• on Aug 3rd, 2009 in Strategy & Public Policy | 18 comments
    It wasn’t too long ago that digital audio players such as iPods and MP3s revolutionized the music industry. Now, almost a decade later, the same sort of revolution is occurring in the publishing industry with the introduction of electronic reading devices such as the Amazon Kindle and Sony Reader. Electronic reading devices allow users to download digital versions of books, newspapers, and magazines. The devices are mobile, and some offer wireless capabilities. Now, newspaper and magazine publishers have another option besides the Postal Service to reach customers. Will electronic reader technology become a more effective method to deliver newspapers and magazines? Will this technology be the answer for the survival of newspaper and magazine publishers or the demise of the mail house and printing industry? A recent study stated the number of business to business publications offering digital editions and total subscriptions have increased over 300 percent from 2006 to 2007. In addition, consumer publications offering digital editions and total subscriptions have increased over 200 percent from 2005 to 2007. However, Periodicals mail volume has steadily declined since 2000, and for the past few years, the Postal Service’s Periodicals class revenue has failed to cover its costs. The electronic reader option offers newspaper and magazine publishers a less expensive way to reach readers. In addition to the thousands of digital books available for download, today electronic reader users can buy monthly subscriptions to The Washington Post, The Wall Street Journal, and other major newspapers all for around $10 a month. These publications can be downloaded automatically to the electronic reader overnight, so at breakfast, it's available to read. Some electronic readers require synching and downloading using a personal computer, while others offer wireless downloads. Electronic reader technology also provides the ability to cut, paste, and email articles, and to clarify words through built-in dictionaries, which makes the electronic reader more compelling as a news delivery mechanism. The technology is still being developed but in the future could possibly include color and touch screen interaction. The technology also saves paper, although it consumes electricity. Right now, the only drawback is the price; electronic readers sell for about $299 to $500. So what do you think?
    1. Do you think the Postal Service’s Periodicals mail volume will be further reduced by electronic reader technology? What about other types of publications such as catalogs?
    2. At the current prices, would you purchase one of the electronic readers?
    3. If you own an electronic reader, do you subscribe to a newspaper or magazine?
    4. Would you subscribe to a newspaper or magazine if you owned an electronic reader?
    5. Is there a way the Postal Service can use electronic reader devices to its benefit to increase revenue?

    This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).

  • on Jul 6th, 2009 in Strategy & Public Policy | 27 comments
    In developing countries, postal services are often critical to reaching a vast underprivileged populace. How do posts in these countries cope with the tension between their universal service obligation and financial viability? A look at today’s India Post offers some insights. First founded under British colonial rule 150 years ago, India Post connects India’s people through a network of more than 150,000 post offices. More than 80 percent of these post offices are in rural areas, where residents primarily depend on postal services to communicate with the outside world. In India’s urban areas, however, middle class consumers have options. They also rely on the professional services of private couriers or the Internet. India Post has shown consistent losses. In recent years, private-sector competitors have siphoned off revenue, and costs have risen dramatically. Not surprisingly, given its financial difficulties, India Post’s widespread rural presence has drawn a lot of criticism. The Indian Government subsidizes more than half the cost of rural post offices, but they are still unprofitable. Critics argue that many are unnecessary and should be closed. Another common prescription for India Post’s losses is privatization. Proponents believe that privatization would improve the quality of services. To improve its financial condition, India Post is experimenting with options such as providing investment and emailing services to customers in rural areas. It already runs the largest savings bank, with a customer base of more than 170 million people. Rural and urban post offices also offer a variety of insurance products. Another initiative is micro-finance. In some rural areas, India Post offers loans to small businesses that may be denied credit by mainstream banks. Many of these services have helped offset India Post’s losses while at the same time providing financial services in deprived areas. There is hope for India Post’s future profitability. India has experienced phenomenal economic growth in recent years, and as a result, there is great potential for growth in postal services. To capitalize on the opportunities of India’s economic progress, India Post is trying to cater to the demands of the growing business sector by providing international money transfers and other services. In urban areas, India Post is exploring providing access to ATMs and non-postal retail services like train and bus reservations. India Post could also consider expanding these types of services to rural areas. The rural population would greatly benefit from these and other services such as faxes and electronic money orders. There are many options for India Post to leverage its network. By improving its infrastructure, technology, and customer service, India Post can continue its important role in India’s economy. What kind of a business model should India Post adopt? Do you think India Post’s experience providing universal service has any lessons for the United States Postal Service? This blog is hosted by the OIG's Risk Analysis Research Center (RARC).
  • on Jun 15th, 2009 in Strategy & Public Policy | 30 comments
    The Postal Service has asked suppliers to cooperate in efforts to reduce contract costs in light of the current financial crisis by identifying scope reductions, process improvements, and price reduction opportunities. In his March 25, 2009 Statement before the Congressional Committee on Oversight and Government Reform, Postmaster General John E. Potter stated:

    The Postal Service, with a physical presence in communities from coast to coast, including 37,000 facilities, spends almost $15 billion on supplies and services each year, from air transportation to building rental, from motor vehicles to computer systems, from processing equipment to Priority Mail envelopes in our lobbies. We are working to renegotiate contracts with our suppliers to reflect our reduced needs and to obtain even better value for each dollar we spend. Across the organization we are also constraining spending in every area possible.

    With the economy in a slump, many suppliers may be equally suffering financially. Will this work for or against the Postal Service’s contract renegotiation initiative? Some suppliers may be unwilling to renegotiate contracts because they cannot afford the reductions. Others may be motivated to renegotiate, reasoning that some business is better than no business.

    What do you think?

    This blog topic is hosted by the OIG's Risk Analysis Research Center (RARC).

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