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THE WAY WE LIVE NOW
PHENOMENA
Priority Mailing

The electronic stamp is the next best thing to printing your own money. By JAMES GLEICK

just got my official United States Postal Service license to print postage. Soon you, too, will have a U.S.P.S. license, and it's a serious responsibility. "It's akin to printing money," says Pam Gibert, U.S.P.S. vice president, retail. Anyway, it beats waiting in U.S.P.S. lines.

Two fiercely competitive electronic-postage services are now opening for business after years of negotiations, Federal Register notices, draft specifications, public meetings, periods for comment and beta tests. One is E-Stamp, at estamp.com. The other is Stamps.com. They both let you buy postage on line and print it from a personal computer onto an envelope — instead of a stamp, a complex, blotchy-looking bar code.

These little black-and-white marks shall henceforth be recognized as a new form of postage. They encode not only an amount, 33 cents or whatever, but also the date, the license number of the sender, the ZIP code and a unique 1,024-bit encrypted digital signature. Your first thought, as the thing pops out of your laser printer, may be how easy it would be to print a few extras. Apparently it will also be easy to track you down if you try it, at least when the Postal Service finishes installing all the necessary equipment in the nation's post offices. In the meantime, Gibert says: "One might get through, but it's a Federal offense to steal postage from the U.S. Postal Service. We take it very seriously."

It turns out that the two services have at least one key difference. E-Stamp sends you a tiny gadget to attach to your PC. This is a high-powered cryptographic engine, officially known as a Postal Security Device, though the company prefers to call it the electronic vault. It stores your postage — as bits and bytes, of course. You need to connect on line only when buying more bits and bytes.

James Gleick is the author, most recently, of "Faster: The Acceleration of Just About Everything."

Stamps.com doesn't send out any hardware. It is the brainchild of three U.C.L.A. business students who, in 1996, thought (to paraphrase slightly), "Internet!" They read the Postal Service specifications for entering the electronic-postage business. These described in detail the hypothetical Postal Security Device; officials were thinking of a successor to the venerable postage meters leased to most businesses by Pitney Bowes.

But the students — Jim McDermott, Ari Engleberg and Jeff Green — decided it was nowhere written that the Postal Security Device had to be . . . well, real. Or at least physically attached to the customer's computer. They devised a system in which everyone's electronic vault resides on the company's servers, and customers just use Stamps.com's software. The electronic vaults are virtual rather than corporeal, like so much of modern life. And why not? The joys of philately aside, paper stamps torn from perforated sheets or rolls start to seem like a clumsy way of conveying payment information. (Though the new peel-and-stick adhesive is nice.)

It's just bits, after all. For people who are connected to the Internet all day anyway, the software-only approach looks most appealing. Time will tell. Both companies expect users to pay service fees of about 10 percent. That could be a lot of service fees. Even in the era of E-mail, the bill for stamps and metered postage in the United States comes to more than $30 billion a year.

Maybe 10 percent sounds expensive, considering that the real meat and potatoes of postal service is still the work of carrying letters for long distances and delivering them to people's doors. Payment seems like the easy part. But the new postage vendors aren't worried. "If you look at other examples of convenience fees, people are pretty price insensitive," says John Payne, Stamps.com's C.E.O. "Time saving is the biggest key. In our focus groups, people tell us that the No. 1 thing they lack is time."

Naturally the company has gone public; the stock market values it at well over a billion dollars. Much of that belongs to the three ex-students.

There's a lesson here: it pays to think in terms of a world where everything is connected to everything else, and then imagine how things could work. The Postal Service didn't do this. Entering the electronic era, its officials didn't think of trying to grab a few programmers off the street and create their own technology.

"Software development of this nature is not the core competence of the Postal Service," says Gibert, reasonably enough. So the Postal Service has created an intricate regulatory structure, and it is paying for the new scanners that validate and track the digital postage, but it is leaving the new revenue stream to the private sector.

That's fine with the private sector. "I have a fundamental belief in the free-market system," says Robert Ewald, C.E.O. of E-Stamp, which is also preparing to go public. The Post Office, he notes, innovates more slowly: stamps were introduced in 1847, postage meters in 1920 and now digital postage just in time for the millennium.

No wonder my new license refers to me, even now, as a "postage-meter user."

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September 12, 1999