2018 Print Forecast: Paper Prices & Postal Rates Will Rise

By: D. Eadward Tree


Declining demand is supposed to cause lower prices, but the magazine industry’s key suppliers are likely to defy the law of supply of demand in 2018, with both paper companies and the U.S. Postal Service raising prices by a little – and perhaps by a lot.

Yes, folks, it’s that most wonderful time of year, when the kids are back in school and publishers turn their thoughts to everyone’s favorite annual task – budgets. Here to help you is Dead Tree Edition’s annual forecast of paper, postal, and print pricing, plus a few tidbits of advice and a bonus advertising forecast.

Paper Prices Will Continue to Rise

Told ya so.

In our print forecast for 2017, we warned that “significant moves in the currency markets . . . could be especially disruptive for U.S. buyers of magazine-quality paper.” The U.S. dollar promptly strengthened, making Mr. Tree sound like Chicken Little for a while.

But now the U.S. dollar is weakening, declining more than 10% against the Canadian dollar in the past 90 days. Not coincidentally, the price of magazine paper is on the rise and likely to end the year about 5% above its mid-2017 trough.

You can also blame the higher prices on single-stream recycling. The American practice of mixing paper, glass, metal, and plastics in the same bins raised the level of contaminants in recovered paper, making it a less efficient fiber source. Most U.S. mills that relied heavily on recycled pulp were forced out of business.

For a while, China’s pulp-hungry mills picked up the slack. But Chinese authorities recently responded to the poor quality by reclassifying much of the U.S.’s recovered paper as garbage and blocking its import. Panicked Chinese mills that relied on recycled have been snapping up virgin pulp, causing worldwide pulp prices to soar – and thereby increasing the cost of making paper.

The analytics firm RISI predicts prices for magazine paper will inch up another percentage point or two during 2018. Given recent trends, Mr. Tree thinks the prices could rise even more than that.

Expect a Postal Rate Increase

What we know for sure is that postal officials are planning to increase Periodical rates an average of about 2% in January. Co-mailed and large-circulation titles will pay less than the average, while smaller titles that don’t co-mail will pay more.

But the big worry is the unknown – what will come out of the Postal Regulatory Commission’s 10th anniversary review of the law that established the inflation-based cap on rate increases.

There’s been widespread speculation that the PRC’s review, likely to be revealed in the next few weeks, will ease the cap and allow higher rate hikes. Some reports have speculated about rates rising as much as 20%. Periodicals, especially those mailed by non-profits, are especially likely to get hit with rate hikes because the USPS supposedly loses money on those products.

Any significant breach of the rate cap is likely to face legal challenges, with implementation delayed at least for most of 2018. In any case, the best move for publishers is to work with their printers (or to find new printers) to take full advantage of co-mailing, dropshipping, and other methods of reducing their postage bills.

Custom Print Will Drive Growth

Ad revenue for consumer magazines will decline at an annual rate of 8.8% over the next three years, according to the widely cited PwC forecasts, while trade magazines will drop “only” 6%. That’s actually an improvement from recent reports of declines in the mid-teens.

But those are averages. The big general-interest titles are suffering mightily, while those serving specific interests, industries, or regions seem to be faring better. As in the digital world, the trend in print advertising is to targeted messages.

“Print advertising is dead – except for custom,” a veteran magazine-media advertising rep told me recently. He wasn’t whining; he’s had a pretty good 2017 in both print and digital sales.

That print success has come despite increasing difficulty selling ad pages. The same advertisers that balk at renewing $100 CPM magazine pages, he says, are eagerly shelling out 10 times that rate for custom distribution (such as an insert sent only to select subscribers or sponsorship of a magazine’s conference edition). Or even 100 times -- $10 per copy -- for custom publications. Digital printing technology makes this level of customization and targeting possible.

Digital advertising’s shift to native advertising and other forms of content marketing could be a boon to targeted inserts and custom pubs. When a company discovers what content works online, it’s not such big step to reformat that content into a printed piece that’s delivered to the company’s best prospects.

Magazine Printing Will Continue to Consolidate

The magazine industry might have grounds for filing an antitrust complaint regarding consolidation in the U.S. printing industry, except for two problems:

  • The U.S. Justice Department doesn’t understand the printing industry.
  • Magazines are no longer run by people who know anything about printing.

In the past two months, industry giant LSC Communications (AKA RR Donnelley) has snapped up two highly regarded, mid-size competitors that specialized in producing magazines, Creel Printing and Publishers Press. There was nary a peep from Justice because it views printing as a single industry with literally thousands of competitors – and therefore immune from antitrust issues.

The reality for publishers, though, is that only a tiny -- and shrinking -- fraction of the country’s printers is truly able to compete for their business. Unless a printing plant specializes in publications, it’s unlikely to have the bindery equipment, ad portal, co-mailing, dropshipping, digital-edition conversion, and a host of other factors and services the typical publisher needs.

Over the past couple of decades or so, the prices of publication printing have been mostly on a gradual descent (without even adjusting for inflation). But by gobbling up competitors, printers may be able to stabilize prices in the face of declining demand.

You never know when your current printer will disappear, so it’s a good time to get to know some other providers. Who knows, you might find one that’s better able to cut your postage costs or to help you produce innovative custom publications.

Author: D. Eadward Tree

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5 Ways Publishers Can Use Digital Printing to Get Personal & Drive Revenue

By: D. Eadward Tree


A financial analyst who specializes in the printing industry recently speculated that “the potential to produce personalized magazines at scale is not too far in the future.”

He was a bit off: That potential already exists – and is irrelevant to most magazine publishers.

Here’s the question we should be asking: Is digital printing -- the technology that is already creating magazines that are personalized from front cover to back cover -- relevant to our business?

The answer is yes.

Let me explain: Most of us don’t need a “solution” that quadruples (or worse) our production costs, kicks us out of co-mail, makes inserts difficult if not impossible, and may require additional investments in writing, editing, photography, and design.

But digital printing – which has no fixed costs and can use data to give each reader a different version of the same page – is creating many real opportunities for magazine publishers. After all, it has revolutionized book publishing, created whole new types of direct mail, and enabled catalogs and retailers to deliver more precisely targeted promotions. Here’s a peak at what it can do right now for magazine publishers:

1. Inkjet Messaging

Most U.S. magazine copies are already personalized with a form of digital printing – the inkjetting of each recipient’s name and mailing address. It can cost next to nothing to add additional inkjet messaging to the cover, a technique often used by catalogs but rarely by publishers.

Imagine the possible messages:

  • Subscriber: “Marie, we’d hate to lose you. Please renew your subscription today!”
  • Acme Rocket executive (who’s a potential advertiser): “Acme Rocket made our Top 100! See page 84.”
  • Calling out a particular ad inside the book that is likely to interest the subscriber, based on her online behavior and newsletter subscriptions.

2. Programmatic Direct Mail

Programmatic direct mail is a lucrative, rapidly growing approach to marketing that cries out for the kind of content we magazine publishers create. Yet, as far as I can tell, the magazine-media industry is not even thinking about this opportunity.

The tactic involves identifying web site visitors who are prospective buyers based on such actions as their clicks, searches, and cart abandonment. Then, using databases that link online identities to physical mailing addresses, a customized mail piece – usually a postcard or mini-catalog – is digitally printed and mailed First Class to the prospect.

We publishers should have a leg up in this field: Not only do we have web visitors, we have relevant, high-quality content. Consider: If you’re thinking about buying a particular model of car, would you respond better to a simple sales-pitch postcard or to a mini-magazine that includes a Car and Driver review of the model? Many marketers who employ programmatic direct mail should be eager to license the use of our branded, trustworthy content.

3. Customized Cover Wraps

Sponsored cover wraps are a proven method of using popular magazines to reach highly targeted audiences – such as copies mailed to ENTs’ waiting rooms with a promotion for a hearing-aid brand. Now imagine if each cover wrap were customized with a listing of nearby dealers, perhaps with directions or a map from the ENT’s office to the nearest dealer.

This isn’t just hypothetical. Audience Innovation, one of several companies that offers marketing campaigns that use sponsored cover wraps on popular magazines, reports that it sometimes employs digital printing to customize the wraps. An insurance company’s campaign of cover wraps affixed to copies of Good Housekeeeping, for example, includes information about and a photo of the agent who is located closest to each recipient’s home. Doing that for a national campaign with traditional offset printing would be inordinately cumbersome and expensive.

4. Distributed Print

Using an international network of digital presses aboard cruise ships and luxury hotels, the PressReader service for years has sold same-day copies of daily newspapers and current issues of magazines in places that would be nearly impossible for the publishers to reach on their own. As the cost of full-color digital printing continues to drop, publishers may be able to build up their foreign circulation by printing in-country rather than using slow and expensive overseas freight.

5. Print-on-Demand

In the past few years, book publishers have cut down on the number of “just in case” copies they print, knowing that if they run out they can switch to digitally printed just-in-time copies. Although unit cost is more expensive than traditional offset-printed books, publishers can save money by printing fewer wasted copies and using less storage space. And they can make money on titles that would otherwise have gone out of print.

How many just-in-case copies does your magazine print? And how many times do you pass up opportunities – to capitalize on an issue that becomes a collectors’ item or to bolster the circulation of an issue with poor newsstand sales – because you don’t have enough copies?

With print-on-demand, bookazines and back issues could be sold on your web site with no upfront printing costs, inventory, or risk. You could offer commemorative books featuring compilations of your best articles on a particular topic, celebrity, athlete, or car. With a bit of programming, you could even let the buyer choose the cover photo or add a personal message to turn the book into a one-of-a-kind gift or keepsake.

Author: D. Eadward Tree

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LSC Communications Further Consolidates Magazine Printing Market with Publishers Press Acquisition

By: Mark Michelson

The publication printing industry in North America continues to consolidate, and LSC Communications is leading the charge. Following on the heels of its July 17 acquisition of Creel Printing, Chicago-based LSC Communications announced today that it has acquired Publishers Press, a family-owned printing and digital solutions provider based in Lebanon Junction, Ky. It brings an end to the stewardship of Publishers Press and its predecessor entities by five generations of the Simon family, whose roots go back to 1866 when Nicholas Simon purchased an interest in a new German newspaper in Louisville, Ky., which later became known as "The Printing Rooms of Nicholas Simon."

Publishers Press is currently led by Michael J. Simon, who assumed the president role following the death of his brother, Nicholas (Nick) X. Simon, who passed away at age 57 in 2016. Michael  and Nick Simon were both past inductees into the Printing Impressions/RIT Printing Industry Hall of Fame in 2002 and 2003, respectively, marking the first time two brothers received the Hall of Fame honor. At the time of their inductions, profiles appeared in Printing Impressionsabout Michael Simon and Nick Simon.

Aside from the Simon family legacy, Publishers Press also had a reputation for accomplishing several industry technology firsts. In 1994, it achieved wide acclaim when it printed an edition of Sports Car International, the first magazine to be printed using an entire computer-to-plate (CTP) workflow process. In 1997, Publishers Press established the first U.S. Postal Service-approved co-palletization program  for short- to medium-run magazines. And, in 2005, it combined co-mailing, co-palletization, and drop shipping to make up its PubXpress distribution system, which Publishers Press claims was the first of its kind in this market.

On the most recent 2016 Printing Impressions 400 list, Publishers Press was ranked Number 26, reporting most recent fiscal year sales of $191 million, a 6% increase over the $180 million the privately held company indicated for the previous fiscal year. It attributed 96% of its sales to magazines (making it the self-proclaimed fourth-largest publication printer in North America), 2% to commercial printing and 2% to packaging. To access the complete Printing Impressions 400 list of the largest printers in the U.S. and Canada as ranked by annual sales, click here.

LSC Communications, on the other hand, indicated 2016 sales of $3.65 billion, of which 45% is attributed to magazines, catalogs and retail inserts (LSC does not break out publication printing separately). LSC has 41 production facilities in the U.S. and eight international manufacturing plants, comprising approximately 20 million square feet of owned facility space. By comparison, Publishers Press employs about 1,200 employees in Kentucky. With an original facility in Shepherdsville, Ky., operations were consolidated into the 700,000-sq.-ft. Lebanon Junction facility last year.

Prior to its purchase by LSC, Las Vegas-based Creel Printing reported annual sales of $130.10 on the most recent PI 400, 25% of which Creel attributed to publication printing and 25% to catalog work. Creel was also a strong player on the digital printing side, giving LSC a quicker entree into what's expected to be a burgeoning market for highly customized, short-run digitally printed publications. Click here for my earlier report and commentary on LSC's acquisition of Creel Printing.

Adding existing Publishers Press and Creel Printing publication printing clientele will obviously bolster LSC's market position and production and distribution capacity, and help it battle primary competitor Quad/Graphics, which reported most recent fiscal year sales of $4.678 billion on the latest PI 400 — $795.26 million of which Quad/Graphics attributed to revenues garnered from publication printing. Taking Publishers Press and Creel out of the market as standalone entities will also likely help swing the pendulum in favor of LSC in terms of pricing power when it comes to negotiating new contracts with consumer, trade and specialty magazine and journal publishers, as well for those contracts coming up for renewal in the future.

It should also be noted that Hunt Valley, Md.-based Sheridan Group, which reported $139.52 million in publication printing revenues of its $196.50 million in total sales on the most recent PI 400, was also acquired in early April by the CJK Group. Click here for my earlier coverage of the Sheridan/CJK transaction, including more information about the relatively unknown CJK Group, a holding company of Bang Printing in Brainerd, Minn.

Dave Cardona, LSC’s President of Magazine Sales, as one might expect, was elated to take former competitor Publishers Press out of the mix. “With Publishers Press’ strong industry reputation, expertise in publication printing and high volumes in distribution and mailing services, this acquisition will be extremely beneficial for our clients,” he was quoted in an LSC press release.

LSC Communications, itself, is the result of former industry M&A activity. LSC was one of three publicly-held companies formed by the break up of industry conglomerate RR Donnelley (RRD) in October 2016. Click here to check out the commentary I wrote at the time on what drove RRD's split into three standalone entities.

Aside from the Publishers Press and Creel Printing acquisitions, on July 31 LSC Communications announced that it has acquired Fairrington Transportation, a full-service mailing and logistics provider of services ranging from freight management to postal optimization solutions.

Attempts by Printing Impressions to reach LSC Chairman and CEO Thomas Quinlan and Dave Cardona for further comment on the Publishers Press transaction were not returned by the time this article was published.

Author: Mark Michelson

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