Pricing Competition Comes from All Sides
Among the more interesting issues in the printing industry is the constant, decades-old complaints about market pricing of print and its supposed roots in industry overcapacity. While those that topic will not be discussed here, it is essential to remember that the print medium exists in a larger communications marketplace, and now competes with more alternatives than ever for the same amount of budget dollars, and sometimes less. Recent reports from the Bureau of Labor Statistics show how prices have changed in these areas.
The Consumer Price Index of inflation for the past two years has increased by 7.7% in total. Commercial printing prices have increased only 4.5%. Print, it seems, has gotten cheaper. Lower prices should be stimulating demand. No, prices are a response to other factors in the marketplace. Paper has increased by 8.2% in that period; printing ink is up by 9%. Prices are lower, materials costs are up. How often have we heard the old industry saw that materials costs increases are just passed on to the customers? They’re not. How come?
In the past two years, we have seen the prices of alternative technologies drop significantly:
• The price of computer equipment is down almost -12%.
• Cellular and wireless communications prices are down more than -16%.
• Internet service provider fees are down -28%.
The cost of connecting and being online is decreasing significantly; as those costs decrease, consumers and businesses are finding that broadband availability increases the amount of time they spend online, and also widens the scope of what they do, and increases their dependence on it. It also means that their personal use affects their selection of media for their company and for their daily use.
Who is getting online is changing, too. The Pew Internet Survey shows that in 2000, the average was that 46% of the public was online. Today, it is 76%. The most important categories in terms of print are the 50-64 and 65+ age groups. These are the groups whose stability, higher incomes, wealth, and education were to be the bedrock on which print materials of all types could depend on for a sustainable future. Of the 50-64 group in 2000, 36% were online; by 2006, that had almost doubled to 71%. The 65+ group had only 12% of its cohort online in 2000; by 2006 that had almost tripled to 32%. The exact demographic profile, income, wealth, and education, were the same factors that sent them online.