The Lead – Brand New Calamity: If downloading won’t kill labels, maybe the post office will
With the explosion in file-sharing on the internet and the incremental obsolescence of the CD, traditional models for purchasing music have been hit hard in the last decade. But for years, a steadfast dedication to buying music the old-fashioned way—on vinyl and cassettes—has helped indie-music labels stay afloat. A recent change in the process of shipping those records through another similarly antiquated-seeming model, the U.S. Postal Service, has posed yet another hurdle for an already beleaguered music industry. Curiously, the USPS, long engaged in a losing war of attrition with the internet, now seems to be joining its ranks in making it more difficult for labels to stay in business.
“I don't know if it's 'killing the business,’” says Ryan Geis, manager of long-running Florida label No Idea Records’ distribution/mail order operation, “but it definitely hit the business in the knee with a hammer.”
Geis is talking about the across-the-board price increases the USPS instituted in late January. While the cost of mailing a letter domestically was minimal, it's international mailing—and shipping in particular—that saw a remarkable spike, one big enough that it could have an impact on the way many record labels and bands do business. Prices for international retail shipping services (of which there are a few different options) increased by an average of 14.5 percent, and in some cases as high as 50 percent. (You can read the specifics of the rate increase here.) Prices to ship to Mexico and Canada are now roughly the equivalent of shipping to Europe.
There's no question the USPS is in bad shape: Postmaster General Patrick R. Donahue says they're losing $25 million a day. While the USPS does not receive funding from the government, Congress tightly controls the organization. One proposal to help stem the losses is that they will cease delivery of standard mail on Saturdays, beginning in August. (Package deliveries will continue throughout the week.) Whether it's up to Donahue or Congress to move to five-day delivery is currently under debate.
One of the most obvious reasons for the revenue crisis the USPS has found itself mired in recent years is that the efficiency of electronic communication has obviated the need for a lot of traditional mail, paying bills and sending letters. But there’s another more insidious reason for the crippling financial state of the USPS. As has been written about elsewhere, George W. Bush signed the Postal Accountability and Enhancement Act into law in 2006. The law required the Postal Service to pre-fund pensions for all of their employees across the board 75 years into the future within 10 years, an extraordinary rare expectation. It also prevented them from branching out into any other fund-raising models.
The law was introduced by Rep. John McHugh (R) of New York, also a member of the corporate lobbying group the American Legislative Exchange Council (ALEC), supported by (wait for it) UPS and Federal Express. Before the law, the USPS was flush with funds. Most critics of this law agree it was an attempt to soften up the postal service, force it into bankruptcy and pave the way for privatization of the mail, in much the same that Republican lawmakers aim to defund other government services (schools, health care, etc.). It's mandating obsolescence through legislation: Once the government services are neutered, the next logical step is to point to their failures as reasons to open them up for private business interests to take over.
As is usually the case when big business jockeys for further market share, it's the smaller businesses that are hit the hardest. While it's not the end of the world, says Andrew Cox, Director of Distribution of Hydra Head Records, “we're definitely losing money on it.” That's especially true on orders that they've had to fulfill that were placed before the shipping rate increase, but sold to customers at the previous rate.
Other, smaller labels, Cox says, especially CD-only labels will be particularly harder hit. Hydra Head are largely known for their vinyl releases. “A lot of labels that only do compact discs and tapes, if you're buying a $9 tape and the shipping is $12, I don't know if I would buy that. You're not going to take chances on stuff that you're not super-familiar with.” Compact discs, which average around $10-12 from Hydra Head would cost around $13-14 just to ship now, he says. Hydra Head sell more CDs internationally than domestically, “which are still a bigger part of the market out there.” >>
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