As the Price of Newsprint Increases the Size of a Newspaper’s Page Narrows Or Its Paper Thickness is Reduced; The Next Step Is To Take The Paper Out of Newspaper

Philip M. Stone October 17, 2005

Seldom does a day pass that some major newspaper like The New York Times or The Wall Street Journal doesn’t announce that it is narrowing the width of its pages, or reducing its paper weight thickness, to save on newsprint costs. It’s a similar scenario to 10 years ago when newsprint reached its price peak.

US newspapers are now paying about $625 a metric tonne for their newsprint, a 44% increase since the low of $425 in May, 2002. The price is forecast to rise to around $690 within the next 12 months. Ten years ago official prices hit $750 but some publishers were said to have signed contracts at close to $900 for fear prices would go higher.

Publishers, who usually stocked around 40 days of newsprint, were then renting warehouses anywhere they could get them and newsprint inventory jumped to four or five months of supply, as a hedge against even further price increases.

Those same publishers were anxious to maintain their 20% plus margins. Some did layoff staff, just as is being done in 2005, while others looked directly at ways to cut newsprint consumption. It was those newsprint price hikes of 10 years ago that gave many American newspapers their current 50-inch web width (12 ½ inches wide), down from what had been the standard 54-inch web width (13 ½ inches).

The Wall Street Journal has now announced it is making a $43 million investment in order to reduce its web width from 60 inches to 48 inches (down from 15 inches wide to 12 inches) by January, 2007, and then it expects annual savings of around $18 million annually – most of it from using less newsprint.

The Journal’s figures probably assume it will not have to reduce its advertising rates even though the paper is losing 20% of its width. Experience elsewhere has been that when a newspaper decreases its size then advertisers insist on reductions, too.  In the advertising world, apparently, size does count!

The New York Times, having announced two rounds of layoffs this year, says it is considering its options on reducing page size. The Times last year said it paid an average of $544 per metric ton and that average price has risen considerably this year. The newspaper spends around $300 million annually on newsprint and ink and cutting it current 14-inches width by just an inch could save it in the region of $20 million annually.

Besides changing page size, newspapers are looking at changing the thickness of the paper, but the results are mixed. Some tests have shown up to 30% “show through” problems, but The Times and nearly all Knight-Ridder newspaper have made the switch from 30-pound paper to 27.7 pound, sometimes upgrading their ink accordingly. The reduced thickness saves The Times about 8% on its annual newsprint costs, plus peripheral savings for having a lighter product delivered to its mail subscribers.

Newsprint prices are historically very volatile, often reaching the highest peaks or scraping the lowest valleys within a relatively short time. From the 1995 highs, prices spiraled down more than 55% in six years, with many producers claiming, and their balance sheets seemingly proving, that they were selling at prices below cost, resulting in huge losses. During the 1995 price rises there was talk that the two industries should get together to work out how to smooth the peaks and valleys, but little came of it once prices started to decline.

The US imports around 8 million tons of newsprint each year from Canada, the world’s largest supplier – a big newspaper like The Times probably uses around 200,000 tonnes annually -- but most Canadian producers have not reported a profit for at least three years. Consequently they have closed plants, and turned some of the remaining production to more profitable higher-grade papers. That has resulted in a more limited newsprint supply, increasing prices, but even at today’s prices producers say they are only just about turning a profit. 

For publishers, it’s a whole different business world between the 10-year price peaks. Back in 1995 it was basically business as usual except the newsprint increase was pressuring those 20% margins. Today, newspapers are suffering from a variety of illnesses -- dramatic circulation declines because of new phenomena like free newspapers and the Internet, plus readership has grown old -- the average reader’s age now is 55 and they are dying faster than they can be replaced by younger readers.

Not only that, but web sites like Craigslist have siphoned hundreds of millions of dollars away from their cash-cow classified advertising revenues (responsible for up to 40% of a newspaper’s revenues), and even national and local ad revenue is under pressure as advertisers divert the spend away from newspapers to the Internet.  There is real difficulty just trying to maintain revenues let alone grow them, and so in a cost-containment environment a 44% increase in newsprint costs in three years is the last thing publishers needed.

Therefore reducing newsprint usage is obviously one way to cut considerable costs, and in a backhanded way US publishers have done exactly that. Because circulation is down, and classified advertising is still recovering, there are fewer newspapers being sold and they have fewer pages. US newsprint usage is down 4.9% for the past 12 months, and in August alone it dropped a whopping 8.2%, according to the Pulp and Paper Products Council.

Newspaper groups, reporting their dismal third quarter results, put some of the blame on rising newsprint costs. Gannett, for instance, had locked in its newsprint cost on a six-month contract but it still blamed part of its 4.3% third-quarter profit decline on rising newsprint costs.

But even chipping away at newsprint costs still leaves a big newsprint bill at the end of the day. It’s just a matter of how big. The only real way to get away from that expense is to get away from newsprint!

Newspapers already can be published on the web. The reader prints what he/she wants. Trouble is we all feel that we want something in our hands and it’s just not the same printing pages from the Internet. So now there are experiments with paper-thin video screens about the size of a tabloid newspaper that can take an entire newspaper’s electronic feed. Take it wherever you happen to take your newspapers, fold it if you want, read it at will. But will it have the same “feel” reading it at the breakfast table?

Mario Garcia, probably the world’s foremost newspaper design guru, believes the size of a newspaper page will eventually shrink to around US letter (European A4). Already in Europe such newspapers exist and they do well.

There is something in our psyche that we expect “size” when we read a newspaper. But production cost factors and technology in our new digital world could well change sooner than we might think the size, feel, and look of our daily companion.

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