Industry Profiles: Printing and Publishing

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Industry Profiles: Printing and Publishing

Overview

Leading sectors of the $243 billion U.S. printing and publishing industry include book publishing, newspaper publishing, periodical publishing, and commercial printing. The largest of these by sales volume is commercial printing, which accounts for more than 30 percent of all industry sales. Newspaper publishing is second, contributing about 20 percent. Smaller segments of the industry include typesetting and platemaking services, and publishing of greeting cards, forms, catalogs, and directories. Few companies are active in more than a couple of these segments.

Printing Commercial printing refers to vendors that operate printing presses and related technologies to produce printed materials for outside clients, as opposed to an integrated firm that prints its own publications. The bulk of commercial printing in the United States—about 56 percent by dollar value—is completed using the lithographic process. "Lithography" describes the printing process in which ink is transferred from a plate with a level surface that has been chemically treated to make some areas ink-receptive and others ink-repellent. The term "offset lithography" was coined to describe the process by which an image or text is transferred from a lithographic plate onto a rubber blanket cylinder and then pressed from the cylinder onto paper or other substrates. Lithography produces high-quality printing jobs and is widely used for printing advertisements, books, and magazines. Advertising is the single largest market for lithographic printing, supplying more than one-third of all lithographic printing business. Moreover, among all forms of commercial printing advertising accounts for a full 60 percent of sales.

The second leading printing process is gravure, which is a form of intaglio printing. The word "intaglio" comes from an Italian word meaning "to engrave"; the word "gravure" is taken from the French and has the same meaning. Intaglio printing methods were developed by carving or engraving an image in stone or metal. In contemporary commercial gravure printing, a reversed image is cut into a thick metal plate wrapped around a cylinder. Ink, applied to the plate and wiped off the surface with a blade, remains in the incised image cells so that when paper is placed against the plate it absorbs the ink and produces a crisp copy of the image.

The contemporary gravure printing process has generally been used for very long press runs on projects requiring superior color accuracy and clarity on thin papers. Gravure is preferred in runs over 300,000 copies, like printing weekly or monthly magazines or mass-distributed catalogs. Gravure's primary advantage over other forms of printing is its ability to produce millions of impressions without suffering any image deterioration. Gravure can also print a superior image on light papers better than other printing methods can, since gravure lays down wet ink over dry. Other commercial printing methods lay wet ink over wet ink, which causes the image to degrade more quickly. Gravure's disadvantages include generally higher costs and increased press set-up time. Because it is a fairly specialized process, gravure accounts for about 4 percent of commercial printing sales.

Many other forms of printing exist. Some common processes include screen printing, flexography, letter-press, digital printing, embossing, engraving, debossing, and thermography. In addition, within the industry there's a niche of book printers who print books exclusively, usually using the lithographic process.

Publishing In terms of revenues, publishing is dominated by newspapers, which constituted a $51.5 billion business in the early 2000s. The magazine and book segments are the next largest, accounting for $39.8 billion and $25.2 billion, respectively. The three main publishing segments are usually subject to completely different market conditions, although naturally all tend to correlate to some degree with general economic health. U.S. newspapers in particular have faced difficult market conditions over the past few decades. For most, circulation figures are down, and some have been forced out of business or into joint operating agreements with competitors. Newspapers are much more directly dependent on advertising dollars than subscription fees, but circulation size is a key determinant for ad prices and the attractiveness of a given newspaper as an advertising vehicle. Periodicals operate under a similar dependence on advertisers, but for the most part they haven't struggled like newspapers. However, although periodicals enjoyed sales growth in the latter part of the 1990s (at four times that experienced by newspapers), advertising revenues declined in 2000. This situation continued to challenge the industry in 2001 as the economy weakened and terrorist attacks against the United States made conditions much worse in the last quarter of the year. As reported in Mediaweek, figures from the Publishers Information Bureau revealed that magazine revenues declined almost five percent in 2001. Meanwhile, book publishing, which has proven the most robust of the publishing sectors, involves a completely different set of economics, as third-party advertising isn't present in most books. Book publishers are more affected by factors like school and library funding and consumers' disposable income.

History of the Industry

Printing History The lithographic process was developed by the German inventor Aloys Senefelder, who discovered that by treating limestone with gum arabic, nitric acid, and a mixture of soap and tallow he could make parts of the stone repel printing ink and parts of it repel water. In 1798, he perfected his process for use in printing.

The twentieth century brought innovations to increase press speeds and improve image resolution. Ira W. Rubel and Caspar Hermann, both of New Jersey, developed thin metal plates in 1904. Their success enabled the development of rotary lithography, a procedure in which the plate was mounted on a cylinder. By the late 1980s, advances in offset rotary press technology had produced presses capable of making 30,000 impressions per hour, printing on both sides of the paper, and receiving paper in sheets or from large rolls called "webs."

The gravure printing process developed from copperplate engraving techniques employed during the fifteenth century. Early plates were flat and had to be hand engraved. The development of engraved cylinders to replace flat plates led to rotary gravure, called "rotogravure." Rotary gravure presses operate by squeezing paper between the image cylinder and a second cylinder called an impression cylinder. Rotary technology enabled the development of presses with increased printing speeds. A process by which rotary gravure presses were able to print on both sides of the paper was patented in 1860 by Auguste Godchaux, a publisher located in Paris. A photographic etching technique developed in 1878 by a Czech painter helped simplify platemaking procedures.

Gravure printing was further refined in 1908 when two German textile printers, Ernst Rolffs and Eduard Mertens, developed the "doctor blade." Gravure printing techniques relied on creating height differences between the image and non-image areas of the plate. An image was formed by making small recessed ink cells. The doctor blade assured the removal of excess ink from the surface level and enhanced the quality of reproductions. One of the most popular items reliant on gravure technology was the Sunday newspaper magazine section.

Publishing History Some of the world's earliest newspapers included the Acta Diurna of the Roman empire and the Chinese gazettes of the first century A.D. The first modern newspapers appeared in Europe in the sixteenth century.

A formative event in U.S. history involved the issue of freedom of the press. Editor John Peter Zenger was brought to trial in 1735 on charges of seditious libel for printing articles that were critical of colonial governor Sir William Cosby. In his successful defense of Zenger, Alexander Hamilton invoked the Magna Carta and stressed that opposition to the establishment was a basic civil liberty, thus creating the foundation on which the American press was built.

An overriding objective for American newspapers was to reach as many readers as possible. One early manifestation of this aim could be seen in the New York Tribune, founded by Horace Greeley in 1841. Priced at one penny, the paper was written by Greeley and other advocates of social change in a style that was described as simple but not condescending. It boasted a tremendous readership throughout the country, which led to enthusiastic support from its advertisers. The populist instincts that Greeley embodied eventually evolved into "yellow journalism," a term originally referring to the practices of many of the New York daily newspapers during the late nineteenth century. Joseph Pulitzer, editor of the New York World, and William Randolph Hearst, editor of the New York Journal strove to increase circulation through a variety of aggressive tactics, such as reporting sensational stories, setting headlines in large type, making extensive use of pictures, and issuing Sunday supplements with color comics.

In the early twentieth century, newspapers began to contend with the rise of new media that was capable of quickly bringing more information into American homes. The formation of the Radio Corporation of America (RCA) in 1919 represented the first of these challenges. In 1929, advertising revenues at newspapers were still far ahead of those of radio, but the newer medium was quickly growing. The Depression, which left the newspaper industry with barely more than half of its advertising income, had little effect on radio advertising, which doubled in the years from 1929 to 1933. A second news forum arose in the 1930s—the newsreel, which was shown between features at movie theaters.

The 1950s brought another challenge for print journalism: television captured the leisure time of many Americans. As it quickly became the medium of choice, television siphoned advertising dollars away from newspapers. Network television news became more readily identified with news of major events. The 24-hour Cable News Network (CNN) debuted in 1980, and its phenomenal growth contributed to the sense that newspapers were becoming an outmoded form of transmitting breaking stories. By 1995, the average adult spent approximately 1,580 hours per year watching television—30 hours per week. During the same time period, newspapers across the country were battling circulation losses. As a result, the number of daily newspapers dropped from 1,745 in 1980 to 1,533 in 1995.

Throughout its history, the periodical industry followed a course similar to that of newspapers, only it was not hit as hard by circulation declines. While it did face scarcer advertising dollars once television was mainstream, many periodical publishers were more flexible than newspapers to adapt to changing demographics and reader interests. Thus, waves of new specialty magazines were introduced to more than account for any declining sales on established ones. Newspapers, in contrast, traditionally had a more utilitarian approach as factual publications and were less apt to modify their content or launch spin-offs in the way that magazines could.

On the book publishing side, the U.S. book publishing industry grew rapidly after the Civil War, as the country moved from an agrarian to an industrial society. Rising rates of formal education and technological developments helped spur the market for printed materials. Several publishing houses became prominent in the fight against censorship in the early twentieth century. One celebrated case occurred in the 1930s when Bennett Cerf, one of the founders of Random House, intentionally notified U.S. Customs about the arrival of James Joyce's allegedly obscene novel Ulysses from Paris. Cerf wanted Customs to confiscate the book so that he could fight the censorship in court. Publishing houses that supported freedom of speech often attracted the top literary and editorial talent.

Paperback books first appeared in the United States in the 1770s, but they did not gain a wide audience until Simon & Schuster introduced its line of Pocket Books in 1939. These early softcover editions sold for $.25 each and met with great success—more than 25 million copies were shipped overseas during World War II. Public acceptance of paperbacks increased the overall market for books and made it necessary for publishers to adopt high-volume, low-cost production methods.

As the U.S. population grew and became more educated, book publishing boomed. This rapid growth culminated in a period of consolidation in the 1960s. Many publishing houses either acquired one another or joined forces with communications conglomerates that held interests in newspapers, magazines, television, and motion pictures. By the early 1970s, the industry was dominated by about 15 giant companies. The consolidation of power continued into the late 1990s, when a handful of publishers mostly of foreign origin controlled the majority of U.S. book publishing.

Significant Events Affecting the Industry

The advent of user-friendly, powerful computers had an enormous impact on most parts of the industry. In some cases, sophisticated and easy-to-use software and relatively low-cost, high-quality printers have eliminated the need for the services of typesetters, giving rise to what is popularly known as desktop publishing. Computer technologies have also improved the printing process in various ways—including saving steps in the platemaking process—and have dramatically improved the productivity of some publishing functions. By the early 2000s, the use of digital technology within the printing industry continued to increase, changing not only production processes but also the number of workers and the kinds of skills required for employment.

Key Competitors

R.R. Donnelley & Sons is the largest U.S. commercial printer, with $5.3 billion in 2001 sales. It is active in many types of printing, including books, phone directories, and software manuals. Quebecor Inc.'s Quebecor World, a Canadian-headquartered firm, is among the world's largest commercial printers, and it has substantial operations in the United States. In 2001, the parent company's revenues totaled $7.3 billion, most of which (86 percent) came from its printing operations.

In the early 2000s, the leading U.S. newspaper was the Wall Street Journal, with circulation of 1.76 million. Other leading papers included USA Today (1.69 million), the New York Times (1.10 million), the Los Angeles Times (1.03 million), and the Washington Post (762,009).

Among the top U.S. periodicals were People Weekly with total 2001 revenues of $668.9 million, Sports Illustrated ($521.1 million), TV Guide ($493.9 million), Time ($459.4 million), Businessweek ($307.3 million), Better Homes & Gardens ($303.8 million), and The Reader's Digest Association's flagship title Reader's Digest ($301.7 million).

Time Inc., a subsidiary of AOL Time Warner Inc., publishes People Weekly, Sports Illustrated, and Time. However, through its AOL Time Warner Book Group division, the company also is one of the United States' largest book publishers, along with Viacom's Simon & Schuster Inc.

Industry Projections

Each segment of the industry is likely to experience differing sales performance in the early 2000s. According to the Association of American Publishers Inc., U.S. book sales reached $25.4 billion in 2001, barely increasing over the previous year ($25.3 billion). From 1992 to 2001, sales in this segment were growing at a compound annual rate of 4.6 percent. Improvement within the periodicals segment will depend largely on the overall economy, including corporate advertising revenues and consumer spending. While printing sales were rising in the early 2000s, climbing from $94.7 billion in 1999 to $97.8 billion in 2000, growth in the newspaper segment will likely follow existing downward trends. According to the Newspaper Association of America, the number of daily newspapers and total daily circulation decreased throughout the 1990s and into the early 2000s.

Global Presence

Many of the leading trade book publishers serving the U.S. market are held by British and German firms. Notably Random House, which has the largest domestic and international trade market share, was bought in 1998 by Bertelsmann AG of Germany, a diversified media company. Bertelsmann already owned Bantam Doubleday Dell, another top-five publishing house.

Employment in the Industry

The printing and publishing industry is a noteworthy employer in the United States. In 2000, the industry employed 1.54 million workers, down slightly from 1.56 million in 1997 but still above levels during the early 1990s, when job losses caused employment to fall to 1.51 million. In 2000 the industry's average hourly wage was $17.01.