Symbiosis or ‘Death Spiral’?
Printers often demonstrate a genuine interest in the financial well-being of publishers. They prove this every time they hold or cut prices when a postal or paper increase threatens their customers’ profitability. Now, this is not entirely a selfless act on their part. Healthy publishers are essential to the print industry, and after all, we are all in this together.
Or are we? It’s common to consider the printer-publisher bond as one of mutual dependence and to note the win-win aspects of what can be called a symbiotic relationship. Each party wants the other to grow and prosper. But what happens to a symbiotic relationship when both industries are losing customers? What happens when growing and prospering are no longer the results of what the two parties can do for each other?
We publishers have done a fine job of reminding printers that the price concession they make today is the only way to obtain our business—now and tomorrow. Growth is implicit in business success, so the printer makes the cuts in hopes of increasing volume. Propping up the publisher is smart strategy, the printer reasons.
Price reductions are also the nearly inevitable consequence of competing for a shrinking pie of work. Although consolidations in the printing industry have reduced the competitive landscape, print volume is going down, so printers must keep on cutting no matter how few rivals they must beat. As long as the presses need to run, work needs to be found.
Publishers aren’t pleased to see that they’re buying less now. The victory of paying less on a per-page basis is counterbalanced by the fact that less revenue is attached to the lower volume. And the leverage of future growth looks shakier and shakier.
IMPACTS OF A CHANGING LANDSCAPE
And so we face two key types of industry shrinkage. First, there are fewer printers and, to a lesser degree, fewer publishers—each of us has fewer competitors. Second, magazine print volume itself is flat to declining. Individual publishing companies and individual titles may boom a bit, but there is no large-scale, industrywide growth.