The Death of Snail Mail and Sunday Papers

The Washington Post reports that “in the past year alone, the Postal Service has seen the single largest drop-off in mail volume in its 234-year history…. That downward trend is only accelerating. The Postal Service projects a decline of about 10 billion pieces of mail in each of the next two years, going from a high of 213 billion pieces of mail in 2006 to 170 billion projected for 2010.”

No, physical delivery won’t ever die. (Like a good newspaperman, I lie in headlines to get attention.) Indeed, we’ll get more ever deliveries of more stuff that used to be on store shelves but are now ordered online. That’s what UPS’ and FedEx’ businesses are built for. But, as the Post says, we’re sending fewer messages to each other; we have much better means to do that now. And companies are trying hard to reduce their cost of dealing with us – billing, bank statements – by taking that online.

There is still a business to be had in distributing coupons and circulars (aka junk mail); this is why newspapers are holding onto delivery a day or two a week. But that’s transitional; it won’t last forever.

As volume decreases, costs to users will increase as deliverers try to cover fixed costs that just can’t be cut anymore. Newspapers like to think they, too, have fixed costs and that’s why they keep whining that readers “should” pay their bills. But they don’t; for their core business – content and advertising – papers have new efficiencies online that the Postal Service doesn’t have. Except for those trucks and presses. They are fixed costs and that puts them in the same sinking ship as the mail.

At some point soon, the couponers will desert both the Postal Service and newspapers because they’ll be just too expensive. But consumers still want coupons; they have real value. (I often tell the story of coming back from a strike when I was Sunday editor of the New York Daily News. We didn’t have coupons because our new owner, Robert Maxwell, was feuding with Rupert Murdoch, who controls coupons – aka FSIs or free-standing inserts – in the U.S. When we got them back, circulation went up more than 100,000. Those readers weren’t buying news. They were buying ads.) Coupons are creeping online but it’s still a pain to deal with them digitally. Mobile devices may be the solution, but they’re not there yet.

So physical coupons and circulars are still great business – if you can get them into consumers’ hands. And it occurs to me that someone will craigslist – that is, undercut – both newspapers and the Postal Service in the delivery business. It’s in the interests of Murdoch’s coupon empire to do so and work with large retailers that produce circulars to come up with an alternative. Or an entrepreneur could establish a network to make it happen. I see the return of the paperboy (oops, the world has changed since then; pardon me: the paperyoungperson): networks of small agents who can deliver this material, which isn’t wildly timely (get it there this week) without the cost structure needed for individualized delivery – the Postal Service – or with a time wrapper of expensive content – the newspaper. Again, it’s transitional, but it’s a nice business for some years.

Here’s what happens then: The cost of mailing an old-fashioned letter will become prohibitive as the Postal Service covers its fixed costs for a system we won’t kill.

And the economic benefit of distributing a Sunday newspaper will all but disappear and news organizations – the ones still standing – will have no reason to hold onto the presses and trucks.

Comments

[Michael Eis...:]

Jeff - This is so right. No sure how I never extrapolated the newspaper to the postal service. Yet another gaping budget hole on the way.

Jul 27 05:32 AM

[TradingHelp...:]

Agree with the vast majority of your excellent points but will there not always be a scenarion when some consumers don't have access to a laptop, or a cutting edge phone and still want to read newspapers.

People still walk around shopping centers despite the fact just about everything can be bought online.

Some functions, reading a newspaper might be one of them, that are so ingrained in human behaviour there will always be a market for it, albeit a smaller market.

Jul 27 07:15 AM

[Snitzer:]

All I get in the mail are bills and junk, and the bills are going on line. The only thing worth reading in the papers are the comics, and even they are storyboarding and becoming less funny daily.
I see no reason why I, or anyone else, should subsidize the continued ramming of "promotional material" into my mailbox or across eighty percent (or more) of the newspaper's available space. USPS will probably either merge with or be clubbed to death by UPS or Fedex, and newspapers will cease to be within a few years (lack the courage to make a solid prediction here).

Jul 27 04:23 PM

[Joe:]

Just found a 2006 article by Jack Shafer, candid and funny as
always, gave way back support to that article:
Chronicle of the newspaper death foretold
The newspaper industry knew it was doomed 30 years ago
www.slate.com/id/21546.../

Jul 27 08:31 PM

[Rallen:]

Snitzer, the USPS is not subsidized by taxpayers -- and hasn't been since 1982. Advertising mail would have been abandoned by businesses years ago if it wasn't effective. The newspaper industry has perpetuated the term "junk" mail simply because it competes with classified ads (classified ads -- now there's some real junk for you).

Also, the next time you send a package, do yourself (and your budget) a favor by looking closely at the fuel, residential and/or rural surcharges that UPS and FedEx add to your shipping bill. The only things they continue to "club" are the wallets of their respective customers.

Facts can be wonderful things when you bother to use them.

Jul 28 03:14 AM

[holmesnmanny:]

Snail nail will hardly die out. And it would appear that Sunday papers will continue to be strong. They really should partner up with the USPS to deliver the weekend editions. Clearly with all of the costcutting that was necessary to pare out enough expenses as needed to remain profitable, that the newspaper industry has bottomed out. Looks like most newspaper stocks are a great buy, especially Mcclatchy, as it would appear that even .20 a share earnings appear to be a worst case scenario in the immediate future, meaning I would expect that stock to be atleast back to 7 or 8 by years end.

Jul 28 09:37 AM