E-Devices: Print’s FrenemyJune 2011 By Erik Cagle
An ancient saying attributed to Chinese author, philosopher and general Sun-tzu offers great insight into the attitude the printing industry should take toward digital devices such as electronic readers, smart phones and iPads: Keep your friends close and your enemies closer. But, whether it was a 400 B.C. general or fictional mobster Michael Coreleone who uttered the phrase, one thing's certain: It pays to know thine enemy and, if necessary, put him to work for you.
Fact of the matter is, printing has been under attack almost from the moment that Johannes Gutenberg kicked off the moveable type printing era in the 15th century. Radio, television, the Internet, the George Foreman grill—all the revolutions of the past 100 years—have threatened to steal away print's market share. While each revolution has been met with an evolution of print, the current wave of electronic devices—e-readers, smart phones, tablets—threatens to provide the stiffest test and harvest the greatest market share to date.
The Writing Is on the Wall
But, opportunities abound for printers to leverage electronic alternatives, particularly for clients who want to have multi-channel connectivity with consumers, be it in books, magazines, advertisements, direct mail, etc. It seems clear, or at least it should by now, that consumers want what they want, when they want it and how they want it presented to them. The likelihood of a single platform being recognized as the sacred cow across any segment is highly unlikely; and, in order to appease the masses across numerous platforms, printers need to become adept at as many technologies as possible.
This article will explore three major print segments impacted by electronic devices, with one major exception. A thorough, interesting look at the added value that Quick Response (QR) codes bring to print, written by Heidi Tolliver-Nigro, appeared in the April issue of Printing Impressions (“Value-Add for Printers : Make Money with QR Codes”) and will not be addressed here.
Books: The Amazon Kindle, Barnes & Noble Nook and the Sony Reader are three of the leading devices in the e-reader space, but by no means are they the only ones. About 10 percent of consumer trade book sales are digital, and certainly much of that growth can be attributed to hard-core readers who are taking advantage of another outlet to satiate their thirst for literature.
Perhaps the greater impact is seen in the offset vs. digital printing battle, with book publishers increasingly seeking shorter runs and going back on press more frequently in an effort to do away with the dreaded inventorying and waste. Digital printing enables shorter run lengths that are simply not cost-feasible with conventional printing. For Montreal-based Transcontinental, going digital has brought back much of the work that was being sent to Asian countries.
"Publishers can't afford to go overseas because time has become much more of a critical factor in the production of the reprints, to get them back into the distribution channel at a quicker rate," notes Bruce Jensen, group vice president of sales for Transcontinental's Magazine, Book and Catalog Group.
Converting hard copy into digital formats has become a modest revenue generator for many book manufacturers. Back in February, Transcontinental announced it had chosen De Marque's production and distribution services platform to address the e-book needs of both U.S. customers and English-speaking Canadian clients.
As for e-readers, the question is whether the rise in market share will be at the expense of hard copy, or if it represents a new sector that doesn't thrive on the demise of the printed word. Brian Freschi, president of retail inserts, books, directories and Canada for Sussex, WI-based Quad/Graphics, believes the truth lies somewhere in between.
"The e-reader has grown the overall share of the pie," Freschi says. "It has taken away some print, but I don't think it's a 1:1 correlation. Saying it's additive might be a bit Pollyannaish, but e-readers are not cannibalizing print anywhere near the extent some people might think."
One segment of the book industry that has the potential to lose significant printing share is education, particularly in the high school and collegiate sectors. Frank Romano, professor emeritus at the Rochester Institute of Technology (RIT), notes that a number of universities are already giving out computers to incoming students, and some (including RIT) distribute course materials via PDFs and other digital formats. In fact, says Romano, every RIT class has an online component—reading materials, tests, videos—and, increasingly, the paper/book aspect is shrinking.
"For a particular course, a student might have to buy three textbooks and may only read two chapters out of each one, which I think is obscene," Romano relates. "It's entirely possible we're going to see the publishers modularize what they offer, so you can essentially buy a chapter."
Going by the e-Book
The younger the student, it stands to reason, the less practical it would be to introduce an electronic device, be it a laptop, iPad or e-reader, for use on an individual basis. The cost of a lost textbook would pale in comparison to replacing an electronic device. A new iPad2 starts at $499, for example. But, considering the cost to outfit a student with books for a year's worth of classes, Romano believes it's not out of the question that subsequent, less-expensive generations of such devices could, within the next 10 years, make the electronic classroom viable.
"If you look over the horizon, at the el-hi level, the iPad or a machine like it will become the de facto textbook of the future," he predicts. "And, that's going to have a devastating effect on the textbook industry."
The process has certainly begun. The school district in Auburn, ME, voted in early April to give 285 incoming kindergartners an iPad2 this fall, a program that will cost the district about $200,000. School superintendent Tom Morrill told the Lewiston Sun Journal that he has a goal of increasing literacy rates from 62 percent to 90 percent by 2012. Ten years ago, the state issued laptop computers to all seventh graders, a move that educators feel was highly successful.
Transcontinental's Jensen questions whether the electronic device is poised to be a threat, especially at the elementary grade level. He notes that, given most states' current inability to embark on printed textbook purchasing initiatives, a mass migration to digital alternatives isn't in the offing.
"We're just at the beginning of the bell curve with the technology," he says. "The iPad has only been out for about a year, and there are more than 50 e-book or notebook-type products out there. There will be a movement in that direction, but just how quickly it will go, and how well it works, remains to be seen."
The 800-lb. gorilla in the room, not surprisingly, is the availability of titles for any/all devices, along with the standardization of file formats. Given how quickly the iPad and other devices have exploded on the scene, these issues seem to be relatively solvable. Again, it would take a concerted effort by most states to recognize an individual platform.
Publications/Catalogs: There's no lack of excitement regarding the changes that are taking place in the magazine and catalog sectors. Ironically, you might need an app to keep track of the ongoing projects by publishers looking to bridge magazine readers to digital offerings—be they newsletters, electronic versions of the publication, or news, promotions and unique content contained on Websites. Some research is producing contradictory findings, and some studies indicate that publishers may be looking to take a different tact with their electronic offerings.
Here's a small sample of recent publisher announcements and publication trends:
• Time Inc., the largest publisher in the world, struck a deal with Apple to make its iPad application free for magazine subscribers to download and enjoy digital content. Time's goal is to provide digital content to paid magazines subscribers across all of its titles.
• A study conducted by publisher Bonnier and ad agency CP&B revealed that readers have a tough time focusing when viewing the iPad editions of magazines. The study groups included heavy printed magazine readers, frequent iPad users and recurring consumers of magazine content on the Internet. The interactivity of the iPad led the study groups in different directions. When readers picked up a printed magazine, they did so for a specific purpose.
• The iPad is not quite reader-friendly when it comes to magazine subscriptions. According to a study by The New York Times, one of the biggest disappointments with iPad apps is the lack of a subscription option. Readers are finding that magazine apps are costing about as much as the hard copy publication itself. Nor are they happy to be limited to single-issue purchases for the electronic version.
David Carey, president of Hearst Magazines, told the newspaper that subscription options will become available given the surge of Android devices and other new developments.
• Advertisements in the iPad edition of Sports Illustrated generated 21 percent higher recall than its print brethren, according to a study by Affinity Vista. Reader-action scores—the tracking of actions such as visits to advertisers' Websites or gaining a more favorable opinion of advertiser's brands—were 34 percent higher for the iPad users than print readers.
• Barnes & Noble (B&N) is reporting robust magazine and newspaper sales at its NookNewsstand since shipping the NookColor, with more than 650,000 total subscriptions and single-copy sales. B&N offers nearly 100 magazine titles.
• On the printer side, last summer Quad/Graphics rolled out branded applications that allow magazines, catalogs and retail advertising to be published for the iPad, iPhone and iPod Touch, courtesy of the Quad/Graphics Digital Edition Platform. The solution enables Quad's clients to distribute content by print and mail, digital editions and branded Apple apps. The iPad application was developed by YUDU Media.
Many of the industry's leading publication printers offer their publisher clients solutions for creating electronic versions of their magazines, such as RR Donnelley's DigiMag. Romano notes that many publishers are prodding readers toward the electronic versions of their publications in order to reduce print runs. He sees certain magazine markets leading the online migration, such as time-sensitive business magazine titles.
"What the magazines have to do is more introspective, research-oriented, opinion-oriented materials," he says. "But even there, why do I need print?
"Over the next decade, we'll see a reduction in the size (page counts) of magazines and the number of publications in print, as more and more content goes online. It will be more gradual than in the book industry, but it will happen."
Many publishers are leaning on printers for advice as they ponder their digital futures, according to Transcontinental's Jensen, thus providing printers with an opportunity to furnish solutions that allow customer content to be disseminated via a number of vehicles.
"We've taken the approach of broadening our offerings at Transcontinental," he says. "It's evident in the acquisitions we've made in interactive companies—mobile, Web page construction, permission-based e-mail systems—during the last couple of years. Our job is to be able to provide a myriad of solutions depending on what the customer wants, because the customer doesn't (always) know yet. It's such a new area.
"Our magazine publisher clients are definitely all trying to get into it. That hasn't impacted the print runs yet. It might affect them a little, but not to the degree that maybe some other areas will be impacted. Books will be affected at a greater level than magazines on the e-conversion side. That's just the nature of the content; one color vs. four colors. People are more at ease using an e-reader for a book than they are with a magazine."
Jensen isn't worried about publishers making the wholesale conversion to electronic versions for a number of reasons, chiefly that digital devices haven't proliferated to the degree where publishers can be reasonably certain of carrying over readership. "Print is in your face," he notes. "When it's delivered to your door—be it direct mail, a magazine or catalog—it's very interactive and in your face. That's not necessarily true with e-mail. People go to the Internet to seek information."
Dave Blais, president of the magazine and catalog division for Quad/Graphics, notes that clients are very up-front in stressing their goals for print, mobile, tablet and the Web. And, the feedback he's received indicates that the relationships between the channels are complementary. The true challenge customers face, he says, is blending all of these offerings and having them work in concert.
"In repurposing content, the challenge is establishing a methodology to not have one channel be ahead of the others in terms of the brand, timing or messaging, and coordination of that cadence is key," Blais notes. "Our customers are pretty consistent in telling us that they really intend to rely heavily on print. Marketers are seeing that, in spite of the attention that electronics get, print works."
Move to Hybrid Printing
Romano isn't worried about print going away, but he does caution book, publication and catalog printers to be mindful of the role that digital printing will play in these segments. Much has been written about the influence of digital printing on the book market's on-demand production trend during the past five years. But, as the page counts in magazines dwindle and publishers churn out fewer copies, that segment could entertain a significant role for the digital press. He envisions magazines with offset printed versions for long runs, digitally printed copies for personalization, as well as online content/ e-magazine versions.
Visibility is important, according to Romano—peppering readers on a regular basis with multi-channel content to attract and engage them indefinitely. The same push campaign is seen in the catalog market. The great whales, such as the once-iconic Sears catalog, have given way to smaller, more targeted print pieces issued more frequently, driving buyers to go to the local store or a Website.
Technology providers are arming printers with the right tools, Romano says, as evidenced by the new HP T400 inkjet web press, for example. Given the 42˝ width and 600 feet per minute output parameters of such a press, he is excited at how far the bar could be raised over the next two years. With the electronic device proliferation revolution under way, printers are going to need all of the technological advantages they can muster in the evolving world of print.
"Book printers have been stuck in that market for a long time but, with new digital printing technology, they can move into new markets," Romano says. "With digital printing, a good fit is the photo book/memory book market. Digital printing is going to open up new markets for many printers." PI