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Are The Post Office and Newspapers Still Relevant?

05/29/2012

The Post Office reported losses of $6.5 billion in the first half of this fiscal year. That’s a ton of taxpayer dollars down the drain. For all its problems, the postal system still generates about $60 billion a year in revenue. Its challenge is to bring expenses back in line.

That’s why it is somewhat amusing that the Newspaper Association of America is publicly concerned about a deal the USPS is attempting to carve out with the direct marketing firm, Valasis Direct Marketing. In the deal Valasis would step up its volume of direct mail advertising in exchange for a 22 to 36 percent discount in postage rates.  Seems logical, right?

Estimates for the Valasis deal say it will gross the USPS between $13 and $42, which is a) a bizarrely wide range, and b) a drop in the $6 billion dollar plus bucket.

The truly interesting battle in this feud is between two entities, the post office and the newspaper business, that have lost their way in today’s online world. Newspapers, magazines and other print publications have been in serious decline over the past ten years. I still receive a daily newspaper, perhaps more out of habit than anything else, but I know I’m in the minority.

The challenge for the USPS and the newspaper industry is to figure out how to become relevant to consumers and businesses again. For the post office to advertise the “security” of mail and offer Saturday delivery is not going to cut it. For newspapers to continue the same format they’ve used since the early 1900’s is a recipe for failure. Consumers behavior/preferences have been shaped by the web and mobile. We are scanners…not readers of lengthy articles. Graphics and images help.

Frankly, I’m not optimistic about the newspaper industry’s prospects and conceptually support the privatization of mail delivery through a company like UPS.

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