Get what you pay for

The third rule of economics is simple: You get what you pay for. It’s been an immutable economic fact of nature. Until now. In a blink of an eye, technology took over and the rule changed.

TV has Tivo. Consumers can avoid those pesky commercials with a click of the button. That 30-minute show turns into a commercial-free 22 minutes just like that! 8 minutes saved! I love my Tivo. Of course, those commercials paid for that programming, but what the heck?!

OK, someone has to be watching the commercials that keep my shows on the air. But it isn’t me. Not any more.

Newspapers and Magazines are also seeing dramatically dwindling ad sales. The lucky ones find buyers or mergers. The less lucky ones go the way of the late lamented Gourmet.

The inventive survivors look for alternative income streams like paid on-line subscriptions (not gaining much traction yet) or ads (annoying, but necessary) or pay-for-special-features promotions (too early to tell).

In an act of solidarity with those who produce the written word, I send magazine subscriptions to family and friends at the holidays. I’m not sure my tiny “Atta Boy” is worth much in the great scheme of things financially to the publishers, but it makes me feel better about canceling my daily newspaper subscription two years ago.

You see, I couldn’t read the paper during my daily commute-by-car, and the ever-growing pile of newspaper carcasses impeded anyone from sitting in my passenger seat. So now I read the paper on the internet at lunch. For Free! A world-class newspaper for Free! It’s one of life’s real bargains. Thank goodness for the advertisers and readers who keep it afloat for me every day. I love you guys!

The internet—the technological instrument of destruction for thousands of magazines and newspapers—didn’t get it at first either. Obtrusive pop-up ads alienated viewers, then pay-for-click evolved. But this is still TBD, and the technology is evolving daily—just ask the SEO guys who are always scrambling to keep up. Do I do my part to underwrite this world-changing media? Probably not. My husband is doing more than enough. I’ll sit this one out, too.

My favorite NPR and PBS stations, realizing that they can get on board or get run over, are broadcasting on the internet, sending shows to anyone anywhere with a computer. They also podcast, webcast, simulcast and recast. And yes, hosts are on FaceBook and Twitter, too. Twice a year they ask for a donation which I am happy to fork over. I’d pay for those real-time traffic alerts, even without the extraordinary content.

So, like most of us, I pay for the media I most value, and hope someone else will pick up the bill for the other guys. With my Tivo I can watch TV and skip the commercials. With my internet connection I can read the newspaper I once subscribed to and ignore the ads that pay for it. I can listen to my NPR and PBS stations with no cash outlay should I choose to do so. It is obvious to me that technology is rewriting the third law of economics. Today, I can get what I don’t pay for.

What is less obvious is that mail is a medium, too—like TV, newspapers, radio, internet. Way before Al Gore thought of the internet, Ben Franklin was putting the post office together. Hence, direct marketing is one of the oldest media around, and is so institutionalized it is easy to overlook. But very time I put a stamp on a letter I’m helping to pay for it.

Direct Mail has been hammered by time and technology, too. Email has almost wiped out whole classes of Mail. The escalating cost of postage is a significant damper in its own right. But now comes “Do Not Mail” legislation—ostensibly a “green” movement upset over destruction of trees.

I’m probably the greenest person you’ll meet today, but I think this legislation, though well intended, is in fact destructive.

Recently Postmaster General John Potter took on proponents of “Do Not Mail” legislation, citing that advertising mail helps fund the USPS.

“Somehow, they think a sale offer coming through the mail—as opposed to a newspaper, a magazine, TV, radio or the Internet—is a bad thing” he said at the National Press Club. “Ads pay for the Internet as well as broadcast TV and radio programs. So, too, ad mail helps pay for universal mail service in America.”

That’s right: DNM threatens universal mail service.

Most of us love—and expect—universal mail service. It’s our right to get mail, even if it’s an envelope from ValPak chock-a-block with ads from maid services, tree surgeons and power washers. That blue envelope helps buoy up the US Postal system in a way that the monthly bill from the cable provider who rents me the Tivo can’t.

The volume of the advertising mail helps keep USPS numbers high. Ad mail doesn’t have to be delivered at a breakneck pace, giving the USPS opportunity to plan distribution and maximize delivery efficiencies. Hence, robust advertising mail numbers are vital to USPS financial health.

But mail volume is down by about 28 billion pieces in FY 2009—driven down by postage, by the internet, by the economy, by dire doom-and-gloom forecasts, by home foreclosures, and by a series of sequential well-reported economic disasters and expensive bailbouts. So despite slashing 40,000 jobs and trimming $6 billion from its costs this year, the USPS lost $3 billion.

Everyone knows the USPS can’t lose money like this forever. But everyone also expects to dependably receive mail. That’s what universal mail service is all about. It’s a given. Like the third rule of economics.

But today technology is voiding the third rule of economics. DNM could nix universal mail service just as effectively.