By Kenneth Norris, Contributing Editor, Pulp & Paper International
NEW YORK,
Dec. 12, 2011
(RISI) -
Despite indications to the contrary, we remain a society of readers. In the US alone, an estimated 57 books are purchased each second on average, totaling more than 5 million books per day. In addition, more than 100 million adults per day read a paid or free newspaper. But these impressive stats for readership hide an increasing divide between printed and digital media.
While printed books and newspapers undoubtedly still hold a disproportionately large share of these readership numbers, e-books sales and online newspapers circulations continue to grow by leaps and bounds. For example, from 2009 to 2010, e-books sales went from 3% of total revenue to over 8%. By 2015, e-books could count account for 15-20% or more of total books sales.
At the same time, e-reader and media tablets sales have exploded onto the market, jumping from approximately 15-17 million units sold in 2010 to more than 200 million worldwide estimated by 2015. The increasing availability of these devices, which were initially designed to be consumption devices but now becoming so much more, can only be seen as helping to speed up the transition from print to digital.
Caught in the middle are graphic paper manufacturers. Seeing demand drop precipitously during the 2007 recession, they now face an even greater challenge with a whole new crop of e-readers and tablets expected for the market in the next year. Arguments that the continuing decline of newspaper circulation numbers has been the works for 20 years, or more as some critics contend, does little to offset the fact that newsprint demand is not expected to rebound anytime in the near future.
Magazines, which have struggled in their own way against lost advertising revenue and pages, now look to become the latest print causalities of the digital migration. Most of the major e-readers and tablets have begun to introduce monthly and weekly subscriptions for digital editions of magazines in 2011. And some magazine publishers are moving further ahead by developing digital apps on their own, giving them better leverage against a single subscription model from any one e-reader or tablet manufacturer.
One in every five households
If anything, these events underscore the need for the paper industry to pay especially close attention to effects of e-readers and media tablets. With the onslaught of new devices expected, and the expected growth of e-magazines and e-newspapers, the game has moved to a whole new playing field. Gone are the days when the paper industry could lose a small percentage of the printed book market and think nothing of it.
"The pool of at-risk paper markets jumped from thousands of tonnes to millions of tonnes, and expanded to many global markets," writes John Maine, vice-president for world graphic paper, RISI.
Leading a team of economists and analysts, Maine has helped complete a recent study looking at how media tablets could impact the graphic paper markets over the next 15 years. The study, The Impact of Media Tables on Publication Paper Markets, concludes that the market penetration of e-readers and tablets could easily reach 190 million users by 2015. Where there was one media tablet in use for every five households in North America, that number could jump to 8 out of 10 by 2015.
The study also looks at the trends for graphic paper demand in the next decade and a half. Using three scenarios - low, mild and high impact - over 5, 10 and 15 years, the trends where media tablets displace print media will be the most crucial for producers of newsprint, coated mechanical, and uncoated mechanical papers. Paper use in magazines alone is expected to fall 25% over the next 15 years.
Breaking down the market share to media tablets by type of book, magazine and newspapers through 2025, the study predicts losses in every area. Currently, magazines, books and newspapers account for 54 - 58% of coated and uncoated mechanical demand in North America, and 21% for coated freesheet. Translated to graphic paper demand, as media tablets adoption increases and drives down the demand for printed media, these producers will suffer the most.
"Many graphic paper producers make their living selling paper to the publishing industry, those companies will be greatly affected by media tablets," says Maine. "Significant demand impacts could come as soon as 2012."
Future equilibrium point
Oddly, this transition from print to the digital may have a positive effect on readership, a fact not lost on Maine. There is substantial room for e-book sales to continue rising dramatically, possibly returning books sales to levels not seen within a decade. The adoption of media tables, especially with the addition of e-newspaper and e-magazine apps, will make browsing news websites and digital editions even more convenient for consumers and advertisers.
Most experts agree, and many e-book and e-reader studies continue to show, that e-books and printed books will almost certainly co-exist for the foreseeable future. While some digital editions will altogether replace a printed edition, there are many cases where both media can and should complement each other. But trade paperbacks, textbooks and special interest books are the most likely candidates to disappear completely in the face of digital competition. The recent trend of e-books sales for adult paperbacks and textbooks seem to confirm this prediction.
Magazine may also see a competitive advantage to incorporating a digital readership to its audience. Some the most popular magazines are seeing subscriptions increase where a print and digital edition are offered at a single subscription price. Unfortunately, this has not translated to newspapers. In North America and Europe, there is little optimism that newspaper readership will rebound, leading to more losses for newsprint demand.
On the environmental front, printed books and e-readers have reached a somewhat uncomfortable stalemate. With the current number of e-readers and media tablets in the market, the environmental impact of books to e-readers comes down to a single number: 22. That is, in terms of carbon emissions, e-readers share an equivalent impact of 22 printed books. If a e-reader owner buys fewer than 22 books in the life of the e-reader, then there is an argument that buying printed books would be better.
And the environmental statistics become grayer when trying to consider used books and those that are shared with others, further improving a printed books environmental footprint. Right now, production of e-readers account for 15% of the carbon footprint when compared to the paper book industry. As the number of e-reader and tablets produced increase, and the printed media decrease, these ratios will certainly change.
Finally, a few last numbers to chew on. Each year, more than 2 billion books, 250 million magazines and 24 billion newspapers are published in the US. For this production, approximately 68 million tons of paper and paperboard are used by the publishing industry. If there is an equilibrium point where printed material and media tablets can meet, both economically and environmentally, the biggest challenge for the graphic paper producers will be how to answer those future consumer demands.
