As acceptance of and demand for non-print media grows, so traditional print products are having to re-evaluate themselves to ensure their place in an increasingly multimedia society.

The volume of print production is strongly linked to advertising expenditure (which itself also reflects GDP). Current growth in advertising expenditure is of some 3 per cent per annum in Europe, but this is lower than the 5 per cent per annum that was the norm during the last decade.

Print is slowly losing market share of advertising expenditure as digital media grow strongly, but will maintain its commanding position for many years yet. Some marketeers are reacting to the growing body of evidence that demonstrates the (cost) effectiveness of print-based advertising, by using catalogues, magazines and direct mail to a greater extent than before, which tends to counteract any downward trends.

There is the well-established competition between electronic media and print - in some cases we have complementary co-existence, in others there is a head-on clash for a given market sector or application, and in yet others the electronic media have provided a significant boost to demand for print.

Although the last four years has not been a period of rapid capital investment, it is nevertheless the case that production technology has continued to develop. Computer-to-plate (CTP) is now widely installed and this, together with automated workflow developments, has made a significant impact on prepress timescales. The installation of more automated presses has reduced the minimum size of a viable print run. Digital printing systems have continued to develop, and based on the market survey conducted for Pira's recent market intelligence report The Future of Print II, the expectation is that digital print will move from a current 4 per cent market share to 14 per cent over the next ten years, with about half of this going to inkjet by about 2010.

Newspapers

Circulation of daily newspapers has been in decline for a number of years, while industry rationalisation has led to marginally fewer titles being published across Western Europe in aggregate. This has been principally attributed to younger generations failing to adopt the habit of reading a newspaper every day, itself largely a lifestyle-driven change. Conversely, in some countries, weekend editions and free papers have developed a flourishing readership base. The net effect has been a gentle downward drift rather than a radical change in readership patterns, but it does differ markedly between countries.

Newspaper circulation in the EU is forecast to decline around 4 per cent from 2002 to 2006, after a drop of 4.5 per cent from 1997 to 2001 (World Association of Newspapers, The Value Driven Newspaper). In North America, circulation will fall slightly more than 1 per cent from 2002 to 2006 compared with 1.5 per cent from 1997 to 2001. While circulations in Europe are falling, there is evidence of a very small increase in readership in Western Europe. A daily newspaper is read by 62.1 per cent of all European adults.

The number of daily titles published in Europe has fallen from 1,147 to 1,131 in the past five years. Average circulation per title has remained stable at 72,000.

The growth figures (about 3 per cent per annum) shown in Table 1 look very optimistic compared with other indicative sources, but they are revenue figures and probably illustrate a more or less static market in terms of copies sold and advertising revenue. Indeed, given the expectation that newspapers will broaden their range of revenue streams, this could also be taken to illustrate decline in the printed product, while the publishing business continues to flourish.

Within the publishing industry, there has been a trend towards a higher level of integration in cross-media ownership. This has to an extent obviated the threat from competing media such as television and, more recently, the Internet. Online content, however, is generally viewed as being a complementary rather than a competitive means of receiving news information.

Generally speaking, however, newspapers and the Internet are viewed as being synergistic, with Web versions of newspapers strengthening brand loyalty. Multiple media is now the standard strategy for newspaper publishers in the digital age, embracing print, websites, mobile phones and so on.

Advertising

Newspapers, seeing their advertising revenues threatened by digital media, have been particularly proactive in developing strategies in response to this, principally by embracing the Internet into their business. Other media possibilities, which a few newspapers are already using, notably include mobile phone technology, email services and digital TV. For the printed newspaper the impact is clearly of more competition, but significantly, much of it in a way that enables advertisers to target more accurately and hence obtain feedback on results. This is reflected in some of the responses that newspapers are making.

Production technology

The majority of newspapers are printed by coldset web offset, and there is no reason to suppose this will not continue for many years, if only because of the large base of installed presses with a lifetime of many years. A rather small proportion of newspapers is printed flexo, and no change is expected. Heatset and sheet-fed litho are used for supplements and other inserts forming part of the published product.

The striking feature of Figure 1 is the expected growth in digital printing of newspapers. The data here for 2003 probably overstates the use of digital print for newspapers by some considerable margin. However, digital print is used to enable on-demand printing of newspapers to the business community in cities around the world. For the future, newspaper printers have a significant decision to make for their next round of press replacements. There is growing interest in the concept of distributed production around the periphery of a city using digital print (possibly inkjet), rather than huge capital investment in new conventional presses in city centres. Hence the suggestion of 18 per cent of newspapers being printed digitally by 2013 may be sensible, and if so, would have quite a marked impact on the demand for certain paper grades, since newsprint in its present form is unlikely to be suitable.

Overall, the effect of the Internet and other electronic media (especially mobile phone technology) on the sales and advertising revenue of the (printed) newspaper is an important factor. Reduction in advertising revenue for the printed product is assumed to impact on pagination, and hence a reduction in total area printed.

Magazines

Magazines remain a very successful sector - their business model of using editorial content to attract and define an audience, which can then be used to target accurately for advertisers, is well-proven. And of course there are a number of spin-offs from this, particularly in the business-to-business sector. The degree of market segmentation varies considerably from one country to another, the UK being at something of an extreme, with more titles on sale than any other European country.

The subscription issue

Another marked difference between countries is the proportion of magazines sold on subscription. Publishers would clearly like to have a higher proportion bought on subscription for cash flow and forecasting reasons, and to this end some new ideas are being considered which would give consumers greater flexibility (e.g. to change title subscribed to whenever they wanted). Such an approach would place some demands on publishers' back-end fulfilment systems. If publishers do manage to substantially change the proportion sold on subscription, it could have a significant impact on the volumes needed to be printed (as opposed to the numbers sold), so reducing run lengths and overall waste levels.

There are notable differences in the business models employed by magazine publishers in the US and Europe. In the US, two-thirds of publishers' revenue is from advertising, and hence the emphasis is on buying subscriptions to boost circulations, hence enabling more revenue to be obtained from advertising by charging more. In Europe the reverse is the case. European publishers are dependent on subscriptions and news stand sales revenue. This places more emphasis on attractive editorial content, cover pictures and cover mounts.

Circulation

Magazines continue to have a healthy circulation. In a number of Western European countries, between 80-95 per cent of the adult population read magazines on a regular basis. Consumer expenditure on magazines is predicted to rise by an average annual compound rate of 2 per cent, reaching US$37.236 billion in 2006, but this includes (and may be substantially accounted for by) increased cover prices.

In the majority of European countries, magazines achieve 10-12 per cent market share of total advertising expenditure (in the US, the figure is 12.3 per cent). While in the past there have, in individual countries, been quite marked changes, the last few years have generally been more stable, and no significant changes are expected other than an almost negligible decline in market share (assumed to be a result of diversion of expenditure to the Internet). However, the general trend is still for an increase in advertising expenditure in magazines, the majority of which will find its way into print.

Production technology

The majority of magazines are printed by heatset web litho or gravure. However, many magazines, especially in the B2B sector, have small circulations and are printed sheet-fed litho. A number of magazines, especially weeklies, have the character of a weekly newspaper and are printed coldset. These considerations largely explain the data presented in Figure 2. The suggested proportion printed by digital processes is almost certainly too high, but the response illustrates an interesting expectation of significant growth in this approach to magazine production.

The outcome appears to have similar characteristics to the newspaper scenario, but in the case of magazines, every scenario results in overall growth. However, there is reason to believe that at the end of the decade growth of the printed product may cease, as the Internet and other electronic systems make their impact. This is particularly likely in the B2B sector, which is already adapting swiftly to the possibilities of the new media.

Books

There is a general view that book sales continue to increase, but this has to be treated with some caution. Although there has been a real increase in book sales revenue in the last ten years or so, and more titles are being published, this does not necessarily mean that more books are being sold. Close examination reveals that when prices are adjusted for inflation, and the average book price is taken into account, the number of books being sold is stable or possibly slightly in decline. This may be considered satisfactory, but should be contrasted with the rather strong year-on-year increases of around 15 per cent in the market for audio-visual products in general, which at least to some extent compete against books for use of leisure time and personal expenditure.

Two significant drivers of change in book publishing are:

• Television - there is a clear and demonstrable link between television and book sales. This arises from the serialisation of classic novels on TV, and for other subjects such as natural history, history and the arts. Many books of television series have become best sellers;.
• The growth of electronic journals, although it must be said that in the majority of countries where it is recorded, only 1-5 per cent of revenues are represented by electronic products at present. (However, this statement excludes some notable countries in the STM market, such as the Netherlands and the UK.)

On-demand books

The digital production of books is now well-established, if still rather small-scale. At a December 2003 symposium comprising an audience of digital book printers, Xerox suggested that 2 per cent of book production was now digitally printed, and this was not disputed.

Developments over the last three years have been:

• Lightning Source has become established in UK;
• Antony Rowe Ltd has created a new production plant adjacent to Gardners' book distribution centre at Eastbourne, UK.

These two organisations do genuinely undertake production on demand - that is, producing a copy of a book after it has been sold. Almost every other digital book printer actually undertakes small batch production, to enable a publisher to hold a small stock of a slow-selling title.

Libri (the German book distributor which supplies about 40 per cent of the market in Germany) has an off-shoot company, Book-on-Demand (www.bod.de), which continues to flourish in Germany. Unusually in the German market, where the majority of books are produced as hardback, Book-on-Demand's on-demand service focuses on paperbacks. Others are Rhombos Press in Berlin (www.rhombos.de) and the Bertlesmann subsidiary Arvato AG's Book-und-Print-on-demand.

Electronic books are only developing slowly (a few publishers, such as the UK's Taylor & Francis already have significant sales), but more growth can be expected, and in certain cases there is no question that it has happened with major impact on printed books (e.g. Encyclopedia Britannica). Given an appropriate platform, which seems increasingly likely to emerge, then in certain sectors (this seems particularly likely with STM and educational books), e-books of some sort are likely to emerge.

Production technology

Sheet-fed litho is clearly the predominant process for book printing, but web systems are used very effectively by some companies for surprisingly small batches (1,000 or even less), when combined with CTP, automatic plate changing and good materials handling systems. As mentioned earlier, it is currently thought that about 2 per cent of books are digitally printed, and this will increasingly become web-based since this class of machine does produce at significantly lower unit cost.

Digital book production is a significant factor in relation to future book sales. It keeps titles in print that would otherwise not be available, it enables the publishing of books that would not otherwise be viable, and generally helps to make books more accessible and more quickly available to the consumer. However, digital production could have a negative impact on the volume of books actually produced, since (eventually) there should be less waste in the supply chain from unsold books/returns.

Product outlook

Newspapers

It is easy to get the impression that the newspaper market is declining, and in some parts of the world, notably the US, that is so. It is also true of certain sectors of the newspaper market. But European newspaper publishers in particular have introduced new concepts for the printed product (as well as developing other revenue streams) that are at least maintaining sales. In fact, the overall demand for paper for newspapers in Europe has increased slightly over the last four years, and the projection is that modest growth will continue until at least 2008, thereafter depending on the assumptions that are made. Overall, growth is expected to be in the region of 0-1.5 per cent per annum. The main downward force is thought to be the Internet, which, with the growing availability of broadband services, encourages greater use in a multimedia sense and for e-commerce. So, from 2010 onwards, the printed newspaper is projected to be in slow decline.

Magazines

Magazines remain a very successful print product. A strongly growing sector is that of customer magazines. B2B magazines have become significant users of the Internet, particularly for classified advertising but also for other reader services, and this is expected to have a marked overall effect on paper demand eventually. However, B2B is relatively underdeveloped in most Eastern European countries, which are expected to experience significant growth. Advertisers continue to find magazines an effective way of contacting well-defined audiences, and consequently advertising revenues in magazines have continued to climb and are expected to continue to do so. A significant issue with magazine publishing is waste in the supply chain. This is both an environmental issue and also a cost issue for the publisher, and one of the drivers behind the push to gain a higher level of subscription sales. However, this still varies remarkably by country, although progress is being made. The projected future of magazines is for continued growth until about 2010, at a rate of about 4.5 per cent, and then varying rates of decline as readers shift to electronic editions, depending on the assumptions applied in forecasting.

Books

This is a complex sector since books serve so many purposes and are produced in quantities from one to hundreds of thousands. The overwhelming majority of titles are slow-selling, and this is giving rise to publishers considering digital print more seriously than ever before. Only a tiny proportion of books are produced this way at present (maybe 2 per cent), but this, together with Internet book retailing, is having a marked impact on the supply chain for book publishing. The most concerning factor regarding the future of books was the increased competition for readers' time in relation to all other leisure pursuits. The projected future for books over the coming decade is for continued growth of about 1.2 per cent, depending on the assumptions applied.

Digital future

Digital printing technology is developing rapidly in niche areas. On-demand book production is becoming well-established. Wide-format inkjet is making a large impact on screen printers for posters and displays. High-speed inkjet systems are becoming increasingly used for printing utility bills and financial statements. And software has been developed which enables and encourages greater use of personalisation and customisation of content.

This, together with increasing evidence of the effectiveness of customised print in achieving a real response, will encourage the overall greater use of digital print. By 2005, the performance of some digital print systems will be on a par with other processes, and by 2013 some 14 per cent of print production will be by some digital process.