Is Magazine Printing a Commodity?

I guess it depends who you ask. If you ask a printer, the answer will be a resounding “no”. Others would say that it absolutely is. It all depends upon the bias of whom you ask and what they have at stake in the answer. For example, a printing company owner, the employee of a printing company or anyone whose livelihood comes from a printing company will never admit that what they offer as a company can be bought just about anywhere and is no different or better than any other printer.

If printing is a commodity, a publisher has nothing to look for outside of price when choosing a printer.

What do I think? I think the answer is maybe. Allow me to explain:

There are three general areas within the publisher/printer relationship that can be examined in this regard: 1) the manufacturing process 2) quality, and 3) service. Service can include many different, yet extremely important things to consider which I will cover in more detail below. I should also say that capabilities would be a significant part of this equation as well but most magazine printers have like capabilities. Or at least for the sake of this discussion I am assuming that they do. Also, later in this book I will detail the many ways to assist you in determining whether, or not, a printer is a true magazine printer.

Lets take a look at the manufacturing process that, as you will see, I think automatically includes quality. In the magazine printer world, the manufacturing process has become very “commodity-like”. I say this because I truly believe that there are only a very small number of true magazine printers that should be given real consideration when looking for a partner. Within this small group of viable magazine printers all of them have the most up-to-date technology and equipment needed to serve the short-to-medium run magazine publisher. Keep in mind however that a new printing press does not make it an ideal short-to-medium run magazine press (I say this because there are printers out there who claim that they are magazine printers and that their new presses support this market when this is not necessarily the case)! So, if using the most up-to-date technology and equipment I can pretty much tell you, from experience, that the differences in quality and efficiency levels of the product from printer-to-printer will be unnoticeable. The newest technology and equipment, for the most part, does all of the quality work automatically. So what a technology is capable of - “is what it is”. If a printer has it, quality levels should be the same as the next printer that has it. Again, this is assuming that the operators are reasonably experienced which most are more than capable.

So manufacturing and quality being in the same category, the only thing left to look at would be service. If you ask 100 publishers for a definition of service, as related to magazine printing, you would assuredly get 100 different answers. For the most part, however, some of the general answers might include fast turnaround, quick response to phone calls, looking out for publishers needs, offering money saving suggestions, etc. These are all extremely important! But will you ever find a print salesman whom is trying to get your magazine business that would tell you that they are not magazine printers? Or that turnaround time is slow? Or that they do not look out for your needs or return phone calls quickly? I doubt it very seriously.

So how do you really know if a printer is truly client friendly, even if they are magazine printers? Are they really any different than other magazine printers? If you cant answer a question about what makes Printer A different than Printer B, then I would say that printing is a commodity! So my answer is that printing has “somewhat” become a commodity. HOWEVER, there are a very small number of printers out there who truly are different and, based on their day-to-day policies, show that they are very customer friendly. And it’s not obvious, on the surface, the type of things that will show these major differences. You have to know where to look and what types of things will tell you this.  

What do I mean by this? Let me give you just a couple of examples. I think most everyone would agree that printer contracts tend to favor the printer, or at least this is the general assumption. Some would say that they favor a printer just a bit and others would say that they completely favor the printer. In general, once you sign a contract with a printer, you are not leaving that printer unless there is a major error committed by the printer. Also, generally, most all contracts define a price increase to take effect at predefined points within the term of the contract.  So these are the two points of a contract that I am concerned about right now – Price and Performance!

What does contract language tell you about a printer? It basically tells you that a printer with the type of contract mentioned above isn’t all that concerned about your general happiness with them once a contract is signed. If you are unhappy, for whatever the reason, it’s too bad unless they have officially violated terms of the performance part of the contract. I should say that there are some printers out there who will allow you to break contract if you are just generally unhappy however its rare and NOT A MATTER OF GENERAL POLICY. I should also say that it’s probably not fair to say that a printer wouldn’t care about you once a contract is signed. This is overly harsh and impractical. What I am saying is that general contract language protects a printer should they fail you or you find that their pricing levels are no longer competitive. It also means that should the market drop, you are locked into a price and not free to take advantage of a falling market. So would a printer with this type of contract sound like a printer with confidence in their abilities to keep you happy long-term, in all areas? I say not.

On the other hand, there are a few printers who, as a matter of day-to-day policy, will lock in initially established prices for the entire term of a contract to include several years if desired. This same contract from these printers will contain a 90 day “out-clause” allowing the publisher to leave FOR ANY REASON with 90 days notice to the printer. So what would this tell you? It tells me that these are printers who have complete confidence in their abilities to keep their clients happy long-term! And also that they will remain price competitive throughout the term of the contract regardless of initially established prices! These printers see no advantage in forcing an unhappy customer to stay with them nor do they have any desire to be uncompetitive in the marketplace. I can tell you, from experience, that I have seen one of these printers lower their manufacturing prices without any prompt from their client! They simply realized that the market had dropped in one particular area and they reacted to it.

Do you see the potential differences in service definitions? It is a huge difference! These printers “put their money where there mouths are”! Outside of these types of unique things, you might as well buy on price! Again, this is assuming that you are choosing a pure and real short-to-medium run magazine printer. If you are choosing a pure magazine printer, you will probably not loose if you do buy on price alone!

Now some might say “I don’t even have a contract with my printer and my printer doesn’t require one”. This is not the point. I am trying to explain an overall mindset and how a normal practice of doing business shows a confidence level about their product and services that seriously differentiate them from competitors. These are the types of things that might not be so obvious on the surface and take them out of the category of “commodity”. Plus, do you want your pride and joy, your magazine, to be as a commodity!

So, to summarize, there are numerous commodity-type printers and only a handful that I consider to be outside of this designation.

What can Making Magazines do for you?

I can help you find these special printers, obtain bids for you from numerous magazine specialty printers, negotiate a contract unlike any you thought possible, continue to monitor your relationship, check your invoices, help you deal with issues, etc. I become an extension of your staff. All at zero cost or obligation to you. No fees or marked-up pricing! Contact me and, within 10 minutes, I will explain how I do this and how I have been 100% successful in saving my clients a significant amount of money on their print, paper and distribution costs and how my continued involvement has benefitted them tremendously. My clients love my service and printers love my service.

You focus on publishing and let me use my experience and expertise to worry about printing and distributing your magazine.

The most common feedback from my clients - “I wish I would’ve contacted you sooner”. 

Fall 2012 Paper Price Increase! Will It Hold?

As you likely know by now, pretty much every mill has announced an October 1st $3.00/CWT price increase on most commonly used magazine stocks. With the economy in such a poor state and showing no real signs of improvement, combined with the demand for paper appearing to decline extremely rapidly, many publishers are wondering why these mills would think that they could increase prices. Here are a couple of very general reasons, as I see it at least:

1) Mergers/Acquisitions and consolidation has reduced industry capacity. Mills are now at a point where market demand has reached parity with available capacity.

2) Normal seasonal increases in demand tax available capacity.

There are many other things that impact each of these items (like China Anti-Dumping Tariffs) however these are two of the more very general reasons (as well as the more easily understood reasons).

Anyway, will these increases hold? I say no! Not long term anyway. And maybe not even short term. I personally think that the consolidation that has taken place over the past few years will need to continue on a regular, ongoing basis as demand for paper will continue to decrease at accelerated rates due to the higher than expected rate of increase in demand for digital content within previously defined timeframes. In other words, digital content is far more popular and demand is much higher to date than was ever expected even a few short months ago. And I think that demand for paper is going to fall at a pace that will make in difficult for industry consolidation to keep pace with.

Paper Price Monitor

It might not be a bad idea to check the Making Magazines Paper Price Monitor out to make sure that you are paying paper prices that are within acceptable current price ranges. Many times, if you are not on top of market conditions and pricing you will find yourself paying way over current market pricing for paper. The Paper Price Monitor can be found via a link in the right hand column of this blog.

* Again, please note that these are my thoughts only as I am not an expert in the area of paper capacity, demand, market conditions etc. 

Printer Contracts - Can they be broken? Are they Beneficial?

Over the course of my career, I have had numerous instances of publishers, for one reason or another, inquiring about whether, or not, their printer contract could be broken. The general answer is - It depends. And it depends on my different things, the full list of which would be impossible to cover in this article. I will attempt to give you some general insight based on my own personal experiences. I want to make sure that you understand my disclaimer:

The following information is not representative of any specific printer and if you find yourselves in a position of either wanting, or needing to break a contract, that you work with your printer and/or attorney to make sure that everything is done properly and, most importantly, for the right reasons.  

So here goes. I have seen several different reasons for publishers wanting to break their contract with their printer. The following are a few of the more common:

1) Publisher obtains a quote from a different printer who offers a lower price than they are paying their current contracted printer

2) Publisher experiences minor problems with quality, delivery or service

3) Publisher experiences major problems with quality, delivery or service

4) Publishers are experiencing a general unhappiness with their overall relationship

There are obviously others however the above listed are the more common I’ve heard over the course of my career. The problem is that, within each of the above categories, there are 100’s if not 1000’s of unique circumstances, each of which could result in numerous different opinions or results based on the unique circumstances. Have you ever wanted to get a generic idea about how much something might cost you only to find the company’s website to say “because each job or product is uniquely designed and customer needs vary, please call for a personalized quote”? Unfortunately, as much as I hate to say it, thats exactly the disclaimer this topic requires. For specific personalized advice, you need to speak with your printer and/or an attorney regarding your specific case and circumstances. I can, however, give you some very general thoughts on the issue and this pertains to pretty much every topic listed above AND is based on experience and the philosophies of many of the truly customer service oriented printers in this business.

Let me make this simple by using an example that most everyone can relate to:

If you found out today that your significant other, for whatever reason, suddenly no longer wants to be with you, would you force them to stay with you? Maybe, however there may be several things that you might do first in an attempt to “save the relationship”. Here are some possibilities:

1) If this was an “out-of-the-blue”, no warning type of notification, you would most certainly want to know why they suddenly didn’t want to be with you. This would probably be followed by anger because they never told you that they were growing away from you for whatever the reasons may be. Would you have a right to know about these things as they build or is it more appropriate to just allow everything to build up and suddenly explode? While there may be a few with varying opinions, I think we all deserve to know when we are doing something wrong before it builds to a point where it blows up.

2) You would probably want an opportunity to correct the problems and make amends. Would you deserve this if you’ve not had an opportunity previously? I don’t know but I am certain that you would think that you would.

The point in these two items is that you should always tell your printer about anything that you are not happy about - regardless how trivial it may seem! Give them a fair chance to correct the problems before they “pile-up”.

But lets say that, for whatever reason, you are just not happy with your partnership. Whether you have given them an opportunity to correct any problems and/or irritations or not, they just haven’t done it to your satisfaction. You simply no longer want to do business with them however, based on the terms of your contract, there is nothing that the printer has done that meets the criteria for legally breaking the contract.

I have been through this very scenario numerous times throughout the course of my career. I have represented numerous printers at times where this has become an issue and each printers thoughts on the matter, in my opinion at least, has depended on the overall quality of the printer. Here are the differences in responses:

Printer A - We have a legal contract and we are going to hold the publisher to it regardless of their level of dissatisfaction!

Printer B - We have a legal contract however, if the publisher is unhappy we cannot have a profitable relationship and, therefore, we will allow the contract to be voided.

Which of the above sounds more professional AND sensible? The bottom line is this:

If you are not happy:

1) Tell your printer and give them a fair chance to correct the problems.

2) If there are ultimate irreconcilable differences, work with your printer to come up with a mutually agreeable plan to move on. Typically, if you are decent about the process a professional printer will work with you and make this process fairly painless.


A COUPLE OF THINGS THAT YOU SHOULD NEVER DO HOWEVER:

1) NEVER LEAVE YOU PRINTER SITTING ON PAPER AND/OR SUPPLIES THAT WERE MEANT FOR YOUR MAGAZINE(S)!!

2) NEVER LEAVE A PRINTER WITHOUT PAYING YOUR BILLS WITHIN THE AGREED UPON TERMS!

Now lets look at contracts in general. Why do publishers sign them?

Commonly, publishers sign contracts because many printers, especially the larger ones, require them. Printers who require contracts are experts at leading publishers to believe that their contract creates for a win-win situation for both you, and them. How do they do this? They lock in manufacturing prices for the term of the contract, cap future price increases and guarantee paper availability. So are these things really benefits to you, the publisher? Would you get these things if you did not sign a contract? I would argue that not only would you get these things without a contract, you might actually be in a stronger position, in todays market, by not signing the contract - UNLESS IT IS THE RIGHT CONTRACT (I’ll come back to this later). Think about it, in today’s marketplace, printers are hungry. Your “contract”  is your free ability to continuously check the market and move if you find a better overall deal (the word “deal”, in this case,  may be more than and/or completely separate of pricing). Printers are not going to like me saying this however its absolutely true. And trust me, in today’s marketplace, they will get you paper! And as far as price increases go - I would never accept a price increase without checking the market first!

So what would you, as a publisher, want in the ideal contract? How about a long term contract with originally established pricing locked in for the entire term and a 90 day out-clause for any reason with 3 months notice! Wouldn’t this contract be all win for you, the publisher? It absolutely would and there are printers who actually do this as a matter of their daily, ongoing business philosophy (If you can’t find them contact me and I can help you)!  Why would a printer do this? Because a relationship where both parties are not happy is not going to be profitable or productive for either. Secondly, because printers who will do this have a very high level of confidence that they will continuously earn your business issue-after-issue. Think about a contract with these terms - you are protected from any price increases AND can take complete advantage of lower pricing if it presents itself!

One final thing to think about regarding breaking your contract:

How would you feel if your printer came to you one day and said, “We can replace your business with a new client that will be more profitable for us and, therefore, we are kicking you out effective immediately”. Would you be ok with this? Absolutely not! Conversely, it’s also not ok for publishers to do this to their printers. If you are not happy, for whatever the reason (price, quality, service, etc), let your printer know immediately so that they have an opportunity to correct it. There are few, if any, things that will sour your reputation more than leaving a printer because you find a better price and then blaming it on problems that you never told them about. If you do this more than once or twice, trust me, word gets out and printers begin to see what you are about and will no longer have an interest in your business.

The moral of this article - Be a Good, Fair and Honest Partner!

New Book - How to Buy Print and Negotiate Contracts for Magazine Publishers

I am close to releasing a book that I have worked on for quite some time. It details the proper way for magazine publishers to spec print, evaluate bids, choose and printer, negotiate a contract and maintain a successful relationship with their printer. The material in this book is something that has long been needed however was just never fulfilled in any meaningful and/or practical way. The book is currently 77 pages of pure, unedited text. I am willing to release advance copies to magazine publishers, or staff members, with the understanding that anyone that it is released to will review it and provide me with feedback on its content and educational value to magazine publishers. While this book covers the benefits of the services that I provide as Making Magazines, you will complete this it with a very usable level of expertise that could save you thousands of dollars on your print, paper and distribution costs. It will also provide for a base that will undoubtedly improve your relationship with your printer and give you a renewed understanding of your biggest and most important partnership.

If you are interested please request a copy via my email makingmags@gmail.com. I will reply with a copy for you to review.

If you find your print pricing to be way above the market, whose fault is it?

It is not at all unusual for me to “go out for bid” for a client and find that the client is paying way over market pricing for their print services. In most cases, when this happens, the client becomes very angry with their printer. Understandable! Or is it? There are a couple of common problems:

Common Problem #1

Let’s take a look at why this happens. In most cases, this happens to publishers who have either been with their current printer for a very long period of time, or publishers who just did not do their homework when they chose their printer in the first place. One area that stands out as being the most common to find yourselves overpaying in, is paper.  Typically, publishers do not really have any good resources to consult that would tell them what they should be paying for paper. In most cases publishers trust that their printer is charging them “fair market pricing”.  Most specialty magazine printers are incredibly good at passing on paper price decreases as quickly as they pass on increases. Sometimes, it just slips through the cracks though and decreases just aren’t passed along in a timely manner and/or to the extent that the market declines. Over time, the price you are paying becomes extremely high when compared to market pricing. In almost all cases, the publishers who have found themselves in this position have not checked the market on a regular basis and/or at least the paper market on a regular basis.

   

Common Problem #2

The other problem that I commonly see is publishers paying for a higher-grade paper than they are actually getting.  If you do not know paper it might be extremely difficult for you to know this.  I’ve seen situations where publishers were actually paying for paper that was 2 grades higher than what they were actually getting!

So how do you avoid this? This is actually a really simple problem to solve. You have a few different options:

1)   Go out for bid every at least every 12-18 months. This will keep you abreast of both market print pricing and paper pricing.

2)   Find a paper professional that you can consult on a regular basis about what the market is doing, and what you should be paying for the weight and grade that you are using

3)   Use the Making Magazines Paper Price Monitor located on the Making Magazines website at www.makingmagazines.com.

4)   Find a professional that can assist you in all of these areas and ensure that you are always protected!

  

      Overpaying for anything in this economy can make the struggle to survive much more difficult. My biggest concern is that most publishers just don’t realize that they have a problem.  Take the time to check the market and find good resources to assist you in your efforts. 

What’s going to happen to print? Another possibility.

There’s much talk about the future of the printed magazine. And where there is conversation, there is also prediction. Most of the time, when its readers of magazines discussing the topic, there are two primary opinions: 1) Those readers who prefer an actual printed magazine and 2) Those who are ok with, or prefer, reading a digital version on a tablet device, smart phone or laptop/desktop computer. Other times, when its actual magazine publishers discussing the topic, the discussion may also include concerns related to an uncertainty about or lack of a proven or successful business model to create or sustain advertising revenues, or possibly a lack of market mass in the area of tablet ownership. These are obviously all extremely important areas of consideration; areas that, unless they are satisfactorily addressed, will prolong transitions from print to digital.

There is one additional possibility that might be considered: 

The dynamics of the economy and the market for magazines and related print services, in general, may force a natural transition from print to digital much sooner than you might think.  Why?

Printers are struggling right now! Maybe more so than ever! Note - this is a very general statement as I’m sure that there are printers out there who may be doing better than ever! In general, however, printers are struggling. Why are they struggling? For numerous reasons, some of which include the following:

1)   Less Demand For Print. When the economy is bad it creates less demand for almost everything, except money of course! It starts with general consumers cutting back, in many areas of their lives, which causes advertisers to cut back, which causes less demand for printed pages, which causes less demand for print, which causes less demand for paper etc, etc, etc. Consumers also tend to cancel magazine subscriptions in a bad economy because its something they can simply do without. It’s discretionary spending! This also contributes to less demand for print which causes less demand for paper, etc, etc, etc.

2)   Overcapacity in the Print Market (Too much competition). There is far more available press capacity available in the market than there is demand for it. This creates for extreme competition, which causes prices to fall.  Great for buyers, not so great for printers!

3)   Decreasing Margins. As a result of overcapacity and intense competition for the fewer-and-fewer jobs available for printers to print, pricing pressures have become fierce which is driving margins way down.

4)   Advances in Technology. Advances in technology have leveled the playing field allowing many more printers to provide the same services that, in years past, only the “chosen few” could provide. While in years past technology advances allowed printers to produce jobs more efficiently and, as a result, at higher margins, all of this is being quickly stripped away by a very competitive and challenging marketplace.

In a nutshell, printers aren’t making much, if any, money right now! And I personally don’t see this getting any better in the near future.  Again, I note, that I am sure there will be printers who claim to be the exception to this. If there are any out there, then congrats to them!

Possible Results?

So what could happen as a result? Many printers have already begun to realize that being in the business is “just not worth it”.  Their question to themselves is “Why go through the immense aggravation and pressure that comes with running a business just to simply stay alive and pay the bills?” It’s just not worth it! Many of these printers will simply not have a choice as they just do not have the means to “stay alive” any longer.  The market for print services is shrinking and it will continue to do so.

Now add to this the fact that the print market has already suffered early market share losses to digital media and the market becomes even smaller and more competitive as there are even fewer pages (or at least they are smaller than they were in the past) available for printers to compete for.  

As the market for print services begins to shrink as a result of suffering margins, competition, etc., there will be fewer printers and available press capacity.  As a result there are two possible things that could happen:

1) Demand will drop equal to, or more than available capacity causing even more printers to discontinue business, or at least downsize.

2) Available press capacity will fall more than demand and, as a result, prices will begin to rise following the creation of a market where demand could exceed supply.

The latter scenario would eventually drive prices for print, paper and distribution back up as capacity would be decreased.  The printers that remain in the market may do well, for a time, as margins should improve, as a result. This will change, however, as while prices for print, paper and distribution begin to rise, it will drive more and more publishers to digital creating yet another soft print market which would create for additional printers to exit the business and the cycle will begin to repeat itself! The continued downward market cycle would, eventually, severely wound, and about kill, the market for print, paper and distribution. Digital would be the only thing left save extremely specialized products that, for whatever reason, will have to be printed for one reason or another.  Either scenario above may not be good for the future of print.

More Accessible Technology

In the past the best of technology has been difficult for the smaller, independently owned printers to acquire. Now, its as easily and cost effectively available to pretty much any printer. This creates a more “commodity-like” industry. So now, most all magazine printers have the latest and greatest technology and, as a result, can produce the highest of quality product, with similar turnaround times, they can distribute the product as cost effectively and efficiently as any other printer, and have employees who are all equally knowledgeable and customer service friendly!

So what’s left for a publisher to buy? Price! If Printer A can do exactly the same thing as Printer B, in the same amount of time, with the same level of quality, the same level of service, etc then why not buy the lower price between the two? Print sales people are no longer sales people the way they used to be. Printers have become quote factories and they just aren’t having fun anymore!

Printer Views of the Future

Printers will typically, however, always have an optimistic outlook on the future of print. Especially if they own a printing business! A pessimistic outlook, by a printer, means that they are admitting that the life of their business is limited; their income is at risk; etc.  I don’t know of anyone who would do such a thing! But I do believe that maintaining a clouded view may be suicide for the printers that have it. It is time for magazine printers to start looking at, and offering, alternatives to their clients. The alternatives may shrink print volume however it’s better to sacrifice now, live longer and become more profitable and healthy in the future.

Conclusion

I want to make it clear that I am not saying that this is how the print/digital discussion will play out ultimately. This is a possibility, however, and therefore should be considered. I truly believe that, ultimately, digital will win big over print! And I don’t think it will take nearly as long as most think. If you, a publisher, could show a drastically improved bottom-line based on lower costs to produce and distribute, combined with a simpler process to accomplish it, wouldn’t it make sense and be desirable? I strongly recommend that both printers and publishers start helping each other in the digital arena and work together to move in the digital direction. 

Smaller, Start-Up Publishers Beware of your Design Specifications! They could kill you as you grow!

I recently worked with a publisher who had, from all indications, an extremely successful, young magazine, in a market prime for tremendous growth. This magazine was absolutely beautiful! They are using the highest quality paper, making full use of the pages for color, exotic cover folds, etc. They are building their reputation on the quality, look and feel of the magazine and are attracting many advertisers as a result. Great, right? For now maybe!

Here are the risks and the potential consequences that you must avoid:

This magazine is currently being printed on a sheet-fed press as the quantity is below 5,000. The publisher expects that circulation could increase to well over 10,000 at maturity. So, in such low quantities, printing on a sheet-fed press is absolutely the most cost-effective means of producing the title. Sheet-fed printing opens up a variety of reasonably cost effective options, like higher-grade paper, heavier weights of paper, exotic folding options, exotic coatings, etc. Now, as this magazine grows and hits circulation of 10M, 15M, 20M copies, suddenly sheet-fed printing is no longer cost effective and there is little choice but to convert to the web printing process or pay exorbitant amounts of money to produce the magazine using the sheet-fed process. The sheet-fed process would also become a very inefficient and time consuming process and would undoubtedly weigh heavily on your production schedule. So, as a result, you decide to convert to the web printing process. Now you have to consider the special things that you have built your magazines reputation on like – higher quality paper, heavier paper, exotic folding, coatings, 5th, 6th & 7th colors, etc. Many of these things, while possible to accomplish on a web press, are absolutely cost prohibitive! Cost prohibitive to the point where continuing on as you have in the past could put you out-of-business! This becomes a huge dilemma as you have built your reputation on your design and changing it could have a significant negative impact on both advertisers and subscribers!

My point is this:

When you start your magazine, think ahead about how your design, paper, folding, colors, etc will impact the magazine when it outgrows the sheet-fed process.

I have seen this happen to publishers numerous times over the course of my career! It’s not a good position to be in! All of the publishers told me that they “had no idea” that it would turn into a problem. Hopefully this information will help you avoid some pretty difficult circumstances down the road.

As usual, if you would like any advice please feel free to contact me.