Service has overhauled the way it calculates the amount publishers must pay to mail periodicals in a change that took effect July 15. Postal officials say the new rates give mailers incentives to be more efficient and will help curb the rising costs of mailing periodicals. But small publishers say the plan, which affects newspapers, magazines and newsletters, threatens to drive up their costs at a time when many already face losses.

“This is not good news for us,” said Jim Slife, CEO of Pioneer Communications Inc., publisher of 15 magazines. “This is definitely a blow for smaller publishers.”

Many small publishers say they saw an increase of between 16 and 23 percent in their postal rate, while larger companies saw a much smaller increase.

John Weller, the director of rates and analysis at the Postal Regulatory Commission, said the cost of mailing periodicals has increased faster than for other classes of mail, and federal law requires each class of mail to break even. The new rate structure increases discounts for more efficient mailers who can bundle magazines going to the same ZIP code, ship them directly to a postal distribution center and make them sortable by machine. Officials hope the incentives will be enough for smaller publishers to adopt these techniques.

This is not good news for us. This is definitely a blow for smaller publishers.

– Jim Slife CEO of Pioneer Communications Inc.

“There was a need to implement a rate structure based on what you use,” said Nanci Langley, director of public affairs and government relations for the Postal Regulatory Commission. “Some magazines roll their magazine and put a rubber band around it. Somebody has to unroll it.”

Weller said labor-intensive methods of mailing periodicals cost more, and that cost will be passed on to publishers. Better preparing their materials for mailing or shortening the distance they have to travel by mail will help reduce those costs, he said.

“If your publication can be printed in California and delivered from there instead of printed in New York and delivered across the country, you will save on your postal rate,” Weller said. “The lower the cost to the Postal Service, the lower the cost to you.”

He said companies should take advantage of technology to help offset new expenses; such steps will add costs in the short term but could save money in the future. He also said small publishers can band together to mail publications going to similar destinations.

“There are a lot of ways in which smaller companies can reduce their costs,” he said.

Slife said the post office suggested the co-mailing option to his company, where Pioneer’s magazines would share a pallet with magazines from other companies, but logistically it won’t work. So a cost increase became inevitable.

“We knew there was going to be an increase,” he said. “We didn’t know how big it was going to be.”

He said his company is looking at 20 to 30 percent increases in standard, pre-sorted mail rates, which has caused Pioneer to begin looking for cost-cutting methods.

“We have no control over the postal rate,” he said. “So we have to cut where we can.”

Slife said his company has looked at subscription rate increases, considered eliminating complimentary copies and will most likely be cutting page counts to make up for the increased postage costs.

Slife said the increased costs could shut down some small companies, and would definitely keep some new companies from attempting to enter the market.

“Postage is a huge expense,” he said.

At the heart of the debate is the question of whether the Postal Service should be a market instrument that benefits the most efficient players or a distribution system that levels the playing field to create a free flow of ideas.

Randy Stumbo, director of distribution and postal affairs for Meredith Corp., said the changes mean that mail costing more to handle will now have to pay a higher rate.

Art Slusark, a spokesman with Meredith Corp., said his company saves the Postal Service money by getting its magazines as close as possible to its subscribers before ever utilizing mail service.

“We save them money, so we should receive compensation,” he said.

But Meredith was not immune to rate increases, Slusark said. The company knew a rate increase was coming and had budgeted for it. But when the new numbers were announced, they were shocked to see their rate for standard mail flats – which doesn’t include magazines, only subscription direct-mail pieces – had doubled from previous estimates.

“We expected a 12 percent increase, which would be around $4 million,” he said. “It ended up being around 24 percent.”

The company spent around $32 million of its $145 million postal budget in 2006 on this type of mail.

The unexpected increase pushed the company to eliminate as much mail as possible, turning to the Internet as a substitute.

Weller said despite the negative reaction of small publishers, the Postal Rates Commission took steps to minimize the adverse affect on them. He said under the current proposal, the average increase in postal rates for small publishers, classified as companies with 15,000 or fewer subscribers, would be 13.5 percent. The increase on larger publishers, those with 100,000 or more subscribers, averages 10.7 percent.

“The commission didn’t want small publishers to take a hit,” he said. “But companies have to take the steps, within reason, to lessen the costs on the Postal Service.”