The printing industry has seen tremendous change in the past years and will see even more change in the next years. Digital imaging, desktop publishing, large-format offset printing, ink jet production printing and computers are a few examples of advances since the 1970s. Although the technology has changed and the competition is fierce, some aspects of the printing business remain unchanged: customer service, the demand for quality and adhering to the particular ethics and laws regulating putting ink on paper.
Newspapers have lost readers and advertising to the internet. Book and music shops have closed for good. Sales of DVDs and CDs have plummeted. The television industry has so far resisted big disruption but that has not stopped doomsayers predicting a flight of advertising and viewers.
The surge in smartphones, tablet computers and broadband speeds has encouraged more people to pay for content they can carry around with them. According to eMarketer, a research firm, this year Americans will spend more time online or using computerised media than watching television. “All-access” services, such as Netflix (for film and TV) or Spotify (for music), which give unlimited content on mobile devices for a monthly fee, are prompting people to spend more on digital products.
After years of wreaking havoc, the internet is now helping media companies to grow. PricewaterhouseCoopers (PWC), a professional-services firm, reckons that revenues for online media and entertainment will increase by around 13% a year for the next five years. Even in music, which took the biggest hit from the internet, downloads are something to sing about. For the first time in over a decade global music-industry revenues grew last year, by about 0.2%, according to the IFPI, a trade group. Online sales just about made up for the drop in physical ones for the first time. Subscription services, such as Spotify and Deezer, let people stream songs over the internet either for a subscription or free with adverts. Online radio is also growing.
Revenue from couch potatoes are also stabilising thanks to downloads, rentals and streaming services—to the relief of Hollywood studios. Kiosks that dispense rentable films were once scorned for undermining DVD sales. Now those sites are boosting profits at media firms by buying the rights to stream content online. Television and film companies are selling rights to broadcast content after it debuts but before it is repeated on TV.
The most obvious change in the past few years is the decline of “physical” products, such as CDs, DVDs and print newspapers. In 2008 nearly nine-tenths of consumer cash went on them; by 2017 it will be a little over half, with digital grabbing the rest. Electronic content has some advantages, in particular lower distribution costs. However, consumers expect to pay less for electronic products and are renting instead of buying.
Media firms used to make a fortune selling “bundles”. Songs are grouped into albums; newspapers are packages of articles and advertising. The internet lets people pick what they want. Firms that can keep on bundling have done better. Pay-TV has preserved bundling by not putting current programs online while they air on screen.
Book publishers are also adapting. Thanks to the rise of tablets, e-book sales have climbed. Total spending on books is not likely to rise. But the growing share of e-books—around 14% globally this year—means fatter profits for publishers as printing, distribution and storage costs fall. Around 40% of sales will be e-books in three years, predicts Brian Murray, the boss of HarperCollins, a big publisher.
The internet is at last contributing to media-industry bottom lines. But it will not restore the newspaper or music businesses to their previous size. The economics have changed for good.
Some media firms need to get bigger and trim costs. Penguin and Random House, two publishers, merged earlier this year in order to compete with Amazon, which now publishes books as well as selling them. Universal Music bought EMI, another label, last year. The rounds of sackings at media businesses are as long-running as popular cable-TV dramas.
What will happen as the internet’s influence increases? Journalists write more articles for smaller salaries in shrinking newsrooms. Musicians complain that streaming pays too little. But authors do better. Royalties from e-books are about 25% of net receipts, compared with an average of around 16% in print. Careers can take off faster. E.L. James’s bondage-buster, “Fifty Shades of Grey”, turned up online before being published on paper. Many musicians get more exposure online than they would have had in a record shop, where space was tight, says Martin Mills of Beggars Group, a British music company.
New technology can also provide opportunities for media firms. The value of archives is growing in the internet age: owners can profit from older programmes that are rarely broadcast. Netflix and other online-video firms are snapping up old films and drama series. When a musician releases a new album or goes on tour, old songs are streamed more too, says Daniel Glass, who runs a music label.
The internet can also help firms become cleverer. Concerts have become the lifeblood of the music industry and make up more than half of revenues. Acts used to go on tour to sell albums. Now they put out albums so they can make their living on the road. Bands will probably get cleverer at using streaming data to decide where to perform. Publishers are releasing books electronically to test sales before putting them in print, and to adjust prices to drive demand. Experiments that were once impossibly expensive now cost peanuts.
The trade of dollars for digital cents doesn’t always hurt.
(Thanks to 3dprintingindustry.com)