Newsprint still vital

Origin of text

By Chris Cook, Deputy Editor, PPI Pulp & Paper Week, RISI

SAN FRANCISCO, June 12, 2009 - At a speech in Barcelona the other day, World Association of Newspapers (WAN) president Gavin O'Reilly had an upbeat message for newspaper executives from more than 50 countries who had come to exchange ideas on business strategies for the future.

• 1.9 billion people read a paid daily newspaper every day
• Newspapers reach 41% more adults than the world wide web
• More adults read a newspaper every day than people eat a Big Mac every year

The theme here is not dietary habits or the world's largest hamburger chain, but what O'Reilly called a mistaken chorus from commentators that the Internet will be the death of newspapers.

"If we are a declining industry, the definition of declining is a strange one," he said, citing WAN data that global newspaper circulation rose 1.8% last year, thanks to gains of 6.9% in Africa, 2.9% in Asia and 1.8% in South America.

He acknowledged that circulation also fell 3.7% in North America, 2.5% in Australia and Oceania, and 1.8% in Europe, but said newspapers in these areas had "embraced digital technologies to further improve their audience reach."

That's little solace for newsprint makers in North America, where according to Pulp and Paper Products Council data and industry veterans, domestic consumption and offshore exports are experiencing unprecedented collapse.

• Total US newsprint consumption declined 4.8 million tonnes between 2004 and 2008, a drop of 48% in four years.
• In the first four months of 2009 total US newsprint consumption dropped more than 600,000 tonnes, or 26%.
• Total North American exports are off 230,000 tonnes, or 31%, year-to-date.
• May was the 72^nd consecutive month of declining consumption and the 14^th consecutive month of double-digit declines.
• Mill operating rates in May of 61% on a shipments-to-capacity basis were 33 percentage points lower than year-ago levels.

No surprise then that the price of newsprint in North America is migrating south faster than anyone expected. It is already around breakeven point for a good many mills, and there is no indication it will stop falling until a substantial part of the industry shuts down.

A North American newsprint industry can undoubtedly thrive once it is ‘right-sized', but at this point neither publishers nor paper producers know what that size will be, because as creator of the "disruptive technologies" concept, Clayton M. Christensen, pointed out in his 2003 book The Innovator's Dilemma, large corporations' assets are really managed by customers, not their own managers.

Or as John Lennon put it: "Life is what happens while you're making other plans."