The Publication Ink Market
The Internet and the economy have impacted the publication field, as publishers try to find the balance between printed and online content.
The publication market is suffering through difficult times. The rise of the Internet has changed how many people get their news and do their shopping, which has impacted newspapers, magazines and catalogs.
Meanwhile, the economy has devastated ad pages; figures from the National Association of Printing Ink Manufacturers (NAPIM) show that ad pages are down 55% since 2000.
The October 2012 announcement that Newsweek is suspending its printed edition and going to a strictly online model is another clear example of the changing nature of publishing. Like so many other publication fields, news weeklies have had to redefine how they gather and distribute their news to their readers, most of whom already know what has occurred long before they receive the publication.
Publication ink manufacturers are definitely feeling the impact of these changes. Sales volumes are down, and the dramatically higher prices for raw materials are having a huge effect on the bottom line.
While most raw materials have stabilized at higher price levels, on-going volatility with crude oil and petrochemical feedstock costs remain a serious issue. Ink companies are finding it difficult to pass along much-needed price increases of their own to the already financially strapped publication printers.
Todd Wheeler, marketing manager, US Ink, reported that print media continued to lose ground in 2012
“In the second quarter of this year, ad spending in Sunday magazines declined 7.6% and consumer magazines dropped 2.6% due to steep cutbacks from pharmaceutical companies and auto manufacturers,” Mr. Wheeler said. “U.S. newspapers saw weakness in advertising by financial services, travel and telecom marketers, erasing increases from retailers and auto dealers. Domestic newspaper print advertising revenue was down 8% for the first half of 2012 compared to the first half of 2011. However, this year domestic newsprint consumption and coldset ink consumption are estimated to see declines under 2%, which is relatively positive news from an ink manufacturers’ perspective.”
The Magazine Market
The magazine industry is seeing numerous changes. However, Michael Podd, Flint Group’s global vice president, RR Donnelley/business director publication, said that there is good news to be found in the magazine market.
“The good news in North America is that magazine launches outpaced magazines closures,” Mr. Podd said. “The tough news is that the total number of ad pages and printed circulation continue to decline. In addition, decisions to move to all-digital platforms by publishers such as Newsweek remind us that, while magazines are still dominated by print, we must continue to keep a close eye on trends.”
Wolfgang Blumschein, vice president sales, web, Europe for Flint Group, said that the European magazine industry is continuously creating opportunities to make up for the changing nature of the industry.
“Magazine publishers are increasingly creative – a good move for the industry at large – incorporating interactive technology that keeps printed versions relevant and more engaging,” Mr. Blumschein noted. “Still, printed pages have declined, and the magazine industry will continue to work on finding a balance between print and online content. In addition, a couple of new start-up magazines like ‘Landlust’ in Germany, with over one million copies sold, confirms printing is alive.
Mr. Blumschein said that the European catalog industry works closely with its online sites. “Data clearly show that catalogs drive purchasing decisions and drive traffic to websites for online ordering,” Mr. Blumschein said.
“In the first half of 2012, magazine circulation was down 0.1% compared to the same period in 2011,” Mr. Wheeler said. “Paid subscriptions were up 1.1% while newsstand sales were down 9.6%. However, as the magazine industry transforms itself, looking at magazines through just one platform is misleading.
“Digital readership is making a small but growing contribution to the total magazine audience,” Mr. Wheeler added. “According to Kantar Media, 57% more brands advertised in tablet, online and print editions of magazines in the first half of 2012 compared to the first half of 2010, when tablets were first available. The Kantar research found that 14,949 brands advertised on magazine media in that period, compared with 9,536 during the same time in 2010.”
The Newspaper Market
The newspaper market continues to be hit hard by the Internet and the economy, and ad revenue shows the impact.
“Total print and online domestic newspaper advertising revenue declined 6.7% in the first half of 2012 ($10.78 billion) versus the first half of 2011 ($11.55 billion),” Mr. Wheeler said. “For the same period, advertising revenue for total print and total online changed -8.0% and +2.0%, respectively. In the first half of 2012, print advertising accounted for 85% of total advertising revenue for domestic newspapers.
Mr. Wheeler said that the positive surprise for the U.S. newspaper market in 2012 was how small the year-over-year (YOY) decline in newsprint consumption has turned out to be.
“The YOY decline in domestic newsprint consumption through August 2012 is 1.5%, which is positive news,” Mr. Wheeler said. “Many predicted double-digit declines even with the boost from the 2012 Olympics coverage and the presidential election. The commercial side of newsprint consumption played a significant role in 2012 as many retailers downgraded from gloss stocks to newsprint. Of course, with slower declines in newsprint consumption come slower declines in the volume of coldset ink.”
Mr. Wheeler noted that the 2012 introduction of the inkjet web press to North America for newspaper production offers new opportunities.
“Newspaper companies are looking for new business models that may include printing commercial products such as flyers, catalogs, directories, books and direct mail,” Mr. Wheeler said. “Digital printing offers newspaper printers variable data, on-demand printing, localized news, targeted contents and micro-zoned ads. Digital web press growth in the newspaper market will be partially dependent on developing faster speeds capable generating larger papers faster with more variable data and use of customer specified data.”
Mr. Blumschein noted that the European newspaper market has also been impacted.
“There is no doubt that the news industry in Europe is struggling,” Mr. Blumschein reported. “Readership of printed newspapers is down, and the cost of printing and distributing newspapers makes moving online attractive to publishers.”
However, there is also some good news to be found.
“On the positive side, regional newspapers are important in Europe, and they have not experienced as much advertising revenue loss when compared to national papers,” Mr. Blumschein said. “In addition, newspaper printers in smaller European countries are maximizing their pressrooms by adding commercial printing to their capabilities. Lastly, so far, online ‘paywalls’ have not been popular, which helps keep printed papers more valuable to consumers.”
Norm Harbin, business director, news ink for Flint Group, said that finding the right balance between printed and online content is critical.
“Newspaper publishers – and their customers – are working hard to find the balance between online and printed content,” Mr. Harbin said. “Printed circulation and print ads are down in North America, but still make up the bulk of newspaper revenue. Newspapers are getting creative, though. For example, they are putting their pressrooms to use printing other newspapers or printed media. Some are even exploring non-print revenue, such as offering consultative services to advertisers. It will take a while to strike the perfect balance, but printed newspapers remain a very important part of consumers’ lives and advertisers’ media choices.”