The newspaper business – both small and large papers – has sounded full-throated opposition this past month to a plan by the U.S. Postal Service to purposely entice advertising out of the newspaper so ads can be placed instead with USPS-favored stakeholder Valassis Inc., which purchased the direct mail company ADVO in 2006.
The stated goal of USPS is to create more advertising mail. To newspapers that count on advertising income to pay reporters and cover the news, this new venture is beyond alarming. Many think it will push some newspapers – already in a fragile state, thanks to the economy and competition from the Internet – over the edge.
If that happens, it is the communities across our country that will feel the most long-term harm.
People have a love-hate relationship with advertising, whether in the newspaper or in the mail. When advertising helps them find deals or shop smartly, they love it. When it doesn’t happen to scratch the shopping itch, they may not like it so much. But most people understand advertising drives the economy and it brings other intangible benefits, like paying the bill for news coverage that keeps communities informed.
On every level advertising is highly competitive. Local, regional and nationally, newspapers compete with a growing field of ad media, from Internet to television and door hangers to direct mailers.
But now the Postal Service wants to pick winners and losers in this market. It is providing postage rebates to Valassis of more than 30 percent if Valassis can divert more ad inserts from newspapers into direct mail.
Not everyone can play. The discounts can be offered by Valassis only to large national retailers. Newspapers cannot get the same discount for their own mail because they can’t sign one national postage contract, as the direct mail company did, with USPS. Neither can a small clothing or bookstore or a hairdresser or auto parts shop. We—the newspaper and our small businesses—are all local. This deal is only for the big guys.
For the little guys, USPS has another advertising plan that enables businesses to bring unaddressed advertising directly to the post office.
What’s wrong with this picture? It is that USPS isn’t a business. It is owned by Uncle Sam. It exists to serve all. It shouldn’t be picking winners and losers in any marketplace. It shouldn’t be competing with and undercutting its stakeholders, which are all of us. It should deliver the mail that exists, promptly and affordably.
The Postal Service already has a favored position in the marketplace, thanks to the so-called Mailbox Monopoly – federal law that prohibits anyone except the USPS to use your mailbox. Essentially, when a customer installs a mailbox, control of that mailbox transfers to the Post Office.
That means that if The New Era were to deliver its products in any other manner other than the USPS, the newspaper would have to install receptacles in which to place its publications, or find another way to deliver them so they would stay dry and intact, such as delivering them in bags on walkways or porches.
The USPS has publicly stated that it sees its future largely as periodical and parcel delivery, plus even more advertising, as the Internet saps away letters and bills. This latest move flies in the face of its service to a core customer base – periodicals. This is like cutting off one’s leg to do – well, we’re not sure exactly what.
The USPS’ difficulties aren’t all of its own making – Congress is responsible for mandating the prefunding of retiree health benefits that has played a large role in the Postal Service’s financial woes. The USPS defaulted on a $5.5 billion payment in August and has stated it will default on a $5.6 billion payment at the end of this month. Its proposals to deal with its financial problems, which include closing mail processing centers and rural post offices, have gotten little response from Congress, which must approve such changes, but isn’t doing much in an election year.
Most successful businesses aiming to improve profits would focus first and foremost on making sure they are providing and maintaining top-quality service to existing customers.
It’s pretty obvious that this is an agency – er, business – with little direction, which is grasping at straws. Yes, USPS officials have little power to solve their financial woes, but sticking it to one of its primary customers, newspapers, is neither service nor good business. The question we have to ask is whether America needs a federally owned advertising service.
The answer is no.
This editorial was submitted by the National Newspaper Association and is being published with some modifications by The New Era .