Substitution of Letter Mail

The impact of email on traditional physical letter mail was spotted as early as 1976,7 when a report was commissioned to the consulting firm Arthur D. Little by the White House Office of Telecommunications. The report estimated that 30 percent of all first-class mail in the US would be sent by email within a few years.8

The US Postal Service (USPS) cannot be accused of ignoring the risk to its services. It reacted swiftly, commissioning a $2.2 million contract to RCA to evaluate the feasibility of providing email services. Consequently, President Jimmy Carter (who started to use email during his presidential campaign in 1976) supported the proposal of using what would be called a hybrid mail service. Messages would be written by customers in their computers, sent electronically to the USPS, which would then print them and deliver them in paper form to the recipient.9 Subsequently, many postal operators around the world copied the idea and actually perfected it by such means as transforming written documents into emails and delivering them to the customers.

It seems evident now that hybrid mail could not compete with email. It was slower, as delivery was not immediate as it is with email. And it was far more expensive than email (which was free). Consequently, hybrid mail did not deter email.

Over time, Arthur D. Little’s predictions came true, even if not as fast as expected. The phenomenon became clearly visible for all postal operators as early as the year 2000,10 the first year that the growth of letter mail volumes was no longer correlated with GDP growth. Ever since then, email has replaced and continues to replace a substantial part of letter mail. For example, in the US, the total postal volume decreased by more than 33 percent between 2004 and 2019 (from 213 billion letters to 142.57 billion).11 Similar substitution, and sometimes even more drastic effects, can be observed among all the postal operators worldwide. Letter mail volumes typically decrease by 4-7 percent annually worldwide. The difference is explained by internet penetration, digital literacy (which is lower among ageing populations), and the more or less active promotion of digitalization by various national governments.

In terms of disruption, when the number of connected computers was low, email was a poor substitute for physical letter mail. Remember that the postal network was the first communications network to become universal in its reach. Email was initially popular among computer scientists, and then university communities, but that was not enough at the time to substitute postal services. Substitution became relevant as the internet went massive in the 1990s. Desktops and laptops with access to the internet became a standard in Western societies. Email was already a very good substitute for letters. Substitution was also facilitated by another factor - multi-homing - as individuals could send emails and physical postal letters. A young researcher in the computer science department at Stanford could use email to send written messages to his peers, and then use postal letters to communicate with her grandparents back in Quincy, Illinois.

As computers became increasingly universal and ubiquitous, in the form of smartphones, email achieved even larger network effects than postal letters. Emails could be received by almost everyone, in their personalized mailbox (not in a generic address shared with relatives/co-workers) and almost anywhere. The popularity of email has actually decreased as smartphones have become more popular, with other electronic communications services, such as instant messaging, replacing email use to some extent. As users have personalized terminals available all the time, they can substitute email with instant messaging services.

Recall the words of communications theorist Marshall McLuhan: “The medium is the message." Network mail was the message of the original internet, connecting large mainframe computers in research centers. Webmail was the message for the second generation of the internet, connecting desktops and laptops. Instant messaging services are the message for the third generation of the internet, built on smartphones.

Email is a prime example of what we call the substitution effect. Online platforms develop a new product that substitutes the traditional service provided by a traditional network industry, in this case the postal service.

The new service uses an alternative infrastructure, not the infrastructure of the affected network industry. In the case of email, it uses the telecommunications infrastructure, not the postal infrastructure. The new service fully bypasses the postal infrastructure and services.

Of course, email and electronic communications have limitations. They can convey electronic signals digitalizing written and oral messages, but they cannot digitalize physical parcels. Demand for the transport of letters has severely diminished due to the competition of electronic communications, but demand for the transportation of parcels has increased thanks to electronic commerce and the success of platforms such as Amazon.

Notes

  • 1 Standage, T. (1998). The Victorian Internet. The Remarkable Story of the Telegraph and the Nineteenth Century’s On-line Pioneers. Bloomsbury, New York.
  • 2 Hafner, K. & Lyon, M. (1996). Where the Wizards Stay Up Late. The Origins of the Internet. Simon & Schuster Paperbacks, New York, p. 194.
  • 3 Berlin, L. (2014). The First Venture Capital Firm in Silicon Valley: Draper, Gaither & Anderson. Making of the American Century. Essays on the Political Culture of Twentieth Century America, Oxford University Press, New York, pp. 155-170.
  • 4 Bronson, P. (1999). The Nudist on the Late Shift and Other True Tales of Silicon Valley. Random House, New York.
  • 5 Penenberg, A. L. (2009). Viral Loop. The Power of Pass-it-on. Hyperion Books, New York.
  • 6 Number of email users worldwide, retrieved from https://financesonline.com/number-of-email-users/
  • 7 Wood, A., et al. (1977). USPS and the Communications Revolution: Impacts, Options, and Issues. Final Report to the Commission on Postal Service, prepared by the Program of Policy Studies in Science and Technology, The George Washington University, Washington, D.C., Mar. 5, 1977.
  • 8 Arthur D. Little (1978). The Impact of Electronic Communications Systems on First Class Mail Volume in 1980-1990, Cambridge, MA, April.
  • 9 Hafner, K. & Lyon, M. (1996). Where the Wizards Stay Up Late. The Origins of the Internet. Simon & Schuster Paperbacks, New York, p. 212.
  • 10 Finger, M., Bukovc, B., & Burhan, M. (ed.) (2014). Postal Services in the Digital Age. IOS Press Amsterdam.
  • 11 US Postal Service’s total mail volume from 2004 to 2019, retrieved from www.statista.com/ statistics/320234/mail-volume-of-the-usps/

Chapter 8

Skyp e and WhatsApp

 
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