STEVE INSKEEP, HOST:

The United States Postal Service has cut staff, proposed eliminating Saturday delivery and has just announced higher postage rates, all in an effort to offset record losses. Now, while the rate increases are in most cases really small, they could have a big effect on small business.

NPR's Sami Yenigun reports the increases are already affecting independent record labels and distributors.

SAMI YENIGUN, BYLINE: A postage hike is a familiar bump in the road for small labels. Brian Lowit, who has been working at Dischord Records in Washington, D.C. for 10 years. He says this time it's different.

BRIAN LOWIT: We've gone through a lot of increases in the postal rates before, but I've never seen one this drastic.

YENIGUN: Dischord is home of the hardcore pioneers Fugazi.

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FUGAZI: (Instrumental)

YENIGUN: Dischord Records' Brian Lowit says about a quarter of his mail orders come from overseas, so to ship that Fugazi P to London...

LOWIT: It's about $5.50 more than it was on Saturday.

YENIGUN: Lowit says on Saturday, it cost him 13.17 to send a record via U.S. Postal Service to the U.K. Today, it costs him $18.60. For an independent label that ships several hundred records overseas every week, that's a lot of money.

JEREMY BIBLE: The domestic is real minimal. I am concerned about the international.

YENIGUN: That's Jeremy Bible, who runs Experimedia, a label retailer and distributor of CD's and LP's.

And the domestic increases are minimal. First class letters and postcards rose a penny. First class packages rose around 3 percent. And Express mail rose about 6 percent.

But Bible says think about everything that goes into the final LP before it gets shipped, from the paper sleeve, to what gets glued to the center of the vinyl.

BIBLE: The labels for when they're manufacturing and supplies, probably even up to the manufacturers, such as the pressing plants who have to have stuff shipped to them.

YENIGUN: The biggest, says Bible, will be on small record companies that rely on direct orders from their fans.

BIBLE: In some of these cases, the shipping is starting to become more expensive than what the people are actually buying.

YENIGUN: In other words, that Fugazi record that cost almost $20 to send to London only cost about 11 bucks to buy from Dischord.

(SOUNDBITE OF MUSIC)

YENIGUN: The Postal Service says it has to raise rates, and 46 cents to send a letter is cheaper than just about anywhere else in the world. Earlier this month, Postmaster General Patrick Donahoe said USPS is losing average of $25 million a day.

In an email, a spokesperson said that the postal service is waiting for Congress to enact what she called, comprehensive long-term legislation that creates a more flexible business model for the agency. For now, the best way for small record labels to ship overseas might just be to avoid the postal service altogether.

Ron Morelli runs the label L.I.E.S. that sends a majority of its music abroad.

RON MORELLI: My distributor pays for all the shipping costs. They get a lot better rates from shipping in bulk with a freight shipping than they would having to ship everything through the USPS.

YENIGUN: Experimedia's Jeremy Bible is already shipping in bulk himself.

BIBLE: Like for the U.K., I have a friend over there, when we put out new releases I send him a large box. So then they'd hold onto the stock and then when we need to fulfill an order for that country or a wholesale order to the store, then they would handle the fulfillment of that.

YENIGUN: But, he says, rising shipping costs don't bode well for the future.

BIBLE: We're probably in the last great era of the physical music media.

YENIGUN: Of course, some would say that era has already passed.

Sami Yenigun, NPR News.

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