Postal Service Files 2008 Rate Increases
with Postal Regulatory Commission
On February 12th, the Postal Service filed at the Postal Regulatory Commission (PRC) a Notice of Market-Dominant Price Adjustment, laying out its planned 2008 rate increases for the market dominant classes, including periodicals. As required by the new postal reform law, the rate increase for each of the classes does not exceed the allowable CPI price cap of 2.9 percent.
The overall increase for the Periodicals class is 2.7%, with the increases in individual rate cells fairly close to across-the-board. The Postal Service intends to “bank” the remaining .2% rate increase it could have applied to periodicals now for possible future use in making price adjustments to periodicals rates.
Periodicals mailers calculating the impact of the new rates on their publications are likely to find their increase to be in the 2.9% range rather than 2.7%. The difference is due in large measure to a new discount for “limited circulation” publications. The discount, mandated by the new law, reduces postage by 5% for the outside-county copies of in-county periodicals, as long as there are fewer than 5,000 copies distributed outside-county for an issue.
Procedurally, the PRC now has 45 days to review the proposed rates to ensure that they comply with the new law. The PRC has established Docket R2008-1 for this review. Mailers were given 20 days to comment on whether the new rates are consistent with statutory requirements. MPA and a coalition of periodicals mailers will be filing comments, supporting the new rates. The Commission has announced that it will determine whether the planned rate adjustments are lawful and issue an order announcing its findings within 14 days of the end of the comment period. Barring a determination by the Postal Regulatory Commission that the rates announced by the Postal Service are unlawful, the new rates will go into effect on May 12, 2008.
Intellectual Property Legislation Heads Towards Markup
H.R. 4279, the Protecting Intellectual Property (PRO-IP) bill is making its way through the House Judiciary Subcommittee on Courts, the Internet, and Intellectual Property, and is scheduled to be marked up on March 6th. While MPA supports protection of intellectual property rights, and much of what is in the bill, the legislation contains a particularly troubling provision that could severely impact publishers.
Section 104 of the legislation would change the civil penalties for copyright infringement of compiled works, by allowing each work in a compilation to count as a separate infringement. This could potentially allow plaintiffs to collect statutory damages of up to $150,000 for each infringement, which in many cases would be far out of proportion to any actual damages suffered by a copyright plaintiff. If the law were amended as proposed, publishers could be forced to avoid adopting innovative new products such as DVD’s containing a collection of works out of concern for awards of multiple statutory damages.
At the request of the House Judiciary Committee, on January 25th, the U.S. Copyright Office held an all day roundtable devoted to Section 104. MPA was asked to provide testimony, and did so, as did other others concerned with the proposed change, including the Digital Media Association, the Library Copyright Alliance, and Netcoalition. Following the roundtable, on the 6th of February, MPA was once again invited to discuss the legislation with a select group of legislators, including House Judiciary Chairman Conyers (D-MI), IP Subcommittee Chairman Howard Berman (D-CA), and Majority Whip Steny Hoyer (D-MD).
In advance of the March markup, MPA is aggressively working to meet with many of the key Democratic and Republican committee members to ensure that if the legislation continues to move, it does so without this dangerous provision.
MPA Continues Efforts to Pass Free Flow of Information Act
A wide ranging coalition of advocates is continuing to make a concerted effort to see reporters shield legislation passed in the Senate. While the legislation continues to have the support of Judiciary Committee Chairman Patrick Leahy (D-VT) and Democratic and Republican members of the committee, objections by Senator Kyl (R-AZ) and the Department of Justice (DOJ), as well as a packed legislative agenda, have put the legislation’s fate in jeopardy. In testimony during a DOJ oversight hearing before the House Judiciary Committee on February 6th, Attorney General Mukasey expressed “grave concerns” about the legislation and urged Members of Congress to weigh those concerns carefully.
Having already worked to alleviate the national security concerns, MPA and the Shield Coalition are continuing to press for action on this critical legislation and working to ensure that there are the 60 votes necessary should this legislation reach the Senate floor. The House has already passed its version of the Shield legislation overwhelmingly.
House Members Introduce Business Activities Tax Nexus Legislation
House Democrats and Republicans recently introduced legislation that would set a national nexus standard, defining how states can tax business activities. H.R. 5267, the “Business Activity Tax Simplification Act of 2008,” introduced by Representatives Rick Boucher (D-VA) and Bob Goodlatte (R-VA) is similar to legislation introduced in prior Congresses and is identical to a Senate bill introduced by Senator Schumer (D-NY), S. 1726.
Currently, no national standard exists, and some states have imposed unfair taxes on businesses with no physical presence in that state. The Boucher-Goodlatte bill would expand the federal prohibition against state taxation of interstate commerce to include out-of-state transactions involving all forms of property, including intangible personal property and also services, which are currently not uniformly covered by nexus laws. The legislation would prohibit state taxation of goods unless the entity has a physical presence in the taxing state for 15 or more days per year. Transit time spent in a state would not count towards physical presence. MPA is part of the BAT Nexus Coalition, actively supporting this legislation, and we will continue to advocate for its passage.
FTC Solicits Comments on Behavioral Advertising
Following their November “E-havioral” conference, the Federal Trade Commission (FTC) released suggested principles regarding online behavioral advertising, a method of delivering advertisements to people based on their online activity. The principles focus on five main areas: transparency and consumer control, reasonable security and limited data retention, affirmative express content for changes to privacy policies, affirmative express content when sensitive data is used for advertising, and the use of tracking data for purposes other than advertising. The FTC is now soliciting comments with the original due date of February 22nd having been recently extended to April 11th, 2008.
In conjunction with a broad coalition of other content providers and advertisers, including the Interactive Advertising Bureau, the DMA, the National Newspaper Association, and all of the major advertising associations, MPA will be seeking to get the FTC to appropriately narrow the scope of their principals and their overly broad definition of behavioral advertising. MPA will also work to ensure that the magazine industry’s unique perspective on both tailored content and advertising on magazine web sites is clearly conveyed to the FTC.
“Do Not Mail” Legislation Continues to Be Introduced in State Legislatures
After a very active year at the state level in 2007, with 15 states introducing Do Not Mail legislation, 2008 is shaping up to be a busy year as well. Seven states carried over legislation into the 2008 session, and four have introduced new legislation already. Aggressive early action by the Mail Moves America coalition which includes the MPA, has led to three of the four having already been withdrawn or vetoed.
In addition to being a part of the Mail Moves America coalition, MPA is working with others mailers as part of the United States Postal Service’s “Greening of the Mail” task force, which works to highlight the value of the mail, including advertising. The task force is also working to improve the environmental profile of the mail, which is one of the concerns underlying the Do Not Mail effort. MPA will continue to work with all involved parties, as well as monitor and track the issue at the state level.
Service Tax Plan for Florida Stalled, McKay Plan Vote to be Held February 25
Florida’s constitutionally-created Taxation and Budget Reform Commission put the brakes on a proposal that would have required the Legislature to review current tax exemptions and consider new taxes on services, defeating it seven to two. The vote occurred shortly after economists released a report that taxation on services would be detrimental to the state’s economy. The negative vote was good news for the magazine industry; both magazine subscription sales and advertising services are currently exempt from taxes. The proposal would have forced the Florida Legislature to reconsider the idea of taxing services, reviewing which services are currently exempt and voting whether or not to keep the service tax exempt. A tax on advertising services was passed and subsequently repealed in 1987, following severe negative impact to Florida’s economy.
The negative vote also casts doubt on another, similar tax proposal. Commissioner (and former Florida Senate President) John McKay has proposed a cut in property taxes, which the Legislature would have to raise funds to offset. The Legislature could do this by broadening the tax base, increasing the sales tax, removing current tax exemptions, or any combination of the three.
After the vote, the Commission subsequently delayed the vote on the McKay proposal, pushing it to a February 25th meeting. Should that proposal pass, it will move to the full Florida Tax and Budget Reform Commission. If it garners the necessary two-thirds vote of the Commission, it will be placed on the ballot in November and require a 60 percent voter approval to pass.
Digital DC Event Added to Magazines 24/7 Conference, Focusing on Legislative, Legal, and Regulatory Developments
“Magazines 24/7” -- the premier digital conference for the consumer magazine industry has expanded by adding a second day to its program. The second conference day, dubbed “Magazines 24/7: Digital DC,” will provide the latest information on legislative, regulatory, and legal developments impacting magazines’ digital products and initiatives. Three one-hour sessions will focus on intellectual property rights and copyright protection, privacy, behavioral targeting, social networking, and data security.
Panel 1: Legal Challenges That Stem from Digital Growth
Four trailblazers in the developing field of digital law -- Char Pagar (Manatt, Phelps & Phillips, LLP), Cliff Sloan (Slate Magazine), Thomas Rubin (Microsoft), and Bruce Keller (Debevoise and Plimpton LLP) -- will discuss the busy agenda and enforcement activities of federal agencies like the Federal Trade Commission and will examine current judicial proceedings involving digital intellectual property.
Panel 2: Washington Concerns Driven by Digital Growth
Stu Ingis (Venable LLP), Patrick Ross (Copyright Alliance), and Microsoft/DC alumnus Jamie Houton (now with Elmendorf Strategies), will provide insights and up-to-the minute intelligence on pending intellectual property legislation, online marketing regulation, net neutrality, and other items on Washington’s “digital” agenda for 2008.
Panel 3: Digital DC: Real World Application
Senior industry executives -- Cynthia Braddon (McGraw-Hill), Angelo Grima (National Geographic), Ed Klaris (Conde Nast) -- will bring it all together, discussing how they deal with and plan for legal, legislative, and regulatory contingencies -- and whether Washington’s intense scrutiny of the digital landscape keeps them up at night.
For registration details and more information on both days of “Magazines 24/7,” visit www.magazine.org/digitalconference.
