Royal Mail Pricing Plan Would Banjax Tabloid Mags: PPA

10 June 2002

In a face-to-face confrontation with Allan Leighton, chairman of Consignia (the former UK Post Office), the Periodical Publishers Association slammed the Royal Mail’s proposed change in magazine delivery pricing to a size-based tariff. This, the PPA claims, would effectively wipe out news-based tabloid publishing.

This sector of publishing is almost exclusively weekly and if the RM pricing proposal is adopted, publishers would face an increase in postal costs averaging 50%. One title has told the PPA that its postal costs would rise by over £1 million ($1.49m; €1.59m) annually.

At present, the Royal Mail (Consignia’s main operating unit) provides a specialised discount service, Presstream, available to magazines that pre-sort by postcode before delivery in bulk to the Royal Mail.

The magazines are then batch-sorted by optical reading equipment into localized delivery ‘walks’. But ‘large flats’, as tabloid sizes are commonly known – are generally not machinable. The PPA argues that this should enable tabloid publishing to be ringfenced and treated on a sectoral basis.

The PPA also plans to air its concerns to new postal regulator Postcom, arguing that the RM has failed to produce any cost transparency or justification for its proposals.

Adoption of a size-based tariff would present publishers with three options: switch to an alternative carrier; change their format; or closure. The PPA estimates this could mean a loss of revenue to Royal Mail of up to £50m.

However, according to the PPA, the RM has slapped an alternative pricing option on the table that would address many ongoing issues without the levels of devastation which would follow cost-based pricing.

But, warns one seasoned marketer who has spent much time on the opposite side of the Royal Mail negotiating table, publishers should beware accepting the alternative option with a sigh of relief and minimal haggling – thereby falling for the oldest trick in the monopoly’s bargaining repertoire.

Data sourced from: Periodical Publishers Association (UK); additional content by WARC staff