Are We Living in a Perfect Storm for Print Media?
I have been giving a lot of thought lately to what impact rising inflation might have on digital media. One strong possibility is that print will get crimped.
Consider this a rather simplistic theory for a Saturday morning. However, it's my view that - as if they didn’t have enough to worry about - newspaper and magazine publishers may see a perfect storm accelerate if gas prices continue to escalate. There are three factors at work here - some go beyond the current economic situation.
For starters, as gas prices go up, so will the distribution costs. This could have a significant impact on margins. However, there are larger societal factors at bay here too.
Second, there's a greater awareness among consumers of their environmental impact. At the Forbes Online Brand Summit earlier this year, Jeff Cole from USC Annenberg predicted that as this broadens, consumers will cut back on print in favor of digital media. I think he's right.
Last but not least we have the growing popularity of speedy 3G-enabled smart phones, including the new iPhone 3G. The devices are declining in price while offering a lot more sophisticated experience for reading news.
When you combine these three trends the future for print doesn't feel bright. The big media companies know this and they're looking for new models that can be as lucrative as what they have now. The question of course is whether or not there will be enough revenue to replace what they have coming in now, even as their costs decline.
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Steve, I hope you don't mind me linking this, but I did an interview with the Executive Editor of The Philadelphia Inquirer on our blog the other day for insight into print (specifically newspapers) that goes just along with what you are saying.
http://www.piercemattiepublicrelations.com/2008/07/are_newspapers_dying_chris_kre.html
Posted by: Shannon Nelson | Saturday, July 05, 2008 at 11:21 AM
Steve,
I think you're right, and it's not just impacting mainstream media.
I recently wrote a column about this trend in higher education for University Business - "Magazines: Gone Digital, Going Paperless".
More and more universities and colleges are switching to digital publications to respond to the new needs of their younger audience, but also to reduce their printing budget.
At the University of Michigan, the 40-year old magazine that used to be mailed to 400,000 alums went totally paperless last September.
Posted by: Karine Joly | Saturday, July 05, 2008 at 11:35 AM
Steve,
Great post. I think that one of the things that will save print is the potential rise in value of eyeballs ... Especially on niche and hyperlocal publications. While there has to be significant changes and some consolidation (hopefully to private hands that don't mind 10% growth), the future of print is somewhat healthy. we may see more mini-papers.
At every presentation I give, I ask the audience how many people subscribe to a print newspaper. The answer is very regional-specific. For example, at an AC event, well over 80% got a paper. Whereas at NYC events, it is probably less than 20% (and that group is very age specific).
Add your points to the ridiculous AP bashing and people may start realizing the true value of that cooperative.
Very intersting subject and one that will continue to unfold.
DW
Posted by: David Weiner | Saturday, July 05, 2008 at 01:18 PM
Steve, I couldn't agree more. Trinity Mirror group over in the UK said that as a result of the credit crunch over here, they were having to announce a profits warning.
Traditional strong ad spenders (cars and house-builders) were especially weak.
Interestingly, whilst we frequently hear these stories, the chief exec said that for the first time, production and distribution costs were impacting upon profits.
It has always been easy to believe that "social media" is an easy(-ier) way to reach many more people cheaper than traditional media, but with announcements like the above, maybe there is in fact no need to prove anything about social media - simply let print prove its ineffectiveness.
Posted by: Paul Fabretti | Saturday, July 05, 2008 at 02:00 PM
I'm a former direct mail printing sales guy. (I printed so much junk mail it went into every house in the USA at least 1X). Printing is going to be seen as the Cadillac of marketing and comminications if you can afford to get a revenue to expense ratio that works. The problem with "national media" is that they are ALL TRANSMIT, NO RECEIVE. Look at www.time.com. Most of the stuff they publish is negative in nature, so too the newspapers. Maybe a more narrowcasting view of information via digital will be a better innovation? BTW, the print guys knew this was coming....so the smart ones have prepared....most likely.
Posted by: jim | Saturday, July 05, 2008 at 03:34 PM
There really is a great opportunity in the sinking print media business, though. The cost of newspaper delivery is much less expensive than postage... still.
If newspapers would invest in household-specific insertion and GPS delivery, the opportunity for timely delivery of both advertising and even 3rd party products exist.
Unfortunately, distribution and logistics isn't the area that newspapers have their eyes on - they're still trying to figure out how to maintain 40% profit margins online.
Imagine a newspaper-run auction or classified site where the carrier workforce could deliver the actual products sold!
I know... I'm dreaming. Too bad no one else is, though.
Posted by: Douglas Karr | Saturday, July 05, 2008 at 06:52 PM
Great insight,
But how soon with the storm hit?
I think the trifecta of powers facing the print media also gives them a huge chance to take these factors and spin a huge positive out of them. Look at fast company and what they have done with their community and taking them online, they still have print but have managed to take many things digital and provide a lot more content online as well.
Greening up the print industry? Dont we have recycling to help with that?
And we wont see gas prices hurting the cost of print and distribution until next years re subscription rates come out.
So these factors could have an impact on the print industry but they have currently been working on solving them and i don't see the impact of the storm hitting right away.
Posted by: Mathew Sweezey | Monday, July 07, 2008 at 01:40 PM
Contrarian that I am, I'm going to disagree. In a down economy, people are more likely to buy a newspaper and perhaps even a magazine. They're still great values. People who want out of this bad ecomony know they have to read their way out, and you can always count on a good newspaper for that. Digital will be the delivery vehicle of choice in the future, no doubt, but top tier newspapers and magazines will survive.
Posted by: Steve Poppe | Monday, July 07, 2008 at 05:06 PM
Print is dead but they had a nice 569 year run. In the next 10 years most everyone will convert to consuming their news digitally and not on paper. It's inevitable at this point.
Posted by: Tim Elliott | Monday, July 07, 2008 at 08:51 PM
I disagree Tim. Print is very much alive. The innovation in this field in the last several years is amazing. The pressure on the industry has made it more resourceful. However, the type of printing you will see in the future will change. I agree, the internet will eventually lower quality print sources such as newpapers and forms. Also, printing firms will more and more become graphic communications/solutions providers. You will see more and more offering multiple media. Magazine and higher quality pieces I believe will increase due to easy portability and people still tend to respond more to a nicely printed piece as opposed to an email blast or a web page. Different types of media drive each other.
Besides, here is something I have been thinking about recently. As technology increases and as developing nations such as India and China (which we are supposedly competing against for oil which is part of the reason for the oil increases) get their hands on more and more technology. What are we going to do with all of the e-waste it produces. It takes a lot to recycle and is hazardous work. Print on the other hand, I can recycle everything - plates, paper, ink..the presses themselves and reuse it. Interesting to think about.
Posted by: Brian Harrison | Wednesday, July 09, 2008 at 11:42 AM
I was thinking of those free weekly papers that rely on advertising. Many are home delivered all free of charge. I suppose they have fixed contracts with the delivery companies but sooner or later those things will be up for renewal. Can the free weekly papers survive when the gas price hikes inevitably filter down? I think it kills their business model. These things were marginally viable before.
Posted by: Joe | Thursday, July 10, 2008 at 03:35 PM
No More Dead-Tree Publishing!
I wanted to make headlines again to get all of the Ballmer-bot out of the news, so I arranged an "interview" with the Washington Post and I told them:
"In the next 10 years, the whole world of media, communications and advertising are going to be turned upside down -- my opinion.
Here are the premises I have. Number one, there will be no media consumption left in 10 years that is not delivered over an IP network. There will be no newspapers, no magazines that are delivered in paper form. Everything gets delivered in an electronic form.
10 years?
Yeah. If it's 14 or if it's 8, it's immaterial to my fundamental point. . . . If we want TV to be more interactive, you'll deliver it over an IP network. I mean, it's sort of funny today. My son will stay up all night basically playing Xbox Live with friends that are in various parts of the world, and yet I can't sit there in front of the TV and have the same kind of a social interaction around my favorite basketball game or golf match. It's just because one of these things is delivered over an IP network and the other is not. . . ."
The main thing is that by that time almost everyone will have a ZunePad!
Posted by: steveballmer | Saturday, July 12, 2008 at 07:06 PM