Surging paper costs cut deep for news industry with digital future in mind

The price of paper feels like a mundane thing to worry about, even for those of us still employed in an industry where the price of paper can suddenly start to matter a great deal when it’s going up.

And going up it is. The cost of newsprint — the price of the paper these words are printed on — has swollen unpleasantly since last autumn. As Reach, the owner of the Irish Daily Mirror and Irish Daily Star, summarised it, the first half of 2022 brought an “unprecedented” increase in newsprint costs and they have now hit an “all-time high”.

This does not, it must be said, sound ideal.

The degree of the surge in newsprint prices varies, but the trend is global, with publishers across Europe, the US, Australia and India among those to have raised the alarm.

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Reach has quantified the impact, saying its newsprint bill was up by almost £14 million (€16.6 million) to £38.8 million in the first half, a gain of 54 per cent, and climbed 65 per cent on a like-for-like volume basis.

As of the end of July, the company was “not forecasting any improvement” anytime soon, a prediction that has already proven on the money, with at least two European newsprint suppliers, UPM and Palm, putting up prices this month.

It is not in Reach’s interest to downplay cost challenges at a time when a pay dispute with its staff looks set to lead to strike action by journalists at the end of August. But this is a real problem.

Indeed, its newsprint cost rises may look enviably modest to publishers based elsewhere in the world for whom the soaring price of paper is cutting much deeper.

When input costs go haywire, there is often little scope to escape the pain.

The Irish news publishing industry draws attention to these “historic highs” for newsprint prices in its pre-budget submission, in which it reiterates its call for both printed and digital newspapers to be zero-rated for VAT.

The submission is a joint one by NewsBrands Ireland and its local and regional press equivalent Local Ireland, and, for sure, it is smaller publishers and printers that will be the most exposed in this situation, unable to implement the same cost-mitigation measures within the grasp of the likes of Reach.

Máirtín Ó Muilleoir, publisher of the Belfast Media Group — which owns three local print titles in the city as well as New York’s Irish Echo — flagged the issue in a tweet last month, saying he had just received a message from “our lovely (if slightly embarrassed) printers” notifying him of a 20.4 per cent increase in newsprint prices from August.

Ó Muilleoir, a former Sinn Féin minister for finance at Stormont, has been “at this game long time”, he added, but this was the steepest six-monthly hike he could recall. “Crisis, what crisis?” the tweet began.

Unless it is specifically your job to manage input costs, it is easy to feel divorced, in any industry, from their unsexy detail. This seems especially true of newsprint, if only because a significant portion of people who work for companies that produce newspapers haven’t physically touched one in quite some time.

There is a common trap, too, of attributing the success of businesses to skills that are within their power: inspired marketing, precision-tooled sales tactics, products too good to be ignored.

But the history of industry booms and busts is frequently tied to shifts in fortune that are as uncontrollable as they are prosaic. When input costs go haywire, there is often little scope to escape the pain.

The jumping cost of both newsprint and the coated paper types used by magazines is, on one level, a straightforward consequence of the rocketing energy costs now affecting all industries.

For as long as newspapers have been in operation, the highs and lows of the newsprint market have governed their appearance.

Paper milling is energy-intensive, with prices across the European graphic paper market tied in particular to the trajectory of gas. These same energy movements mean the actual printing and distribution of newspapers is not getting any cheaper either, of course.

But there are other dynamics at play with paper and they are the dynamics of market decline. After years of falling demand from customers with shrinking circulations, paper producers have since 2020 hastened steps to leave the market or reduce their capacities.

Some large producers have converted old newsprint mills to the production of packaging paper, serving buoyant ecommerce customers instead, and they haven’t looked back. But if paper producers are no longer enthusiastic about supplying the printing industry, this inevitably leaves the print industry in something of a tight spot.

For as long as newspapers have been in operation, the highs and lows of the newsprint market have governed their appearance. In Britain, for instance, wartime rationing of newsprint saw titles thin considerably from 1940, with some curbs staying in place for a full 15 years. The low quality of the newsprint used continued to hamper innovation for some time after.

In 2012, I wrote that rising newsprint costs were influencing changes in format and design.

The Guardian had just invoked the rising cost of newsprint as its explanation for cutting pagination, while broadsheets were going through a phase of downsizing to smaller formats or adopting slimmer page widths. The Irish Times, then super-wide in comparison to most, trimmed down in size later that year.

Ink prices? For publishers, I’m afraid there’s no relief there either.

Now, however, increasing newsprint costs feel more existential.

Newspapers would dearly like to evolve to an era when they don’t have to be newspapers anymore, not to an era when they can’t.

They want to be able to ditch print because digital subscribers and advertisers are paying enough for them to survive on digital alone, free of the cost drags of print.

But that future hasn’t arrived yet for most, and, in the meantime, those cost drags are getting draggier.

I could delve into what this likely means for cover prices, but this is guessable, and I’m beginning to feel guilty about the precious ink and paper this is all using up.

Ink prices? For publishers, I’m afraid there’s no relief there either.