Digital Print: The Next Frontier for Newspapers?

By on April 15th, 2009

There’s been a lot of discussion on The Digital Nirvana about the ways digital printing is currently being used for newspaper production, as well as some future applications. While there’s no doubt that the ways of which people consume news and information is changing, it’s also clear that some new business model concepts for newspapers are still utilizing print as a main distribution method. Two hybrid models that come to mind include the previously-mentioned Printcasting, as well as a start-up called The Printed Blog. Each relies on reader-generated content, news aggregation, localized/targeted advertising, and (of course) print.

InfoTrends recently conducted an extensive study to understand present and future digital print applications within the newspaper industry. The result of our research can be summed up in The Emerging Digital Printing Opportunity in Newspaper Publishing, which details:

  • - An overview of the newspaper industry
  • - Current newspaper production workflow
  • - The case for moving to digital newspaper production
  • - Existing and future applications of digital newspaper production
  • - Adoption challenges (hardware, software, and recycling considerations)
  • - Recommendations for greater digital print adoption with newspaper

As existing newspaper publishers think about new ways to bring back print advertising dollars, they need to look not only at online models, but also how they can differentiate their print offerings. Digital printing can be utilized not only as a means for short-run production, but also for personalized content and targeted advertising. One of the things that we found when talking with some newspaper publishers is that there’s a lack of awareness about the possibilities that digital printing can offer to newspaper production. Market education is key. Reports like this one, as well as digital printing hardware vendors providing clear proof-of-concept applications and case studies of digital newspaper production successes can give a glimpse to newspaper publishers about new opportunities they can take advantage of.

So what are your thoughts on digital printing for newspaper production? Let us know.

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10 Responses to “Digital Print: The Next Frontier for Newspapers?”

  1. MichaelJ Says:

    From my discussions over at the journalism blogs, especially the Nieman Journalism Lab at Harvard, I think I’m seeing a shift in the Print is Dead meme. It’s pretty clear to me that newspapers are going to move to hyperlocal print editions for hyperlocal audiences filled with hyper local advertising. The real problem is finding a way to sell and price advertising at the right cost to get to SMB markets.

    I wonder what you might think of commercial print salespeople being able to sell ads for newspaper print and web. I keep looking at it, and can’t figure out why it wouldn’t work.

    The opportunity going forward is to be able to invent then deliver multi channel marketing to SMB. There is already a site called mediabids.com that has invented a way to sell the ads and is presently working on an affiliate/ resellers program.

  2. Bryan Yeager Says:

    Some of the discussion over at the Nieman Journalism Lab has been pretty interesting. It’s like anything else: there’s always extremes on both ends. There are some people that can’t fathom a world without printed newspapers, and those that feel that it’s time to fully embrace online delivery and get rid of the printed product. As with most of these things, the answer lies somewhere in the middle, and I think that middle involves more targeted news offerings for print and continued news aggregation online to drive traffic to newspaper websites.

    One problem that I find is that many newspapers have done a lot to promote their online sites, but nothing to promote the value of their print products. This is not true in all cases. In the InfoTrends report, we talk about the Chicago Tribune’s TribLocal network that utilizes the concept of Microzone Publishing. The technology utilizes reader-generated content and localized ads for different geographical clusters in the Chicagoland area. Residents can sign up to be pseudo-journalists and provide their own content for their region, and local companies (mostly SMB) can create and order print ads online for specific regions that want to reach. The real value is that editors pick certain reader-generated stories to be published in a weekly, zoned section of the paper. Having the opportunity to see your story in print is still very appealing to people. Print can still be powerful and valuable, and this is just one way to show that power through newspapers.

    In regards to commercial print salespeople trying to sell ads for news and print, I think it’s a stretch in most cases at this time. We spend a lot of time trying to educate commercial print salespeople on how to effectively sell customized communications to their clients. It’s hard enough to get to that point of understanding. Selling ads is an entirely new ballgame. I think it can be done in special scenarios like the AlphaGraphics in New Jersey that has taken on printing newspapers digitally. As more printers adopt high-speed digital color inkjet devices and look for new applications to run on those devices, this idea may become more viable. Even so, I think most of those scenarios will be a newspaper outsourcing production to a service providers, but not sales.

    MediaBids.com is interesting. Thanks for pointing it out. Yahoo! has also been working on its advertising platform (http://ypt.yahoo.com) that allows media buyers to target the types of publications and other mediums that they want to advertise on in one single platform. I think applications like TribLocal that utilize Microzone Publishing are better equipped to handle the SMB market than something like MediaBids or Yahoo! APT.

  3. MichaelJ Says:

    I agree that the idea of printing salespeople to sell newspaper ads is a stretch. But consider that “educating” the sales forces mostly has not worked. My take is that it doesn’t work because “education” usually doesn’t work to change behavior. It’s not about understanding it’s about time and compensation. Give sales people enough time and clear comp, and they will naturally move to “consultative” sales and pick up the understandings by learning by doing.

    The path for both local newspapers and local printers is to figure out how to create and deliver multi channel marketing programs for micro and small business. An offering that would combine newspaper print sales + newspaper ad sales + print collateral ( signs, brochures, database published brochures = a true multi channel marketing campaign for smb.

    Imagine if the local Staples, Alphagraphics or the local printere offered smb the ability to buy ads in the local paper.

    The real trick is the comp. Mediabids say they are working on a reseller program. Given that the mediabid functionality is DIY newspaper ad sales it should mean that the time needed to place, price and get paid for an add is minimal.

    For a print salesperson that could mean the offering is “Can I talk to you about a marketing campaign that works. Ads on the web, in Print in the XYZ newspapers, and the brochures and signs that could make a real difference.”

    The “newspapers” in question could be the local shopper, the community paper, one of the microzone editions you mention, or the city paper. So the print sales person becomes a VAR for multi channel marketing at an affordable price.

    Many newspapers are already trying to sell print collateral. Why not turn it on it’s head?
    It might be counter intuitive, but I don’t see why it couldn’t work assuming that the right conversations could be started between printers and newspapers.

  4. MichaelJ Says:

    Bryan, Just a quick question. Do you know and can you share any information about whether the Tribs micro zoning effort is making a profit? I know it is probably very hard to get that signal through the accounting noise, but it would be a great data point. It sounds to me that it should work.

  5. Don Piontek Says:

    Interesting comments and points. I do believe that the ability to sell “local” advertising presents new revenue opportunities for newspapers. The main problem is the investment required to “go digital”. Suitable digital presses for newspapers (such as Oce’s Jetstream 2800, and HP), along with the finishing gear and front-end structure, will require a a capital investment of between $6 – $7 million dollars PER UNIT. And multiple units are required, since these presses only produce around 4,000 copies per hour. How would this production model meet the needs of a city like Chicago? Newspaper ad revenue fell an estimated 30% during the last quarter. They simply don’t have the money required to make this transformation.

  6. Andy Nonomussen Says:

    I agree with Don. Where is the capital going to come from to enable these newspaper companies that are bleeding money to invest in digital technology? If you factor in the period of utlization of these presses (6-8 hours a night), what will they be doing the rest of the time? Full color direct mail? TransPromo? Books? I haven’t seen a business model that works in this environment that would enable the kind of investement it will take to pull this off.

    Factor in the infrastructure changes from sales to production and you’ve got quite a mountain to climb.

  7. MichaelJ Says:

    Andy and Don,

    But another trend is for newspapers to outsource their printing. Might it be possible that a PSP with excess capacity could make the deal with a newspaper. Given the very uneven peak levels of newspaper production, it might be able to sell this press time at a very competitive price. I think this is the model that Alphagraphics is trying with Screen. As i read the story the press was purchased by the UK publisher and installed at Alpha. I woudn’t be surprised if the deal was that Alpha gets to sell the excess capacity in return for giving the newspaper very favorable rates.

    Another path might be for Oce or HP to do some kind of deal similar to the one that EFi just announced for the wide format printers. Zero down, extended payouts. I agree that the” give me money and you get the box” is not going to work. But suppose the vendor/PSP took some of the risk in return for some of the upside? That would put the printing as a variable cost, instead of fixed cost. If the variable cost brings in more than it costs, why wouldn’t you do it.

    The point about infrastructure charge and production is well taken. But that could also be handled by outsourcing. Given that newspapers are trying to focus on their core advantages outsourcing or getting something like a facilities management contract with either a PSP or with HP/Oce direct or some combination of both might work.

    Thoughts?

  8. MichaelJ Says:

    Just one more thought about the 4,000 per hour. Consider If a market of 50,000 is thought of as 10 markets of 5,000 each. And if the local newspaper uses the web for breaking news, and the print edition for the more leisurely read, the sports, horoscopes, op eds, and ads, ads, ads.

    Then the problem to be solved is to do a deal where the all in marginal costs of 10 editions of 5,000 each are less than the ad revenue. Not an easy problem to solve. But with a little creative thinking, it doesn’t seem impossible.

  9. Bryan Yeager Says:

    All good points, guys. Let me address a few:

    Michael, in regards to TribLocal, I don’t know how much there is to share. It’s something that they continue to pursue and improve, so I believe it has been a success for them. I think the tactic they are using engages readers and also enables a method for local advertisers to better-target where they want to advertise. To me, that seems like the double-whammy to keep printed products afloat through rough economic seas.

    The points from Don and Andy about capital investment and utilization are all important considerations. The point that Michael made about print service providers taking on these volumes with new high-speed digital color inkjet equipment as opposed to newspapers investing in equipment themselves is a real possibility. Newspapers are becoming more comfortable about not having to own 100% of the news production process, printing included. Many newspapers have started to outsource their print production to facilities that specialize in newspaper production, such as Transcontinental. If those centralized newspaper production facilities make the investment in digital technology, they can either aggregate newspaper print volumes to digital devices, or they can run other types of applications. I think we will see new business models to aggregate volumes and applications when these new devices become more prominent in the market.

    For major newspapers with large circulations, a digital device could be utilized to print “niche” publications, such as microzoned/specialized sections or for magazines and directories. Smaller community newspapers could have the whole of their volume printed efficiently on one of these devices as well. One factor that we’ve considered for news production is redundancy. In a web offset scenario for news production, if something goes wrong with the press such as a web break, there is a team of presspeople and engineers that scramble to fix it as soon as possible to get the news printing again. The same can not be said for servicing digital devices. There would need to be some sort of redundancy built in (e.g., a minimum of two presses) to ensure that the news gets out on time.

    Regardless, I think we’ll start to see more movement toward digitally printed newspapers as the technology improves.

  10. MichaelJ Says:

    Bryan,

    I think that one of the game changers is that the “press deadline” as the time organizer of newspaper production may be going away.

    Recent conversations in journalism web sites seem to indicate that “breaking news” is becoming a dead alley for many print newspapers. If that comes to pass the economics change dramatically. Instead of the overhead needed for peak load, there is an opportunity to balance load. Once that happens, the real economies of print manufacturing come into play. The marginal cost of manufacturing/delivery should be low enough to be profitable with robust local business ad sales.

    I also see a different place for newspapers that might turn out to be significant. I’ve been on a little soapbox for a while about replacing textbooks. The real problem for textbooks is that they are -one-size-fits-all solution that can take 2 years to get to classroom. Imagine if newspaper editors could work with educators to aggregate content in a wiki organized by educational standards.

    The teacher could then select just the right content for her class for next week. And it could be delivered in newspaper or bookazine or paperback or even poster/newsletter format in a couple of days.

    I’ve been calling this kind of functionality and product a wikinewspaper or a wikibook. From where I sit, this seems like a low hanging fruit, both for newspapers and offset/ digital print manufacturing capabilities.