Chasing paper: How the rising price of newsprint threatens the industry
Print might be shrinking, but publishers still rely heavily on its ad revenue.
A song to read by: "Skinny Love," by Japanese Breakfast
What I’m reading: "Autobiography of Red," by Anne Carson
When I first started working in media, the magazine I ran operated out of a tiny room inside a massive airplane hangar in the industrial district of San Antonio, a sprawling asphalt landscape dotted by factories like the Frito-Lay plant next to our warehouse. In the evening, when I walked through the heat to my car, the air smelled like Fritos.
Our small team worked in the hangar because the owner of the publication had scrounged up years of meager profits to invest in a state-of-the-art Mitsubishi printing press, which he had shipped, part by part, from Japan. He owed his livelihood to that printing press, he told me, because he bought it right before the 2008 financial crisis: Its cutting-edge efficiency enabled his business to survive, while all around him much of the industry folded and consolidated.
As my coworkers and I clicked and clacked away on our laptops, the press hissed, beeped, burped, belched and blared around the clock — a night crew came in to spell the daytime team so the machine never had to stop. The great metallic monstrosity, easily fifty yards long and suspended in scaffolding, looked like the workhorse cousin of the Hadron Collider.
When I wanted a break from editorial work, I would put on a pair of noise-canceling headphones and walk through the factory, where pallets of freshly printed newspapers, brochures, magazines, fliers, yearbooks and phone books lay flat. When we printed our magazine monthly, I could watch it come off the press, hot to the touch, before it was assembled, bound, packed into boxes and loaded into a fleet of delivery trucks.
Despite how impressive the great printing press was, and how much of an investment it represented to the business, it was not the biggest expense of the operation, at least on a monthly basis.
“No,” my boss would always remind me, as we walked by their signature wooden spools: “The most expensive thing here is the paper.”
Paper beats publisher
Inflation has come for us all, and the news industry is no exception: The price of newsprint, the paper upon which newspapers are printed, has risen to historic levels since the onset of the pandemic. The factors are the same you have heard elsewhere — supply chain issues; rising fuel costs; the war in Ukraine; the lull and boom of the pandemic economy — but here they threaten a resource whose utility is so ingrained in our daily lives that sometimes you hardly notice it.
The issue is a global one: Over the past year, European newsprint prices have increased from about $490 to $590 per tonne, according to reporting from the Financial Times. Executives and analysts said some printers had encountered far steeper increases of about 60%.
The UK news publisher Reach, which is similar to Gannett here in the U.S., saw its stock price plummet at the beginning of March when it shared the impact it predicts it will experience due to rising newsprint costs. Its annual results showed the group already saw a “significant” rise in newsprint costs last year, up 16% to roughly $70 million.
In Australia, the rising price of newsprint has sparked fear that the costs will shutter small publishers, the Sydney Morning Herald reported two weeks ago. Many of the news publishers in the country rely on a Norwegian owned paper supplier, called Norske Skog, for their paper needs, but the company has said it needs to raise prices 30% - 40%. A similar problem threatens the newspapers of India, which rely on raw materials from Russia.
And in North America, the cost of newsprint has risen 20% - 30%, according to The Economist. A number of executives I have spoken with in recent weeks alluded to the pinch the price hike has caused, and some have expressed anxiety about the threat it poses to their print operations.
Print? In this economy?
Why is that relevant? After all, when was the last time you read a print newspaper? Take it from someone who has to remind himself of this constantly: Print circulation has been declining for decades, but it has only recently become a number two — and a close number two, at that.
For example, about once a month I encounter some metric that reminds me of how important print media is to the news industry. This time, it came courtesy of Condé Nast, where a source told me that the company had only recently begun generating more revenue from digital than print. (This piece from The New York Times in December buried that lede a little bit.)
I have also seen the importance of print come up in my reporting for another story, one about alt-weeklies, many of which see no end on the horizon for their print product. And I know from peers involved in rural reporting projects that even the purported death of print has been greatly exaggerated — about 10% of Americans still lack an internet connection, so print media is a fact of life, not an artifact, for some 30 million Americans.
Not only do large portions of the country and the world still use print media to meet their basic news needs, publishers’ bottom lines rely on it.
Look at these two charts made from data from in the 2021 Pew Research report: The first shows that print circulation has dropped to the lowest point in U.S. history.
The second shows the proportion of advertising revenue publishers get from digital channels.
Even at its latest heights, the majority of newspaper companies' advertising revenue still comes from its print products. When I spoke with the president of the Association of Alternative Newsmedia on Wednesday, he told me the majority of alt-weeklies still make the lion's share of their advertising revenue from print.
All of this means that although print may have faded from mainstream focus, it still plays a critical role in the business of the industry. And with inflation raising the price of the paper those news products are printed on, the cash cow could be in jeopardy.
Less paper, more problems
Publishers are open about the calculus they use to justify their print operations: It is a simple matter of price elasticity. As print grows more expensive to produce, publishers raise their prices — to consumers, advertisers or both — to keep it profitable. When the price grows so high that consumer demand dips, publishers will stop printing.
I do not know the exact margins of this balancing act, but I know they are thin. In February, Dotdash Meredith ceased print operations for the titles Entertainment Weekly, InStyle, EatingWell, Health, Parents and People en Español, and stories abound of publishers scaling back print operations in a variety of ways.
These circumstances mean that even a small increase in the cost of production — in this case one caused by ballooning newsprint prices — could hasten the demise of any print product already flirting with unprofitability. And because those print products bring in such an outsized proportion of revenue, their disappearance could hobble the industry.
Once again, it seems, the pandemic plans on pushing the media industry years into the future, whether it is ready or not.
Some good readin'
— A story I cowrote with my colleague Trish about publishers' efforts to protect their female journalists from a rising tide of digital harassment. (Adweek)
— And one more: A feature I wrote about PMC and its plans, as newfound owner of South by Southwest, to mold the festival in its image. (Adweek)
— A timely profile of Jay Penske, the furtive billionaire behind Penske Media Corp. (The New York Times)
— The employees of Condé Nast, the publisher perhaps most associated with grandeur and excess, have unionized. It is the latest in a series of such labor movements, but it is a huge symbolic development for the industry. (The Washington Post)
— You would expect a story about the Pied Piper of hallucinogenic toad-licking to be odd, but this story is unbelievable nonetheless. (The New Yorker)
— One of the best and most heartening pieces on climate change I have read in a while. Check this out if you need some well-reported optimism about the planet. (The New Yorker)
Cover image: "Waves Breaking Against the Wind," by J.M.W. Turner