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Yesterday, the San Francisco Board of Supervisors passed the opt-in ordinance that the Yellow Pages industry had vigorously opposed. Immediately following the vote, the Local Search Association (formerly the Yellow Pages Association) called on San Francisco Mayor Edwin Lee to veto the ordinance. The ordinance passed 10-1 but formal passage must wait until a routine “second reading” next week, which is likely to be a rubber stamp.

The ordinance is the first opt-in (where consumers must proactively choose to receive a print directory) measure to pass in the United States. While the industry sees opt-out (where consumers can choose not to receive a book) as a serious challenge, it has viewed opt-in as a lethal threat. Opt-in could decimate reach, increase costs and drive secondary operators out of business.

Proponents argue that in an era of declining usage, ubiquitous distribution is incredibly wasteful. if someone wants a book, no one is stopping him or her from requesting one under an opt-in plan.

The San Francisco ordinance is positioned as a “three-year pilot program” that will commence in 2012. The ordinance was proposed based on environmental concerns as well as concerns over the cost of disposing of unwanted phone books.

Here is what LSA President Neg Norton said in a statement released after Tuesday’s vote:

“It is unfortunate that the Board of Supervisors relied upon myths about the industry’s environmental impact, production processes, financial impact on the community, advertiser ROI and usage statistics. It is also unfortunate that they failed to honor the First Amendment rights of publishers, advertisers and residents of the City,” said Norton. “We will continue to oppose any attempt to single out the Yellow Pages industry and will be working with the Mayor’s office to ensure that the truth about this ill-conceived ordinance becomes known.

“The Board of Supervisors has also failed to provide the public with accurate information on potential tax and revenue losses to the city as a result of the legislation, including the decrease in recycling revenues from the city’s curbside recycling program or the cost to taxpayers of a court battle over the Constitutionality of such a law.”

The industry remains committed to honoring stop-delivery requests from consumers immediately via, and working with San Francisco residents, and consumers across the country.

The Yellow Pages industry had scored an apparent victory last month when it got the San Francisco Board of Supervisors to delay voting on an opt-in delivery bill in order to generate an economic impact report. The decision to ask for the report came in large part because the industry had marshaled together a coalition of unions and small businesses that voiced concerns about lost jobs and lost customers if Yellow Pages directories weren’t allowed to thrive.

What the city controller’s office came back with Monday is a report that actually says opt-in will be a net positive for the local economy. One of its key points is fewer directories distributed would mean lower ad rates, and thus more efficient advertising for local businesses.

On Tuesday, the Association of Directory Publishers issued an “industry response” to the economic impact report. Basically the ADP argues the report makes very little sense. For example, the report estimates Yellow Pages revenues in San Francisco will decline from $17.5 million to $2.9 million as a result of the ordinance. “Yet is claims that only 20 out of 235 current jobs will be eliminated,” the ADP responds. “This defies all consideration of how the Yellow Pages industry has responded to lower revenues across the country.”

Finally, the ADP responds, “On behalf of the small businesses throughout San Francisco, including those in the Hispanic, Chinese and LGBT communities, we urge the supervisors to see this report for the hogwash that it is.”

The report appeared to be a crushing blow to hopes of staving off a yes vote on the ordinance. Absent a veto, the industry will now be forced to accept the ordinance (unlikely) or file a lawsuit challenging its constitutionality. This week, the industry was handed a setback in Seattle, where it failed to win a ruling that would prevent the Seattle opt-out ordinance from taking effect pending the outcome of the lawsuit there.

Supervisor David Chiu, a mayoral candidate and chief sponsor of the proposed ordinance, cited the report’s findings in an op-ed piece published on SFGate and in the San Francisco Chronicle.

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