Digital pennies mean less mail soon

The biggest challenge of this new era of digital content is adjusting business from what were analog dollars into digital pennies. That’s a term the head of NBCUniversal used to describe his problem in broadcast TV, but it applies much more broadly to all the forms of mass communication we’re used to.

And today, more news that these changes are coming to a US Post Office near you.

There’s a solid article on these changes written by Hope Yen of the Associated Press. Here’s some of what she discussed:

$3B in cuts mean the closing of about half of the mail processing hubs around the country in 2012, and that will mean slower mail. This will slow down first class mail, wiping out next day delivery which is now 42% of mail.

This is on top of a projected 3700 local post office closures which was published earlier this year, along with elimination of Saturday delivery, and rate increases. These measures all wait for an “opinion” from the Postal Regulatory Commission, which is due to rule next March.

One of the more telling quotes is this one, from Postmaster General Patrick Donohoe.

We have a business model that is failing. You can’t continue to run red ink and not make changes. We know our business, and we listen to our customers. Customers are looking for affordable and consistent mail service, and they do not want us to take tax money.

This quote from the article itself is also a sign of things to come:

In the event of a shutdown due to bankruptcy, private companies such as FedEx and UPS could handle a small portion of the material the post office moves, but they do not go everywhere. No business has shown interest in delivering letters everywhere in the country for a set rate of 44 cents or 45 cents for a first-class letter.

One big problem the Post Office faces is the cost of retiree health benefits – $5.5B annually. It’s the same shackles the auto industry has been trying to free themselves from.

But the reality is, in many post offices, foot traffic is down to almost nothing, except for this time of year. By the end of this decade, first class mail is projected to drop to half of what it is now – and that may accelerate and worsen with these changes.

One creative proposal is to move the stand-alone post office of today into what the USPS calls the Village Post Office, colocating into a business such as a grocery store or … yes, the dreaded “appropriate retail location” which is code for WalMart in many areas of the country. But not even WalMart is everywhere.

This is one of those things most consumers in urban and suburban America won’t notice until it’s too late, but it will be noticed in rural communities fairly quickly. In many rural communities, newspapers are delivered in afternoons by postal carriers – that may come to a halt. Many others in rural America rely on lifelines from pharmacies and don’t have a lot of options for transportation, and that’s at risk.

There’s also a storytelling angle to this. What’s the worth of a handwritten card, or a letter sent from a distant loved one? There’ll be an uptick in late birthday cards, and for most email seems so much easier. But it’s less personal in many ways.

Or how about the model of the weekly magazine which will now likely be delivered almost 2 weeks late? Yes, this model is already moving to tablet delivery, and there’s something to be said for the green movement with less paper and lowered carbon footprint from not having to transport all of it.

There is such an uproar when email providers go dark for a few hours, or when overnight packages are lost – imagine where we are headed for both business and personal communication if this plays out poorly.

We can’t hang on to antiquated business models in this digital world, but somehow this one is troublesome – it feels like a slippery slope, with no going back. But there aren’t enough billions of analog dollars left to make up the difference. What do you think of the situation, and are there solutions that make sense?