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Will A Rise in Postal Rates Kill Physical Media?

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Will A Rise in Postal Rates Kill Physical Media?

Old 06-11-11, 02:28 PM
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Will A Rise in Postal Rates Kill Physical Media?

This was just a thought that crossed my mind.

I just read somewhere that the US Postal Service is 17 billion in debt and many other countries around the world are having similar financial difficulties with their postal service.

Currently stores seem to be stocking less and less DVD and Blu-ray titles with many people buying off Amazon, eBay etc or downloading/streaming.

If the postal service is revamped and much higher rates are introduced for shipping, will this greatly reduce the sales of physical media and turn more and more people to downloading & streaming?

I know Australia has increased their postal service to point where it's not worth it for them to have an item shipped to them because it is so incredibly expensive.

For instance, the same box I can send to England for $10 will cost about $30 to Australia.

Can a similar thing happen here in North America?
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Old 06-11-11, 03:02 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

No.

/thread
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Old 06-11-11, 03:30 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Amazon Prime, baby! Raise those postal rates all day long, I don't care!
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Old 06-11-11, 03:44 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Originally Posted by Groucho View Post
Amazon Prime, baby! Raise those postal rates all day long, I don't care!
That's part of my thoughts. If rates go way up will Amazon still be able to provide free shipping?
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Old 06-11-11, 03:49 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Only reason postal services are bankrupt is the unchecked corruption and greed within their ranks. If our own postmaster general alone can make $850,000 a year in salary & benefits, then something is royally frakked up with this picture. -kd5-

Last edited by kd5; 06-12-11 at 06:27 AM.
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Old 06-11-11, 04:18 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Originally Posted by orangerunner View Post
That's part of my thoughts. If rates go way up will Amazon still be able to provide free shipping?

The US Postal Service and UPS are two different companies. Amazon uses UPS most of the time. Most DVD distributors use UPS to deliver to retailers.
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Old 06-11-11, 05:12 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

The US Postal service was $8.5 billion in debt last year (as per CNN) and no it would not have a meaningful impact on Amazon IMO
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Old 06-11-11, 05:17 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Originally Posted by Texan26 View Post
The US Postal Service and UPS are two different companies. Amazon uses UPS most of the time. Most DVD distributors use UPS to deliver to retailers.
Fair enough, I didn't know they used mostly UPS.

I guess my second though would be if downloading/streaming becomes more and more popular for both video and print, places like Amazon may find their overall volume drop and therefore may not be able to absorb the shipping costs any longer.
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Old 06-11-11, 05:59 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

They don't mostly use UPS. I get most of my stuff through the post office. Very rarely do I get a package through UPS.
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Old 06-11-11, 06:17 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Originally Posted by Spottedfeather View Post
They don't mostly use UPS. I get most of my stuff through the post office. Very rarely do I get a package through UPS.
I get 98% of my free Amazon prime shipments through UPS 2 day shipping. The other 2% is FedEx. I have about 10 to 15 orders per month. You might live near an Amazon warehouse in which they are able to use the unreliable postal system. I know I wouldn't get all my orders in two days if they used the postal system.
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Old 06-11-11, 07:24 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Originally Posted by SterlingBen View Post
No.

/thread
This. My guess is that online shopping is at an all-time high and will continue to rise into the foreseeable future.
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Old 06-11-11, 07:43 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Originally Posted by Texan26 View Post
I get 98% of my free Amazon prime shipments through UPS 2 day shipping. The other 2% is FedEx. I have about 10 to 15 orders per month. You might live near an Amazon warehouse in which they are able to use the unreliable postal system. I know I wouldn't get all my orders in two days if they used the postal system.
The only time I get an order from Amazon via USPS is if it's coming on Saturday. Otherwise, it's UPS or LaserShit. We have Prime, though. I'm going to assume spottedfeather doesn't.
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Old 06-12-11, 12:37 AM
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Re: Will A Rise in Postal Rates Kill Physical Media?

That is like asking if a rise is gasoline will kill physical media. no and no. also, I wish the USPS wasn't a monopoly, I'd love to see it fail, it deserves to fail - any for profit company ran as terrible as USPS would have been gone long ago - I enjoy waiting in line for 45min and then being treated like shit every time I go to my local post office, everyone complains - but nothing happens because you aren't going to take your business anywhere else, them got you, them get you.
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Old 06-12-11, 12:59 AM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Of course, I don't have prime. Other than it being a waste of money, there's a really horrible shipping company called A1 shipping. You can look up amazon forum topics about it. I refuse to take the chance of a package of mine being treated the way A1 treats their stuff.
http://www.amazon.com/gp/forum/cd/di...x1S36AZK6I1PPQ
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Old 06-12-11, 01:06 AM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Originally Posted by Spottedfeather View Post
Of course, I don't have prime. Other than it being a waste of money
If you only order a few times a year, yeah. When you order 50 to 100 times a year then you're wrong.

And I have never had a problem with packages.
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Old 06-12-11, 04:25 AM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Originally Posted by Spottedfeather View Post
there's a really horrible shipping company called A1 shipping. You can look up amazon forum topics about it. I refuse to take the chance of a package of mine being treated the way A1 treats their stuff.
http://www.amazon.com/gp/forum/cd/di...x1S36AZK6I1PPQ
Meh. If it doesn't arrive or is damaged, Amazon will replace it. There is nothing I buy on Amazon that is time sensitive.
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Old 06-12-11, 12:25 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Originally Posted by bse View Post
That is like asking if a rise is gasoline will kill physical media. no and no. also, I wish the USPS wasn't a monopoly, I'd love to see it fail, it deserves to fail - any for profit company ran as terrible as USPS would have been gone long ago - I enjoy waiting in line for 45min and then being treated like shit every time I go to my local post office, everyone complains - but nothing happens because you aren't going to take your business anywhere else, them got you, them get you.
I don't know much about the workings of USPS but I know a Blu-ray can be mailed to me in Canada by basic mail for about $2.50. I don't know, can the couriers compete with that price?

A rise in gasoline, in effect, can kill physical media if the shipping rates go up across the board.

If you buy a DVD from say, eBay, for $10 it may be a good deal but when you add $4.50 ($5.00+ when marked up) shipping it becomes a $15.00 DVD. Is it still worth it?

If you have an infinite number of titles available for download/streaming at a cheap price, physical media can quickly be seen as a costly and time-consuming alternative for many people.
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Old 06-12-11, 12:47 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

I'm sure it costs Amazon about $1.00 to send something UPS 2-Day - I worked for a corporation in the past and the shipping breaks they get due to their bulk shipping is insane, USPS doesn't offer any breaks to corporations, they actually charge large companies money to pick up their stuff.
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Old 06-12-11, 01:31 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Originally Posted by bse View Post
I'm sure it costs Amazon about $1.00 to send something UPS 2-Day - I worked for a corporation in the past and the shipping breaks they get due to their bulk shipping is insane, USPS doesn't offer any breaks to corporations, they actually charge large companies money to pick up their stuff.
But there are different rates. There were complaints from someone about how Netflix was getting a better rate.

I imagine Amazon would rather raise Prime rates than get rid of the program.
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Old 06-12-11, 01:37 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

I don't have Prime, but I order a LOT from Amazon year after year, and everything's always come USPS, which I prefer as I easily pick up the packages at my PO box and don't have to deal with UPS leaving notices when I'm not home. It does sound like Prime users get their stuff through UPS. Also, I never pay for shipping as I always make sure to order over $25 which gets free shipping. It's just as easy for me to buy 2 DVD's instead of one to get free shipping, and not pay the annual Prime fee. I assume Prime is shipped faster and probably has other cool benefits, but I'm fine without it.

My current USPS branch is terrific, very rarely a long line, I know all the clerks as I'm in there every day, and the USPS shipping rates are still easily the lowest of any shipping service. And their rates do go up every year, sometimes steeply. The news only mentions the first-class stamp going up a penny or two - they never mention international jumping a full dollar, or priority increasing $1, and other additional services going up 10 cents or 20 cents. That's the stuff they make their money on.
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Old 06-12-11, 01:38 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

It hasnt yet, so no.
As for Amazon Prime, it is the best bang for your buck. Provided you order a good amount with Amazon. Obviously if you dont order alot from Amazon, it isnt worth it. Any third grader would be able to tell you that. For those of us that do above 50 orders a year, its a no brainer.
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Old 06-12-11, 01:39 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Originally Posted by Spottedfeather View Post
Of course, I don't have prime. Other than it being a waste of money, there's a really horrible shipping company called A1 shipping. You can look up amazon forum topics about it. I refuse to take the chance of a package of mine being treated the way A1 treats their stuff.
http://www.amazon.com/gp/forum/cd/di...x1S36AZK6I1PPQ
There's plenty of threads there about how bad USPS is as well.

Prime is great for people that order quite a bit (and it can be shared with relatives accounts).
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Old 06-12-11, 06:27 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Originally Posted by davidh777 View Post
But there are different rates. There were complaints from someone about how Netflix was getting a better rate.

I imagine Amazon would rather raise Prime rates than get rid of the program.
I did some searching earlier and found Netflix didn't get a special rate and they pay about 88 cents per mailer. The extra $1 for blu-ray movies was part of the way to combat higher cost of shipping.

They also went a little into streaming and while the price of streaming isn't all that much, the rights to stream are where the costs are. Some films cost $4 for each play.
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Old 06-12-11, 09:22 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Originally Posted by jjcool View Post
As for Amazon Prime, it is the best bang for your buck. Provided you order a good amount with Amazon. Obviously if you dont order alot from Amazon, it isnt worth it. Any third grader would be able to tell you that. For those of us that do above 50 orders a year, its a no brainer.
The $80 buy in is a steep price initially, but is definitely worth it when amortized over the year. Even 40 orders a year will justify it since you would only be paying $2/ package for 2 day express shipping.

But the big benefit that I hardly ever see mentioned is- just like B&Ns membership-there is no minimum order to get the free shipping.
This is a HUGE deal around the holidays when prices swing wildly and insane deals may only last an hour or two. Last Christmas I must have placed about 10 orders each under $8. No way I could have bought half that stuff if I didn't have Prime because the shipping would have either thrown cold water on it, or else I would have had to throw in more things to reach the $25 free ship threshold. Last year I think I placed about 65 separate orders, so it definitely was worth it, and I've already changed my preferences to automatically re-bill when this is up in a month.
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Old 06-12-11, 11:22 PM
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Re: Will A Rise in Postal Rates Kill Physical Media?

Originally Posted by Mister Peepers View Post
I did some searching earlier and found Netflix didn't get a special rate and they pay about 88 cents per mailer. The extra $1 for blu-ray movies was part of the way to combat higher cost of shipping.

They also went a little into streaming and while the price of streaming isn't all that much, the rights to stream are where the costs are. Some films cost $4 for each play.
This is what I was thinking of, but there appear to be some legit reasons for the different rates:

http://arstechnica.com/gaming/news/2...ys-profits.ars

GameFly to USPS: higher postage than Netflix costs us $730K per month

GameFly is a service where customers pay a monthly fee to rent games which are delivered via the US Postal Service—kind of the Netflix of gaming. The mailing of these games, and the danger of games breaking in transit, are major ongoing concerns for the company, and in 2009 GameFly filed a complaint with the United States Postal Service alleging that Netflix mailings were given priority over—not to mention better rates than—GameFly's mailings.

On March 23, the president of GameFly wrote to the Postal Regulatory Commission asking that the complaint be resolved. The reason is startling: the cumulative cost difference between the shipping of a Netflix and GameFly disc exceeds the net monthly income of the company.

"GameFly filed this complaint nearly two years ago. Before that, GameFly spent 18 months working with the Postal Service in an attempt to informally resolve the issues on which the complaint was based," David Hodess, president and CEO of GameFly, wrote to the Postal Regulatory Commission. The next paragraph of that letter, sent to Ars via an anonymous source, is a jaw-dropper. Update: you can read the letter for yourself.

The issue needs to be resolved quickly, and the reason is purely financial. "At the company's current volume of approximately 1.2 million shipments per month, the difference between the two-ounce flat rate of $1.05 that GameFly must pay to avoid automated letter processing for most of its DVD mailers, and the one-ounce letter rate of $0.44 that Netflix pays to avoid automated letter processing of return mailers, amounts to about $730,000," Hodess wrote. "This amount represents more than 100 percent of GameFly's monthly net income in 2011."

GameFly had already complained about the length of the proceedings in 2010. "This complaint case has been pending before the Commission since April 23, 2009—almost a year ago. Continued delay threatens irreparable injury to GameFly," the company wrote. The volume of mailings reported then is the same as now, 1.2 million per month. That's bad news for the company, as its profits are being eaten by postage fees and growth appears to have stagnated.

Netflix and GameFly ship differently
The media may be the same, but GameFly and Netflix mail their discs in very different ways, and at a different scale of operations. GameFly has four shipping locations, whereas Netflix has 58. Additionally, it's a simple thing to visually separate Netflix sleeves from the rest of the mail for manual sorting, as those discs are mailed in brightly colored sleeves. GameFly, on the other hand, has made its packaging blend in with standard mail as a way to reduce theft.

GameFly has estimated that it pays $50 per game, and that's a major issue when a game is broken or stolen. To keep those losses at a minimum, GameFly uses a cardboard insert to protect the disc, which in turn adds significant weight to the mailers. Netflix discs are mailed in paper sleeves, and are much lighter.

The methods of shipping also vary. "Both Blockbuster and GameFly utilize Business Reply Mail for their return mail pieces, which requires an accounting step to assess postage due fees; while Netflix utilizes Permit Reply mail where return postage is prepaid and the postage due assessment step is not required," Larry J. Belair, the senior plant manager for the US Postal Service in San Diego said in a 2010 filing. He also pointed out that other companies that ship discs in bulk use letter-shaped mailers, while GameFly alone uses flat-shaped sleeves.

Belair also explained why Netflix sleeves are handled differently than most mail. "When volume densities of a single DVD rental company's pieces warrant, postal employees may segregate all of that company's pieces (that are located—some are not found) in separate trays so they can avoid downstream handling," he explained. "Segregation can begin as far upstream as the rental customer's delivery unit." Belair estimates that 97 percent of DVD mailers belong to Netflix, while only 1 percent come from GameFly.

So there are multiple things here that contribute to Netflix's streamlined operations: the sleeves are mailed in a way that requires less work by the USPS, the discs are mailed in packages that are shaped a specific way and are brightly colored to aid in manual sorting, they're lighter than GameFly mailers, and Netflix operates at a much higher volume than the game rental service.

It's going to be a hard sell to get the Post Office to change GameFly discs' fees and handling, especially if the company is unwilling or unable to change the method, size, shape, and coloring on its sleeves. There are two competing forces at work here: the cost of replacing broken or stolen games versus higher shippings costs.

GameFly may characterize Netflix as receiving preferential treatment, but the reality is much more nuanced. What's clear is that the shortest path to higher profits appears to be further streamlining of the game rental outfit's shipping methods, although each path in that chain opens the company to higher rates of breakage or theft.

We contacted GameFly for comment on the letter, but have yet to receive a reply.
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