Digital newspaper printing – the missing link

For several years now remote printing of newspapers has been a fertile topic of conversation and debate wherever newspaper folk gather. It is not difficult to see why either when you consider the wonderful possibility of fresh papers delivered directly to remote readers on distant shores. The changes in technology particularly with regard to file transfer software make the movement of newspaper content from creation to printing as simple as sending an email.

Just think, say the vendors, no more supply chain with expensive trucks, boats and aeroplanes and your news product as fresh as the internet but much more convenient. It is a beguiling thought for editorial colleagues that they can communicate so immediately with their audience wherever they may be in the world. We have even seen examples of papers printed on digital machines at sporting events with reports of the action handed out to spectators on their way home, literally hot off the press.

When the subject was first raised the possibilities seemed endlessly attractive, and indeed, much like the internet, digital printing was going to challenge traditional methods of newspaper production and delivery. The fact that this has not happened yet is down to a variety of factors chief among which is economics. While there are certainly issues with format, colour and speed the primary drawback to digital production remains the high cost of production.

While this may vary from method to method the price per page is expensive precisely because of the low volume nature of the exercise. Capital and setup costs are spread over fewer copies and economies of scale are lower. Toner based solutions are the most expensive because these machines are using plastic for printing rather than coloured water but essentially they are all shades of the same economic effect.

At the same time that newspapers started flirting with digital production the big vendors queued up for a dance. Xerox, Oce, Scitex and IBM all flushed with excitement at this attention. Again it is easy to see why these large companies would be attracted to the newspaper market. For all the industry gloom about newsprint based sales the market remains a colossal one when translated into potential click revenue for digital manufacturers. (Click revenue refers to units of charge made by suppliers and is linked to usage.)

If they were able to capture just a tiny fraction of the off-set print volume used by newspapers they would significantly increase their existing volumes of graphic arts based printing. Newspapers are also attractive as a new business line because they generally use print capacity at night when traditional graphic arts volumes are lower. To give an example a newspaper printing just 1000 copies per day at a single location would generate well over 28m (A4 equivalent) clicks per annum and this represents serious digital print volumes.

Entry to remote markets

From the Publisher’s point of view digital printing offers the potential for simple entry to remote markets. The Guardian and The FT from the UK have been pioneers in large volume digital print sites opening up new markets in Australia and South Africa respectively using OCE’s DNN service. The idea of publishing an edition in Australia would have been unthinkable before the growth of digital because the volumes are too small to economically utilise traditional offset printers and flying copies in from London takes two days. Under the current deal The Guardian is able to print 600 copies per day in Sydney and have the copies on sale down under before their readers in Europe have even woken up.

Many other newspapers (around 160 in total) are supplying their content daily in portable data format (PDF) to the main brokers of local digital printing – NewspaperDirect (ND) and Satellite Newspapers (SN formerly known as PEPC). Although they operate in subtly different ways they are both staking all on the expectation that readers far from home will pay a high price for fresh news wherever they are. ND tend to operate as brokers of content through locally based franchises where each franchisee has monopoly distribution rights within a territory and pays a commission for each copy sold back to ND. SN on the other hand have developed their own machines for printing and dispensing newspapers. Currently SN have around 120 Machines installed in Hotels and other premium travel spots around the World. Neither company has fully broken through commercially yet but they seem to have willing backers ready to stake them through this tough initial period.

So if we have an attractive technology and a strong perceived industry demand, how then can we bring the economic realities into line?

As everybody knows there are only two ways that a publishing business can make ends meet, either by selling copies to readers or by selling those readers (and their purchasing power) to advertisers. Although readers have shown a certain willingness to pay more for fresh newspaper content the volumes remain tiny compared to the publisher’s core business. The advertising community has also been very slow to adopt and drive the new technology in a way many might have expected.

There are reasons for this of course and when you consider how much the publishing industry is driven by volume it is natural that advertising revenue for digital editions have stayed at a very low level. The advertising community is also strangely conservative when it comes to new opportunities. There is always a lag between a new medium and commercial success in advertising and digital will need to make its case more forcefully if it is to take its share of the available cake.

Operational drawbacks

Two operational drawbacks in digital printing also contribute to a paucity of advertising support and they are the lack of colour available in most digital installations on the one hand and the binding mechanisms used by sheet fed printers (used by both ND and SN) on the other. Colour is vital in the long term for advertising success and we would expect that this issue can be overcome. Even now most digital printing solutions can be in colour but at a high price premium. The binding problem is significant however for all digital printers that use single sheet fed production. The finished copy is merely a collection of loose sheets that must be either stapled or glued to hold them together neither of which makes for an attractive end product.

Despite these technological drawbacks a case can be made that newspapers should concentrate on developing a business model for digital printing based on sponsorship and harnessing the power of global brands focused on very local advertising opportunities. This could for instance be in the form of a hotel sponsoring copies of an international title giving it an opportunity to co-brand with its host and taking space to address their customers directly. Because of the variable data opportunities offered by digital printing (every copy could be unique) this allows even small quantities to be valuable to a potential sponsor.

Local sponsorship opportunities

Under this scenario a newspaper can step by step build useful volumes in remote locations funded by locally sponsored copies. From the publishers point of view they would only need to set up the arrangements (either themselves or through a franchise partner) once and then watch regular daily volumes add to their global sale. I see airlines, hotels and holiday resorts being attractive initial partners in this venture but conference facilities and sporting/entertainment venues could also be likely targets.

The question will remain as to who will pay for this and how much is it worth to each party. For the final consumer the product will either be free or subsidised and this is particularly true for premium guests or passengers who are valuable to the sponsoring organisation.

As far as the newspaper is concerned not only will they see a growth in total audited sale (subject to ABC acceptance) but also they will be reaching a growing audience of affluent and influential customers.

A further refinement would be to use the advertising space on the front page to talk directly to these customers making local offers that should have a high conversion rate. The kind of example that springs to mind is that of a conference venue or hotel offering a free cocktail to all delegates at their restaurant or bars on production of the advertisement. Because of the very local nature of the audience – all of them are within about 300 yards of each other – promotions and offers can be precisely targeted.

This scenario has greater value for a single newspaper operating in a similar way across many sites but it can also work with a range of newspapers printed in a single site. An example of this would be the home hub of a major airline. This place would then print copies of titles sponsored by the airline chosen either by passenger preference or by destination. To take Heathrow as an example BA could choose to offer US newspapers of the day to passengers boarding west bound flights and Asian newspapers to those on East bound flights. Premium passengers checking in for a flight to Bangkok for instance could be offered either English or Thai language titles that would brief them on their destination and these copies could also be offering advertisements for local hotels and car hire in Thailand. The newspaper itself for example could offer vouchers for free copies during the passengers stay and attractive subscription rates for long term residents.

Regionals can profit too

This is not just a game the national press can play. The opportunity also exists for regional newspapers to open up new markets on foreign soil. Each year millions of readers break their purchasing patterns to take a well earned break in the sun. Digital printing can allow a regional paper to supply fresh copies to passengers as they fly home offering them attractive deals on renewal and thereby reducing churn. Add to that the potential to add genuine ABC sale and you have the recipe for a low cost promotion that makes their tanned readers happy into the bargain. With Manchester, Liverpool, Glasgow, Birmingham and Dublin all heavily involved in holiday traffic this should give plenty of scope to the enterprising publisher.

The opportunities for building a macro sale from a micro base funded all the way by sponsorship is an obvious and sensible extension of the digital opportunity but it will take both imagination and persuasion to make it work.

If publishers are not prepared make the necessary marketing investment then perhaps this is an opportunity for a 3rd party broker to take the content and build the business for them. As far as the publisher is concerned this can offer a path for reader service in remote locations at a low cost and a useful addition to their global sales figures.

Digital printing is in its infancy and all issues such as speed, binding and cost effective colour will eventually be resolved. The missing link is the commercial imagination to use the technology for what it is designed and we would expect this missing link to be identified sooner rather than later.