by Gary North
The Internet, which includes the World Wide Web, is steadily changing the way that Americans buy and sell things. It will seriously alter the retail markets within five years. It is today changing the way that young people find jobs. You had better adjust your thinking to the Internet if you intend to stay in the labor market at anything like your present salary. I will cover this later in this report.
One organization that has been unable to adjust to the new conditions is the United States Postal Service. Unlike the U.S.P.S., you don't have a government subsidy.
E-MAIL UNDERMINES A REALLY FIRST-CLASS MONOPOLY
We are all abandoning snail mail. The Postal Service is slowly losing the cream that has sustained its revenues: 1st-class postage.
The Postal Service estimates that, beginning this fiscal year, which began on October 1, it will carry 2.5% less mail each year until 2008. This is the official estimate. (See footnote 2.)
Last year's rate hike will likely speed up the rate of decline.
One big factor in the switch away from 1st-class mail is the steady increase in on-line banking. An October 14, 2002 article in Time reported the following:
In 1995 consumers wrote 49.5 billion checks. By 2000 that number had dropped 14% to 42.5 billion. Meanwhile, online bill payment is now used by some 12 million households, up from 10 million in 2001.
What's driving the shift? Over the past year, electronic payment got a boost when the anthrax attacks elevated fear of using the mail, says Bill Nelson of the Electronic Payments Association. The hike in postal rates also hurt snail mail.
But the biggest factor is that consumers have caught on to the convenience of being able to check their balance 24/7 and see exactly when checks clear. The time savings is also a boon, says Javelin Strategy analyst James Van Dyke. Typically, it takes an American household about two hours to pay its 10 to 12 bills each month, according to Van Dyke's research. Automating everything takes about two hours to set up, but after that, each month's bills can be paid in about 15 minutes. Van Dyke sees people who start out paying a couple of bills electronically and then add one or two a month until they're fully automated. "It's a good kind of quicksand," he says. "The more bills you pay, the more you want to pay."
The Postal Service is being left with government-subsidized mail (non-profit organizations, magazines, newspapers), bulk mail, and bits and pieces. This is one reason — though not the main one (yet) — why, in an age of "deflation" (ha!), postal rates keep going up. UPS, FedEx and e-mail are steadily eroding the Postal Service's monopoly, a government monopoly extending back culturally to medieval China, and probably classical Greece.
I built my career on junk mail, yet I no longer look at direct-mail solicitations that come in an envelope. My wife reads the catalogues. I don't.
What about you? Do you pay much attention to traditional mailbox junk mail? Or is your time spent reading things on-line?
The decline of paper-based newsletters is killing the industry by shrinking its base. Any newsletter writer or publisher who is not actively making the transition from paper to digits — "from atoms to electrons" — is doomed.
Yet, ironically, readers regard paper newsletters as worth paying for, but not e-mail letters. Twenty years ago, if a publisher had been able to offer instant delivery mail to investors, he could have charged a premium. "Get information earlier than your competitors." That was what initially allowed Reuters to create his huge communications business two centuries ago: carrier pigeons that delivered stock prices in distant stock markets. Today, instant information is regarded as not worth a subscription fee, but information delivered by second-class mail is worth paying for. Go figure.
This is true of gray heads. It is not true of people under 30. For them, paper-based newsletters are archaic.
Meanwhile, e-mail is turning us all into McLetter writers. I used to write real letters: several hundred a year. Now I write fewer that two dozen. But I probably write 5,000 e-mails, 99% of which can safely be blipped as soon as the readers read them.
Future historians will find that collections of serious letters end after 1996. The treasure trove of letters that historians have used for two centuries will cease. The wonders of carbon paper copies will be replaced by . . . nothing. When a hard disk goes down, it takes the historical record with it. Hard disks go down all the time. How many e-mail letters to you and your replies have you printed out and filed away?
The Web is changing everything. It's Gutenberg, Marconi, Edison, and Farnsworth wrapped into one cheap package. (If you have never heard of Philo Farnsworth, look him up. He is the second most unknown world-changing inventor of all time. Number one is Tim Berners-Lee.)
MESSAGE UNDELIVERABLE: A SOLUTION
There is still one major advantage of physical 1st-class mail: it usually gets through. E-mail has a horrendous non-delivery rate.
I write a Christian economics newsletter. I have written it for 20 years. I now send it out by e-mail. I have a non-delivery rate of at least 5%, and usually 10%. Sometimes it goes over 11%. It's cheap to send: $29/month for up to five long letters to as many as 3,000 people. It goes to $39 from 3,000 to 10,000. But I never know what gets through. My wife is on the list. Last Saturday, she received her letter in many months. She had not seen one for six months. Yet nothing had changed at her end, supposedly. You can view back issues of my letter here.
You can subscribe by clicking on this link and then clicking SEND. (I never ask for money. It costs $29/month to maintain the list and do the mailings. I love to write. Call it Soapbox Fever.)
Why doesn't e-mail get delivered? The main reason, I am told by my mailing service, is that the free, large mailbox services fill up. So, mail is sent back to the sender's e-mailing service, which tries again several times. Then it quits trying.
Is this the main reason? I don't know. I do know that I use a normal local internet service provider, and I get a lot of mail. I don't use a mail box service like Hotmail. I get an on-line e-malbox with my ISP service, so that I can access my mail if I'm on the road.
Another reason: people switch service providers and do not send a change-of-address. This number is large: 1% per mailing. My free economics advisory newsletter goes out twice a week, or 104 times a year. It has an attrition rate of 20% per year.
A mailing list is capital. I lose 20% per annum just from changes in address. That is a large loss, I assure you. But cheap postage and no printing costs make up for it.
I personally use a forwarding service, Bigfoot. It used to be free. It still is, but only for 25 letters a day. Spam can keep "real mail" from being delivered. They charge $9/quarter for a premium service. It forwards 150/day. That, so far, is sufficient.
Here is the advantage of Bigfoot. I can switch the address forwarded in 60 seconds. If I get a new internet service provider, it doesn't matter for my e-mail. I don't have to tell everyone about my new address. I will keep that address for life. At $36 a year, that's a good deal for me. But I live on the Internet.
I have hesitated to tell anyone about this service for years. Why? Because it used to be free. Web companies that deliver free services tend to shut down overnight without warning. If I had all of my subscribers on Bigfoot, and it went bankrupt, so would my newsletter. Now that they charge $9, I think this risk is lower.
Here is my advice. Sign up for the free Bigfoot service. See if you like it. Don't use it for your friends, whom you contact regularly anyway. Use it for a dozen newsletters. You want to receive them, but you're not in constant communication with them. This way, you can switch your ISP, and all you have to do is go to Bigfoot and redirect your mail to your new address. That takes 60 seconds.
If you like Bigfoot's service, sign up for $9/quarter on your credit card and get the 150/day service.
This way, you will have to send out only one more change-of-address form.
Of course, your existing e-mail address will still work. By signing up for Bigfoot, you're only testing the forwarding service. All of your regular mail will come to your existing mailbox. Only those letters to which you send a change-of-address notification will go to Bigfoot.
Test Bigfoot. Then, if you decide to make a switch a new ISP, you can sign up for the $9 bigfoot service. You will have to inform everyone of the change anyway. Then set your new ISP's e-mail configuration to put [email protected] in the return address. Here's where to sign up: http://www.bigfoot.com.
LET'S GET DIGITAL
For important mail, businesses still use a printed format. For attracting new customers, printed mail is rapidly becoming obsolete, except for catalogues. The advertising world is changing. Your business had better be working hard to make the transition.
Printed mail still works for reaching corporate customers. There, the secretary is the barrier. She identifies junk mail and tosses it out.
So, printed mail is becoming a realm for the Big Boys. For decades, it was where the little guy could compete. He could write an ad, rent lists, mail a few test letters, and see what happened. He could roll out more mail if the test worked.
It can still work. It's not dead yet. But it's changing. Specialized printed magazines still are popular. You can rent their lists. But printed newsletters are going the way of all flesh. The universe of rentable names is shrinking. That affects me directly.
You're not interested in my problems. You're interested in your problems. If you are still employed, your problems begin with your employer's efforts. If you want to start a small business, you will face a very different market for getting out your message.
So far, there are no clear-cut working models of what to do on the Internet to generate business. There are a lot of models that have worked for certain products or for people with supreme marketing skills. But this much is clear: if you're not on the Web, you are going to lose out. A business that pretends that it is "on the Web" with a passive version of a Yellow Pages ad is fooling itself. (For that matter, hardly anyone knows how to create a cost-effective Yellow Pages ad.)
There is no question that the Web offers tremendous opportunities for people with marketing skills. But the skills that work on the Web tend to be verbal rather than graphic. So, mainline advertising agencies aren't interested in the Web, except for big clients. This is another reason why the little guy can compete on the Web. It's getting tougher, but it can be done.
In the strategy that I developed six years ago, I combined print ads, Web pages, and e-mail. It has worked for me. But I'm a writer. It works best for people who can write effective motivational ad copy.
Not many people have this training or know where to get it. Copywriting skills, like all skills, are not evenly dispersed in the economy. That's why what I'm about to tell you could provide you with a career edge that will last your whole career. For most of you, it won't. You are already overloaded with information. But for a few of you, this will be your turning point — all in a cheap e-mail report.
That's why I love e-mail! (When it gets delivered.)
GENERATING MONEY WITH WORDS
You can go to your local library and get good introductory materials. You can order through interlibrary loan classics. My favorite is Victor O. Schwab's How to Write a Good Advertisement. Use it to write your job résumé.
(Note: if you use an on-line job-search service such as www.monster.com, include a click & send e-mail address to an autoresponder that will instantly send out your full, hard-sell résumé. Example: "[email protected]" Most Web hosting sites offer free autoresponders. A site costs maybe $7 a month. You don't even need a visible Web page, although you ought to have one. You do need a domain address. The cheapest way to get one is at http://www.godaddy.com.)
Another classic book is on the Web free of charge: Claude Hopkins' Scientific Advertising.
I like books by Jeffrey Lant. They are sold on Amazon. In writing your résumé, The Unabashed Self-Promoter's Guide is the second step after reading Schwab's book. Then there are these: (1) No More Cold Calls, (2) Cash Copy and (3) Money Making Marketing. I've read them all, years ago.
You may think, "I don't need something like that. My job is secure. My retirement is secure." Then again, you may not. Millions of Americans did think such things as recently as late 2000. But they are learning their lessons, painfully. There is no security in this job market. It is getting tougher to make a good living. Retirement is out of the question for most Americans. They just don't know it yet.
What I'm telling you here, few people will ever hear about. Even among my readers, few will bother to click through and print out Claude Hopkins' book, despite what I say. I wish this were not true, but I know it is. The book is free for the asking, yet most people will not ask. That's because an intellectual awareness of what's coming economically is not the same as an emotional awareness. Emotion is what motivates most people to action, especially action that is out of their comfort zones.
The mark of a business that is going to contract or die is the attitude of the owner, who thinks, "I'll do well despite the change in my market." If you want to view a graphic description of the results of this attitude, take a three-day drive across Route 66. Hardly anyone is getting his kicks there now. Interstate 40 has replaced it. What was once the most famous cross-country highway in America — America's Highway — is today a little-used road with the rotting corpses of travel-related businesses along its side. If you're short of travel time, click here.
Your career is not immune from changes in the marketing of goods and services. You cannot safely coast. You cannot safely rely on the good will of existing customers. Price competition is with us. The Web is the greatest engine of price competition in marketing history. If you ignore it, you're like the frog in the pot of water on the stove. The heat will kill you, but not all at once.
There are ways around this. I have mentioned some books and strategies that can help you. But knowing about them is not the same as adopting them.
But be ye doers of the word, and not hearers only, deceiving your own selves. For if any be a hearer of the word, and not a doer, he is like unto a man beholding his natural face in a glass: For he beholdeth himself, and goeth his way, and straightway forgetteth what manner of man he was (James 1:22-24).
October 15, 2002
Copyright © 2002 LewRockwell.com