The Future of Paper Is Not So Bleak

By: Steve Outing

The rapid growth of the Internet and electronic communications, common sense would seem to indicate, will lessen the demand for paper over time. Indeed, some futurists, such as MIT's Nicholas Negroponte, see the modern world in the midst of a transition from a world of atoms (printed communications) to a world of bits (digital communications).

But it's not that simple. In fact, according to a new study on the future of paper, paper will remain a viable medium over the next 20 years -- even as the business and publishing worlds proceed through a period of momentous change.

According to the new "Future of Paper" study, conducted by the consulting and research firm CAP Ventures (Norwell, Massachusetts), paper will remain a major part of our lives for several reasons:

Throughout the 20th century, each phase of the information explosion has resulted in increased paper consumption. This is likely to continue. The growth of paper is linear, versus the growth in amount of information, which is exponential. Print media such as newspapers, magazines and books have through the century adapted to new media such as television and radio. There is reason to believe that the same will be true during the rapid growth of the Internet into a mass medium. Digital printing -- that is, customized, printed-on-demand documents -- complement the new digital media. For the 20 years that the CAP Ventures report forecasts, digitally printed paper will account for 47% of all paper growth. Digital printing will increase dramatically, while traditional publishing use of paper will remain flat or grow at a very slow pace. In other words, the future of the paper industry appears bright, as specific segments such as newsprint which are flat are replaced by new market demand created by emerging digital technology. The study, which was principally authored by CAP Ventures senior consultant Adina Levin, forecasts growth trends for consumer communications and finds that as a result of the growth of digital communications, newspapers, magazines and directories will show flat annual growth (0% - 3%) through the 20-year study period.

Whither newspapers?

Levin, based on dozens of interviews with industry experts, singles out the newspaper industry as having a fuzzy future. It will go one of two ways, she writes, depending on how aggressively newspaper publishers act to protect their classifieds franchise from cyber competitors. If newspapers fail to adapt to the newly competitive classifieds market, she says, "a rapid loss of classified ad revenue will slash profits, damaging the newspaper business model. Newspapers will shrink, go out of business, or cut over completely to electronic media, despite consumer preference for printed news."

Magazines also will be limited to positive but slow growth, the report says, with mass circulation publications continuing to decline while specialized publications continue to proliferate.

Books, in Levin's view, have a few more years of solid growth before the digital revolution has much of an impact. After 2005, she says, "electronic book" devices should slowly begin to temper growth in paper book sales. The book industry also will adopt new on-demand printing technologies, which will allow book publishers to serve niche markets requiring small print runs. The on-demand technology also will permit publishers to fill "out of print" orders in a cost-effective manner, opening up a new revenue stream.

An area that is likely to show significant growth in paper consumption -- much to the chagrin of consumers tired of postal-delivered junk mail -- is direct mail. The study predicts that direct mail will be stimulated significantly by interactive electronic media, as businesses collect and mine their increasingly rich databases for consumer preferences. While consumers can expect more quantity of paper in their "snail mail" boxes, at least in the next 20 years it will become more targeted to our personal interests -- and may seem less like "junk."

Levin also writes that inserts and coupons, which are a mature market, will continue to be tied to the newspaper industry -- but publishers must adapt to selective inserting to target specific consumer groups. Over time, however, consumer use of coupons is expected to decline as more stores (such as grocers) use frequent-buyer cards.

Trade publishing outlook

Professional and trade publishing also will experience either slow growth or a moderate decline during the next two decades, due largely to the adoption of electronic media by the professional and technical people who make up these audiences. The CAP Ventures study predicts that electronic delivery will account for one-third of this publishing sector's revenue by 2015, and that paper consumption by these publishers will see very slow growth.

Other areas for slow growth or decline in paper consumption will be specialty directories (e.g., Official Airline Guides), technical manuals and financial printing. In all these areas, the trend toward electronic publishing is seen in its early stages, reducing the use of paper.

The overall view

The study confirms what many observers long have suspected: The rapid growth of digital media will impact traditional publishers by impacting old-media advertising revenues enough to flatten print demand, but not affect it so much as to cause negative growth in the next decade. The outlook for the paper industry is not so bleak, however, because new digital technologies that allow marketers to reach consumers one-on-one will create new demand for paper. Increasingly focused print communication will augment personalized digital communications services.

Finally, the CAP Ventures study doesn't give a lot of hope to people like me who have desks stacked with paper. The printed page continues to be the best quality reading medium, with computer screens a distant second, Levin writes. People will continue to print electronic documents in order to read them rather than suffer the glare and low resolution of the computer screen.

So much for the "paperless office."

Contact: Adina Levin, adina_levin@capv.com

Steve

Previous day's column | Next day's column | Archive of columns
This column is written by Steve Outing exclusively for Editor & Publisher Interactive three days a week. News, tips, and other communications may be sent to Mr. Outing at steve@planetarynews.com

The views expressed in the above column do not necessarily represent the views of the Editor & Publisher company