Thursday, May 16, 2013

How Google Is Becoming the Magazine Industry's New Best Friend

After siphoning off billions of dollars that used to go to print advertising, Google’s practices in recent months have provided a huge boost to many magazine publishers. The search giant is about to provide even more help for publishers' web sites -- except perhaps for those that have jumped onto the “native advertising” bandwagon.

Google revealed this week that it is close to deploying “the next generation of Penguin.” The original round of Penguin algorithm updates last year ruined some spammy web businesses but apparently jacked up search-related traffic to the web sites of many legacy publishers.

“We expect it to go a little bit deeper and have a little bit more of an impact than the original version of Penguin,” said Google executive Matt Cutts. “We’re doing a better job of detecting when someone is sort of an authority in a specific space . . . and trying to make sure that those rank a little more highly,” he said in a video released Monday.

He made no specific reference to legacy publishers. But with Google’s continuing bias toward bylined articles that are written by subject-matter experts, “Penguin 2.0” sounds like good news for magazine publishers that are active on the web (and who isn’t these days?).

Cutts’ advice to those preparing for Penguin 2.0 certainly shouldn’t scare traditional publishers, who for the most part have never really learned to write for bots because writing for real people is in our DNA: “Try to make sure you make a great site that users love, that they’ll want to tell their friends about, bookmark, come back to, visit over and over again, all the things that make a site compelling,” he said. “As long as you’re working hard for users, we’re working hard to try to show your high quality content to users as well.”

Upended by Penguin and Panda
In the past year or so, Google’s Penguin and Panda updates have already upended best practices for search-engine optimization (SEO), putting the kibosh on sleazy tactics like keyword stuffing and questionable links.

“It’s 2013 – nobody wants to read SEO content, not even the search engines,” says a recent infographic created by ContentVerve called SEO Copywriting:10 Tips for Writing Content That Ranks in 2013”. “Everything points to the fact that Google prefers natural content to obvious SEO stuff.”

ContentVerve’s tip #5 should warm the hearts of magazine publishers and other organizations with high standards for their web content: “Write LONG, in-depth, quality content. The average web page ranking on the first page of Google has over 2,000 words. Moreover, evidence points to the fact that in-depth articles get more shares and links than short, superficial ones.”

18 million experts
It’s no wonder that so many publishers have been celebrating record traffic to their web sites lately. And it’s no wonder that non-publishing companies are spending more and more dollars on content marketing that mimics the look, feel, and articles of traditional publishers’ web sites.

(Unfortunately, this trend means that the 18,134,377 self-appointed SEO experts in the U.S. who morphed into 18,134,377 self-appointed social-media experts are busy transforming/rebranding themselves into 18,134,377 self-appointed content-marketing experts.)

Cutts also warned that Penguin 2.0 will address native advertising (a term open to much debate and interpretation), especially for paid promotions made to look like editorial content.

“Now there’s nothing wrong inherently," he said, "with advertorials or native advertising, but there should . . . be clear and conspicuous disclosure so that users realize that something is paid, not organic or editorial.”

For further reading:
  • Cheesy porn: For a truly amazing look at how sleazy web sites can still game the search engines, be sure to check out Digiday’s recent expose of non-porn sites using sex-related searches to drive traffic to their sites: . Don’t miss the image of Velveeta sponsoring gang rape videos, a classic fail that belongs in the Marketing Hall of Shame. (Yes, it’s possible Kraft is trying to turn Velveeta into more of an “adult” product, but the porn experts I checked with were not aware of any pasteurized prepared cheese products being used in porn videos. One of them with an overly active imagination did, however, manage to dream up a plot for a proposed video to be called “Velveeta Spread.”) 
  • Craze-y: Dead Tree Edition recently examined why content marketing has become so popular among non-publishing brands in Publishing Without Profits: What's Behind the Content Marketing Craze? Content marketing could become a real threat to traditional publishers, except right now most of it sucks. 
  • Thank you, oh large Chinese marsupial: Google’s first Panda algorithm update, in 2011, had an immediate favorable impact on the number of visits to Dead Tree Edition: The Google Panda Update Is a Change I Can Bear. Since then, this site’s search-related traffic continues to grow despite its criticism of Google’s greenwashing.
  • Wait for it: Later this month, Publishing Executive will publish an article I wrote about how the non-magazine ventures of many magazine publishers are thriving. I also shamelessly rip off Charles Dickens.

Wednesday, May 8, 2013

USPS Backs Off From Price-Hike Gambit

The U.S. Postal Service is apparently backing away from an attempt to use one-time payments to mailers as justification for permanent price increases.

As Dead Tree Edition reported last month, USPS proposed to offer large mailers a one-time “Technology Credit” and then to have those credits considered a price decrease for purposes of calculating its inflation-based rate cap. That would result in permanent price increases that would eventually cost mailers far more than the maximum $5,000 credit per mailer.

USPS clarified – or changed – its position this week in response to questions from PRC Chairman Ruth Goldway:

“Revenue forgone from the Technology Credit Promotion for each class of mail will be subtracted from revenue in calculating price cap authority in the upcoming annual price change, and then the same amount will be added back to revenue in calculating price cap authority in the subsequent annual price change,” USPS wrote. In other words, any price increases resulting from the Technology Credits would be temporary.

I’m told that postal officials have claimed during a meeting with mailers that the Dead Tree Edition article misinterpreted the price-cap issue. But several private-sector postal experts have told me they agreed with my interpretation of the Postal Service’s original request, which said nothing about reversing the price increase. And Goldway apparently agreed as well.

“The Postal Service appears to propose the creation of permanent price cap authority,” Goldway wrote to USPS last week. “However, the Technology Credit Promotion is proposed as a temporary, one-time offer. How does the Postal Service intend to reflect the expiration of the Technology Credit Promotion in subsequent . . . rate adjustments?”

The PRC’s Public Representative staff had a similar interpretation, warning the commission about “the danger of creating permanent price cap authority from temporary price reductions” because that could lead to “price cap avoidance tactics.”

USPS estimates it will pay out $61.6 million (down from the original $66 million estimate) in Technology Credits to major mailers that use the Full-Service barcodes during the 12 months that begin June 1. Both Goldway and the Public Representative noted that USPS’s original filing did not show how the payouts were calculated.

In fact, the Public Representative indicated that USPS tried to game the system by presenting “bare bones initial filings without the data necessary to evaluate its request,” making it difficult for anyone to challenge the proposal before the PRC must decide the case.

The Postal Service has already admitted to significant math errors in that initial filing. It now estimates the potential price increase for Standard mail will be 0.231% instead of 0.158% and for Periodicals will be 0.165% instead of 0.244%. It also tweaked the estimated increases for First-Class Mail (0.084%) and Package Services (0.015%).

Because the PRC is requesting so much additional information from USPS on the proposal, it has extended the deadline for commenting until May 17.

Saturday, April 20, 2013

New Postal Incentive Could Backfire for Mailers

Mailers should beware of postal officials bearing gifts.

The U.S. Postal Service announced a few days ago a “Technology Credit” of up to $5,000 for mailers who use Full-Service Intelligent Mail Barcodes. But if the Postal Service gets its way, the one-time credit would result in a permanent and ultimately far more expensive price increase for senders of First Class, Standard, Periodicals, and Bound Printed Matter mail.

And it would set a precedent for similar efforts to circumvent the inflation-based price cap on most postal rates.

“The purpose of the Technology Credit is to offset a portion of the investment by mailers in the hardware and software changes necessary to support Full-Service mailings,” the USPS filing said. Mailers already have another incentive to go Full Service by Jan. 26, 2014: After that, only mail with Full Service IMbs will receive automation discounts.

At an estimated cost of $66 million, USPS will provide credits to mailers that have mailings containing at least 90% Full-Service pieces between June 1, 2013 and May 31, 2014.

Here’s the catch: USPS is asking the Postal Regulatory Commission to consider the credits a price decrease for purposes of calculating the price cap for the next round of rate changes. Without such consideration, USPS claims it would be discouraged from offering future credits that promote more efficient mailing practices.

The logic of the request seems to be that the Postal Service would be paying out credits of $66 million to mailers in the coming months, so it should be able to balance that with $66 million worth of price increases next year.

But consider the case of a major magazine that now pays $10 million annually in Periodicals postage and earns the $5,000 Technology Credit. If the Consumer Price Index doesn’t change during the course of 2013, the magazine normally would not face a postage increase next year.

With the Postal Service’s request, however, even with no inflation the Periodicals rate cap would increase an estimated one-quarter of a percent. That increase would cost the magazine almost $25,000.

And if the inflation rate remained zero percent for another year, again the magazine’s postage bill would be $10,025,000 – instead of the even $10 million it would be if the USPS's request is denied

In other words, if the Postal Service is successful, the magazine would get a $5,000 credit this year and in return pay a recurring charge of almost $25,000 annually. With a return on investment like that, no doubt postal officials would look for other one-time credits they could “give” mailers.

The PRC has set a deadline of May 6 for comments on the Postal Service’s proposal.

Other articles about postal price-cap controversies include:

Monday, April 15, 2013

The Worst Postal System in the World, Except . . .

Complaining about the postal system is a national pastime in the U.S., but looking at the rest of the world can put things into perspective.

"The USPS, even with its vast problems, is still the best and cheapest postal system in the world," wrote an unnamed subscriber in a comment published today on Morning News Beat, a grocery industry news site.

The writer, who frequently sends mail overseas, says "most European countries charge between $2.00 and $3.00" to send a one-ounce letter to the U.S., while the comparable rate for an international letter from the U.S. is only $1.10.

(The U.S. Postal System often charges much less than its international counterparts for domestic mail as well. While most magazines in the U.S. are delivered by mail, in many developed countries high postal rates mean that publications are typically delivered via the newsstand system.)

"Even though there is some pilferage stateside, there is nothing like the level of mail theft in other countries," the writer adds. "Yes, I have had delivery problems and things that have disappeared into a black hole, but I still think they do an amazing job with what they have to handle."

This reminds me of a Winston Churchill quip that "democracy is the worst form of government except all the others that have been tried."

Of course, most foreign postal services do have one big advantage over the USPS: They're solvent.

Wednesday, April 10, 2013

Publishers May Pay To Preserve Saturday Delivery

Publishers and other mailers celebrating today’s news that Saturday mail delivery will be continued should take another look at the announcement’s ominous words.

“The Board has also asked management to evaluate further options to increase revenue, including an exigent rate increase to raise revenues across current Postal Service product categories and products not currently covering their costs,” today's statement from the U.S. Postal Service’s Board of Governors said.

Translated from Beltway Babble into plain English: The board wants to hit Periodicals publishers and mailers of Standard-class flat mail, such as catalogs, with an extra rate hike. Increases in most postal rates are limited to the inflation rate, but in emergencies USPS can seek “exigent” rate hikes.

USPS estimated its plan to end most Saturday deliveries would have added $2 billion annually to its beleaguered bottom line. Now the governors are looking for other ways to get that money, and instead of an across-the-board increase they’re suggesting that the hikes be targeted at allegedly unprofitable mail.

Despite extensive downsizing by the Postal Service and better preparation of catalogs and magazines by mailers, USPS claims its costs of handling flat mail have risen rapidly in recent years. Some postal experts blame USPS’s cost-accounting system, which tends to allocate the costs of “automation refugees” and other inefficiencies to the Periodicals class and to Standard flats.

Adding insult to injury, the $1.3 billion investment in the Flats Sequencing System (FSS) – which was supposed to revolutionize the handling of such mail – so far is costing more money than it is saving.

USPS claims the Periodicals class (magazines and newspapers) pays only 72% of its costs, meaning that a 39% rate hike would be needed to bring the class to theoretical breakeven. For “Standard flats” – the portion of Standard-class flat mail not in carrier-route bundles – the increase would be 24%. The most efficient Standard mailers would be largely shielded from an exigent rate hike because most of their mail is in carrier-route bundles.

Here’s some background information on the relevant postal issues:

Saturday, April 6, 2013

5 Myths of Saturday Mail Delivery

Misunderstandings abound regarding the U.S. Postal Service’s proposal to end Saturday delivery of all mail except parcels later this year. Here some of the most common myths:

1) Congress recently put a stop to the plan. That’s the story told by the news media, Congress, and the Government Accountability Office, but it’s not necessarily true. Congress did indeed put the requirement to continue six-day mail delivery into a recently approved appropriations bill. But the USPS’s Office of Inspector General says that if the Postal Service merely refuses the pittance in such appropriations (which are mostly for free mail for the blind), it would not be blocked from ending Saturday delivery. And it’s not even clear whether USPS’s plan – which would continue Saturday delivery of certain types of mail – would violate the legislation.

2) Ending Saturday delivery would save USPS $2 billion per year. Even the Postal Service talks about $2 billion in savings, but in reality its position is that its profitability (cost savings minus lost revenue) would grow by $2 billion. The calculations have been subject to debate and competing interpretations, partly because of different assumptions about how much business would be lost. Also, the $2 billion estimate was for full cessation of Saturday delivery, not for the latest plan to have mostly non-career employees delivering profitable parcels on Saturday.

3) The loss of customers would hurt the Postal Service. Actually, it could be a blessing. The customers who care most about Saturday delivery are daily newspapers and certain weekly publications; few other mailers care so much about getting delivery on a specific day of the week. Newspapers may be USPS’s most unprofitable product because they are often inefficiently prepared for mailing, can be difficult to sort, and sometimes get special treatment. Even highly presorted and dropshipped weekly magazines – though not as unprofitable as USPS alleges – are no big money maker. And most will survive without Saturday delivery.

4) Letter carriers oppose ending Saturday delivery. Yes, the main carrier’s union, the National Association of Letter Carriers, is vehemently opposed to the Postal Service’s plan. But many rank-and-file carriers would be happy to get Saturdays off. The NALC is “fighting a battle the majority of its members do not want,” writes Tom Wakefield, a city carrier and NALC member who runs PostalMag.com.“Five-day would be such a benefit to letter carriers. Today, because of shortages of letter carriers in many districts, many, many carriers are being mandated to work on their days off against their wishes, often with less than 24 hours notice,” adds Wakefield, mirroring frequent comments by rank-and-file carriers to Dead Tree Edition and other sites. “Today, the ‘daily grind’ is stretched to six days, with a Sunday off and one day during the week for many carriers. Five-day would allow two days off in a row and the daily grind would only be five days.” Many carriers are also hoping that five-day delivery would cause USPS to thin its carrier ranks by offering retirement incentives.

5) Ending Saturday delivery is the key to saving the Postal Service. No one who has looked at USPS’s finances believes five-day delivery is a cure-all, regardless of their position on the Postal Service’s plan. Because of declining mail volumes, $2 billion alone is not enough turn around the Postal Service even if the accounting games with postal pensions and “pre-funded” retiree benefits are corrected. More cost cuts or, less likely, significant new revenue sources are needed to keep USPS afloat.

Related articles:

Wednesday, March 20, 2013

Using Recycled Paper in Magazines Protects the Environment

New Life Cycle Analysis study shows that in 14 of 14 environmental impact categories studied there is an environmental benefit to using recovered fiber as a substitute for virgin tree fiber.

Frank Locantore, with Stella and Schofield
A study commissioned by the National Geographic Society found overwhelming environmental benefits to using paper containing recycled content, it was announced today. Frank Locantore, Project Director of the Green America Better Paper Project, which for more than a decade has helped publishers switch to recycled paper, joins us as a Guest Columnist to explain and interpret the study's findings (which are summarized here).


Recently, National Geographic Society changed course on recycled fiber, walking away from its long held belief that using recovered fiber in its publications has negligible environmental benefit and agreeing to explore recycled paper options. We are encouraged by National Geographic Society’s initial indication that they may begin printing on recycled paper soon. If they do so, they will join the growing list of other magazines that have been using recycled paper for a decade or more like, Fast Company, Audubon, YES!, and Ranger Rick.

As a big fan of Dead Tree and his efforts to foster a dialogue within the industry about this topic, I wanted to share this information with him and his followers to help advance this discussion. As a proud “paper geek,” I look forward to productive conversations with any of you about the best ways to promote environmental paper use that can help the industry prosper in an environmentally and financially sustainable manner.

In the case of National Geographic, Green America and many other NGOs encouraged the venerable publisher to re-examine its beliefs regarding recycled paper. In response, National Geographic hired an independent consultant, ENVIRON International Corporation, to determine if it made environmental sense for them to use recycled paper in their magazine. The results (shown below) clearly indicate that in 14 out of 14 environmental impact categories studied, the production of deinked pulp is environmentally superior to the production of virgin fiber pulp.


ENVIRON International Corporation was asked to answer three questions: 1) Is it better for the environment to use recovered fiber for magazines versus virgin fiber in isolation? 2) If so, can we show that it is better to use recovered fiber in an alternative product? and 3) Do supply limitations exist such that the use of recovered fiber in magazines would displace its use in an environmentally preferable alternative product?


Decision Chart

















Question 1: Is it better for the environment to use recovered fiber for magazines versus virgin fiber in isolation? Yes.

In Figure 5 of the study (see below), it is clear that deinked pulp (green) has substantially lower environmental impacts relative to a 50% Kraft/50% Mechanical virgin pulp mix (blue) in all fourteen impact categories.

Relative Impacts
















The central environmental question that all paper purchasers must ask is: “Which paper options provide the greatest environmental benefits and fewest negative impacts?” This Life Cycle Analysis (LCA) compared the environmental impacts of paper production between deinked pulp and virgin pulp. When compared to kraft and mechanical pulp, deinked pulp always has a smaller negative environmental impact.

Question 2: Can we show that it is better to use recovered fiber in an alternative product? No.

The fact is that magazine publishers are not choosing between printing on containerboard or newsprint or printing/writing papers for their publication. They are only considering paper options within the “printing/writing” grade.

National Geographic did not want to make the study “mill specific” to the mill they source their paper from, Verso Paper's Jay, Maine mill. Rather, they wanted the results to be applicable for the entire magazine industry. However, this question can only be answered for a specific mill.

Lisa Grice, Sustainability Practice Area Leader for ENVIRON, wrote in her summary of the LCA:

[We cannot determine if there is a better use for recovered paper] because the sensitivity analysis shows that, because of the range of mill specific characteristics regarding fuel mix and energy efficiency, we cannot distinguish between impacts of alternative products produced from any combination of the mechanical or kraft pulp studied. It is possible that a future analysis at the individual mill level may indicate that a specific grade of deinked pulp used to displace a similar grade of virgin fiber pulp for one product may have greater or lesser impact than displacing virgin fiber pulp for another product, but this would be only applicable to the specific mills involved and not more broadly applicable.

While possible, it seems highly unlikely that virgin pulp production could have an overall environmental benefit considering the tremendous environmental advantage for deinked pulp that is demonstrated in this study. ENVIRON’s answering the question, “no,” indicates that it can’t be shown that recovered paper and deinked pulp would be better used to manufacture other products over printing/writing grades.

Question 3: Do supply limitations exist such that the use of recovered fiber in magazine would displace its use in an environmentally preferable alternative product? No.

I should reinforce that no environmentally preferable product has been identified. We all know that some industry stakeholders believe that there is a limited supply of recovered paper available to produce deinked pulp for recycled paper. While true, that “limited supply” is far from exhaustible and nowhere close to being adequately used.

It is difficult to predict how the market will react to increased recycled paper use in the US. Will increased demand create higher prices for recovered paper? Would potential higher prices for recovered paper drive better and more collection of valuable printing & writing paper, separated from the mixed grades where most of it currently ends up? Would increased demand for recycled content printing and writing papers reopen some of the shuttered capacity in recycled mills, potentially enabling even more customers to specify recycled content printing and writing papers? Would the US ship less recycled paper to China? Would more paper companies increase the supply of recycled papers?

What we know is that 9 million tons of printing & writing grade paper remains uncollected each year. And much of what is collected ends up mixed into lower grades that find their way into packaging or other non-printing & writing paper products. We also know the U.S. is behind a number of countries in collecting recycled paper, and that higher recovery rates are possible.

And, we know that National Geographic has their paper made by the Verso paper mill in Jay, Maine – only about 31 miles from Cascades' Auburn Fiber deinking plant.

According to the supply study completed by ENVIRON and done in conjunction with the LCA, Tony Newman, the plant manager for Cascades, indicated that, they “currently have excess capacity, and if demand for paper with recycled content were to increase they would increase their capital investment, produce more, and meet the increased demand.”

From "The Availability of High Grade Paper with Recycled Content for Magazine Use," prepared by ENVIRON, commissioned by National Geographic Society:

[I]t is likely that if demand for magazines with recycled content were to increase, then sufficient supplies of magazine-quality recycled fiber would be available. For a very large magazine, however, the state of world markets is not as important in terms of availability. It is likely much more regionally based. And the fiber they need is already available from a regional supplier [Cascades].

Could National Geographic’s demand for recycled paper simultaneously help boost the profits of Maine’s Cascades plant and reduce pressure on the environment? Based on the study provided by ENVIRON, such a move would benefit the environment, and it is hard to see how sourcing more pulp from Cascades could do anything other than increase profits and provide more employment opportunities for the plant’s community in Maine.

Conclusion

Going back to the questions in the “decision chart” at the beginning of this blog, all the arrows point toward “National Geographic to consider availability and cost of using recovered fiber for their magazines.”

1) The relative environmental impacts for deinked pulp are better than those for kraft or mechanical pulp in all environmental categories studied.
2) It isn’t demonstrated that it is better to use recovered fiber in non-magazine paper.
3) There are currently no significant limitations on recovered paper supply.

We applaud National Geographic’s effort and work to come to this conclusion, and look forward to their use of recycled paper in the near future.

Paper production – both recycled paper and virgin fiber paper – has an impact on the environment. However, using recovered paper has much lower impacts than virgin fiber, which should be the only comparison end users are making when considering paper choices – not pointing fingers at where an imagined limited supply of recovered paper is “best used.” If we want to avoid painful environmental consequences, we must act together so we can all succeed. Unfortunately, we have been going around in circles on this conversation for years – mainly, we talk past one another. I find that tiresome and unproductive, and consider the results of this study as an opportunity to now move forward together.

As Winston Churchill once said, “The era of procrastination, of half-measures, of soothing and baffling expedients, of delays is coming to its close. In its place we are entering a period of consequences.”

The paper industry as a whole has made some strides towards sustainability, but we’ve still got a long road to travel. We should have an honest conversation about the key metrics to determine how to make and use the most environmentally responsible paper. Collaborative efforts will achieve the best results.

National Geographic demonstrated a good model for collaboration and deserves recognition for committing to a process that was transparent, actionable, and inclusive. Green America, Natural Resources Defense Council, and World Resources Institute were stakeholders throughout this entire process. The participation of all the parties resulted in a study with a high level of integrity and value.

Now the question is whether or not others in the paper and magazine industry can employ the same model of collaboration in order to solve critical environmental consequences associated with paper production and use?

Please contact me if you would like to be part of this conversation: frank@greenamerica.org, 202-872-5308.

Related Dead Tree Edition articles:



Monday, March 18, 2013

What Magazine Publishers Can Learn From "The Da Vinci Code" Giveaway

They did it again.

At least once a year for the past dozen years, a magazine I have never even seen sent me a direct mail piece asking me to subscribe.

And, as usual, amidst all of the breathless marketing copy in the elaborate package, this year’s missive contained no actual content from the magazine. No one-page excerpt of an article. No highlighted paragraph. Not even a pithy quotation.

So I’m supposed to pay money for a magazine I know almost nothing about when I can download a free copy of one of the biggest best-sellers of all time, The Da Vinci Code? Or get a 30-day free trial to the tablet edition of any Conde Nast magazine? Or read various free issues, free previews, free book chapters, and even free excerpts I'm allowed to reuse in my own newsletter or blog?

No wonder the print magazine business is struggling. Even if people prefer print, we publishers don't make it easy for them. In a try-before-you-buy, get-it-now world, we're still trying to sell "Buy it now and wait six to eight weeks for delivery to try it."

Once upon a time, a decade or so ago, if you published a magazine that focused on a particular topic and you put your promotion in front of someone interested in that topic, you had a decent chance of getting her to subscribe.

It helped if she had seen your publication in a store, in a waiting room, or at a hair salon. If not, she still might take a chance on a subscription, knowing that even a mediocre magazine devoted to her hobby, industry, or passion would be worthwhile.

Not any more. In case you hadn’t noticed, we publishers no longer have a monopoly on information. Pick any topic, and you can probably find plenty of mediocre content about it for free with a bit of Googling. And with newsstand sales declining about 10% per year and free “public place” circulation shrinking, it’s becoming increasingly unlikely your target consumer has ever bought or even examined your magazine.

Trot out your best purple prose about “must-have articles and exclusive interviews,” and today’s consumer will reply, “Show me.” She’s still willing to shell out a few bucks for a well-written publication that’s attractively and conveniently packaged.

But to prove you’ve got something worth paying for, you may have to give her something free.

Other Dead Tree Edition commentaries on the magazine industry include: