;

Although the Postal Service has a $1.4 rates.” Gould added that "the system Isn’t billion deficit for the five years up to 1975, paying for itself. It’s going to be expensive." and another billion dollar deficit for 1976, “Rates are likely to go up," admitted Sea- Callan said the deficits were "a small part of graves for the Postal Service. He blamed the current increase.” He maintained “the inflation. “There’s no indication that the increases are due to increased costs of the cost of living is going down.” USPS.” Higher wages are the biggest fac- Seagraves claimed it just “depends on tor, he felt, since 90% of the postal budget how much inflation we’re going to have. goes for manpower. When wages go up, rates go up." “You shouldn’t blame the labor unions,” Brief Moratorium argued Barton. “Their last contract was There may be a brief moratorium on the austere, less than most unionized industry increases, however, if a congressional sub- gave their employees. sidy goes through this month. But the “Letter carriers and clerks are well paid,” billion dollar subsidy (H.R. 8603) passed by

Barton noted, “but it’s a judgment if they’re the House last October, and expected to overpaid. United Parcel Service (UPS — pass the Senate the end of this month, may the Postal Service's main competitor) pays only postpone, not prevent, future in- more than USPS.” creases. Discounts Discounted A condition of the subsidy is that the One ray of sunshine in all the gloom over Postal Service cannot raise rates until next postal rates was supposed to be a three- February. By that time, a blue-ribbon panel and four-cent bulk mailing discount on of the Postal Rate Commission is to make a pieces under one pound. The phased rates report on how much money it feels Con- are 23. 9$ for a five-digit pre-sort according gress should appropriate to the USPS. to zip code, and 24.2$ for a three-digit pre- “Congress got out of the Post Office,” noted sort. “It’s not enough of a discount many of Callan. “That’s become very unrealistic.” them are saying,” said USPS’ man Sea- “There’s no end in sight to the increases graves. unless Congress decides to give recogni- Ned Callan said the discount was inten- tion that the Postal Service is a public ser- ded to “give mailers credit for something vice institution,” Richard Schmidt said. “It STARSHIP SPITFIREWORKS IN CENTRAL PARK — The Jefferson Starship and 60,000 they’d already been doing." While some makes no more sense to make the Postal fans converged last week in New York's Central Park for the group's fourth annual free New York mailers do pre-sort, others do not, and the Service a break-even operation than the concert. Later, RCA Records hosted a party at the Terrace Penthouse of the St. Moritz Hotel. variety in mailing habits is great. fire department or the public schools." “Spitfire" the group's latest LP was certified gold by the R.I.A.A. on release. Pictured (photo #1) Record industry representatives were The only optimistic forecaster was Ned left-to-right are Mel llberman, division vice president, commercial operations, RCA Records unanimous in their disappointment with the Callan at the rate commission who said the Grace Slick; Marty Balin; Jack Kiernan, RCA Records division vice president, marketing; Paul USPS “has to prove they need those in- discount. “Under the present system, I Kantner; Starship manager Bill Thompson; David Freiberg; Pete Sears; Craig Chaquico, and don’t know that we can get any advantage creases.” He noted that the $240 million a John Barbata at all,” claimed Kayes. “It would require month deficit has been reduced to $19 substantial modification of present prac- million a month. “We consider them almost tices.” breaking even.” Congress Hikes Postal Rates „ deficits fact “It may help at some time in the future,” The “minimal” may in show a the RIAA argued that the 40/14/8 rate, “As far as the commission is concerned, added Trossman. He pointed out that the growing fiscal strength of the Postal Ser- which lowers the over-seven-pound rate the new rates are fair,” according to Ned savings now are only 1.2

first pound, and it is this feature which ad- makes people mad. Everyone’s mad." it worthwhile.” And book publishing repre- versely affects the record clubs who are No More Subsidies sentative Richard Schmidt felt the WEA Cut-Off ,,, mailers of low weight pieces as contrasted Inflation is one reason for the frequent “discount is very small. It doesn’t provide Attempts to reach Joel Friedman, presi- with book publishers whose pieces of mail rate hikes. “Transportation and labor are substantial savings.” dent of WEA, or Skid Weiss, national adver- are much heavier. The revenue un- hardest hit by inflation,” according to coun- Other Carriers tising director, for comment on the issue, necessarily given up on high weight pieces sel for the House Postal Facilities Subcom- Since the Postal Service does not have a proved unsucessful. by this rate structure change is partially mittee Richard Barton. Yet the rate in- monopoly over bulk mail, mailers could try According to informed sources, the WEA recovered on the 'front end’ low weight creases are “far higher than the yearly rate to save money by using UPS or other move to prohibit newspaper advertising in pieces.” of inflation,” he said. carriers. “Some have gone to other this city has a two part motive. First, WEA is Thirty-five to 52% of records mailed by The 1970 Postal Reorganization Act, or carriers,” said Schmidt of the book trying to divert some of the money that has the two major record clubs are under one Disorganization Act as some feel, is the real publishers. “It’s cheaper or equal service traditionally gone into newspapers into pound, and the average is under two reason rates have increased so that’s faster, with less damage.” radio advertising, and to make retailers pounds. Sweezy found that “pieces in dramatically in the past five years. Record companies, however, said they more aware of radio as an advertising excess of seven pounds are insignificant.” Reorganization “took the Post Office out of want to stay with USPS. “There’s no viable medium. In advertising circles, this is "Equity is the main issue,” claimed Brief. politics," said Barton. Congress no longer alternative to the Postal Service,” said known as “improving the mix," or revising "The rate favors material over one pound, appointed local postmasters, and the Trossman. Although Columbia House has the balance between print and radio. and over seven pounds. (Book) publishers postmaster general was kicked off the made isolated tests with UPS, “by and large Current estimates are that print takes up to were not nearly as disturbed as we were." President’s Cabinet. we’ll stick with the Postal Service.” 80 percent of some budgets; WEA is repor- Trossman concurred, saying, “We feel The Post Office’s finances were reor- “There’s no price advantage to UPS," tedly looking for more equality between the that the allocation of costs is unfair. Special ganized and the U.S. mail was bumped off Kayes felt. He reiterated the statement he two. rate fourth class bears an undue burden, the congressional dole. The new Postal made at House hearings on bulk mailing Secondly, it was believed that this move but,” he added, “not unique.” Service was given the power to borrow two months ago: “Until death do us part, for might help relieve some of the intense price A Washington attorney for book money for capital eApenditures, the right to better or worse, simply because we believe competition underway between a number publishers felt “the rate really hits us all.” bargain collectively with its employees, and a viable and healthy postal service is the of New York area retailers who were using He admitted, however, that “if you ship the authority to set new rates via the rate solution for all major mailers.” manufacturers' ad money to promote their lighter items you pay disproportionately." commission in order to make users pay at- Still More Increases product at “giveaway” prices. For while the Cost and Weight tributable costs. Although mailers want to stick with the accounts can continue to advertise their The rate commission based its decision "We've been in a catch-up position,” Postal Service, it looks like the U.S. mail will albums at the same lowball prices they had to jack up record rates on the premise that declared Van Seagraves, a Postal Service continue to stick it to the mailers. “Rates will before, radio advertising, while more effec- costs do not increase proportionately with spokesman. "The percentage of costs go up,” warned George Gould, another tive than print in some cases, is not as visi- weight. “The principal cost determinant for borne by the user is greater than in 1971 counsel on the House Postal Facilities Sub- ble, and therefore is less disturbing. this type of matter is the number of pieces when it was carried by general tax committee. “The system won’t help keep of mail rather than weight, except in the revenue.” them down.” case of very heavy parcels." “Congress realized rates would go up Both Gould and co-worker Richard Bar- Abattoir Seeks Nat’i. The rate commission was concerned phenomenally when the government got ton feared the bulk mailing centers (BMCs) Dist. For Kalapana over the loss of volume of special rate out of the subsidy business,” said Ned which opened this year will be a major fac- fourth class, and felt Sweezy’s proposals Callan. Rate increases were therefore tor in future rate hikes. The BMCs, which LOS ANGELES — Abattoir Records is mak- would “impair the Postal Service’s ability to phased over an eight-year period for com- centralized all bulk mail processing, have ing a major effort to close a national dis- compete for this type of mail.” It pointed to mercial mailers, and a 16-year period for gained a reputation for ravaging records tribution deal for its primary artist, an “historical rate advantage” enjoyed by non-profit users. and books in their machines. Hearings Kalapana. The label reports sales of over UPS over parcel post. The 13% hike in phased rates is actually have been held highlighting BMC problems 65,000 pieces (albums and tapes) on “There is no evidence that the rates a 21% increase in full permanent rates. “It’s by Rep. Charles Wilson (D-Cal.). Record in- Kalapana’s first album without national dis- proposed by the Postal Service will result in misleading to use the greater figure,” dustry spokesmen testified on their tribution. In addition to Kalapana, the Abat- undue adverse impact on mailers,” the claimed Callan. "Nobody ever pays the full problems with the BMCs (see CB, May 29, toir label has several other artists in the commission concluded. Remarked Brief, rates on categories that are phased. June 5). wings, including a group named Summer “If we felt no adverse impact, we wouldn’t “Eventually,” he added, “they will pay the "They spent a billion on the BMCs,” said which will be opening for Kalapana for their have filed comments.” full rates." Barton. “That’s got to be picked up from the Roxy showcase on July 26.

24 Cash Box/July 24, 1976