Digital vs. Print: Tipping Point for the Publishing Industry?

Jeff Hayes
Jul 20, 2010

There were several interesting announcements in the publishing industry yesterday that have me thinking deeply about the future of print and digital content.


In the book industry, announced some startling figures related to its Kindle and e-book sales.

  • is now selling more e-books than hardcover books. Over the past three months, for every 100 hardcover books has sold, it has sold 143 Kindle books. (The ratio is 100 to 180 over the last month!) These figures are across’s entire U.S. book business and include sales of hardcover books where there is no Kindle edition. Free Kindle books are excluded and if included would make the number even higher.
  • Amazon sold more than 3x as many Kindle books in the first half of 2010 as in the first half of 2009. During this period Amazon lowered the price of the Kindle to $189 from $259 (27% reduction).
  • The Association of American Publishers’ latest data reports that e-book sales grew 207% year-to-date through May. Kindle book sales through May exceeded that growth rate.

Jeff Bezos, Founder and CEO of stated, “We’ve reached a tipping point with the new price of Kindle–the growth rate of Kindle device unit sales has tripled since we lowered the price from $259 to $189. In addition, even while our hardcover sales continue to grow, the Kindle format has now overtaken the hardcover format. customers now purchase more Kindle books than hardcover books–astonishing when you consider that we’ve been selling hardcover books for 15 years, and Kindle books for 33 months.”

Wow! The rapid growth in e-books requires every book publisher, printer, and retailer to take notice. I find it interesting that Bezos also stated that Amazon’s hardcover sales continue to grow — just not nearly as fast as their e-book sales. Sounds like e-books are helping to grow the overall sales of books. The question is for how long?

In the near term e-books may not significantly affect printed books sales, but my sense is that in the long run (next 3 years) if you make your money from offset printing of books you need to be concerned. With the growing customer base of Kindle, iPad, Nook, and Sony Readers we appear to be reaching a critical mass of e-book consumers – a tipping point?

Another important question is whether or not e-books will help the growth of digitally printed books. It is possible that e-book sales will lead to shorter print runs which will push more publishers into an on demand production print model.


The Publisher Information Bureau announced that both printed magazine pages and revenue grew for the first time in the last nine quarters. The last time the industry experienced growth was the fourth quarter of 2007 when the US entered the current deep recession.

However, before getting too excited it is important to note that 2Q 2010 magazine ad pages are down 36.7% from the same period in 2008 and way off their peak back in the 4Q of 2007.

US Magazine Ad Pages Chart

There were also reports in the NY Times that the outlook for the important third quarter is good with many publishers reporting significant increases in print ads for their September 2010 issue. The article went on to cite that Condé Nast (publisher of Glamour, Brides, Vanity Fair and other leading consumer publications) is reporting that its ad pages are up 57% for the month: 241 ad pages for September 2010 compared with 153 for a year earlier.

However, Glamour, which is launching its iPad version of the magazine, required advertisers who bought an iPad spot  to also buy a certain amount of space in the print magazine.

William J. Wackermann, a Condé Nast senior vice president and the publishing director of Glamour noted the dual digital-print ad sales approach was a way to help ensure this year’s numbers would far outshine 2009. “A year ago we were talking about the death of print,” he said. “Here’s an example of how digital and print can work together, and here are the results it’s producing: the biggest issue in 20 years.”

Interesting! While I agree that digital and print can work together, I am not sure how long Glamour and other publications will be able to require advertisers to take pages in the print magazine as a pre-requisite for advertising on the iPad or digital site.

My sense is (1) publishers will not be able to require advertisers to purchase both print and digital advertising for very long and (2) we experienced a peak in printed magazine ads back in late 2007 that likely will not be reached again.


Finally, newspaper giant Gannett Corporation announced its second quarter 2010 earnings with highlights that included:

  • Overall revenues were down 1.6% to $1,365.1 million vs. $1,387.3 million in 2Q 2009
  • Net income (adjusted for special items) was up 35.7% to $146.5 million vs. $107.9 million last year

The real insights are in the revenue growth by Gannett’s key lines of business.

Publishing (USA Today, Newsquest) revenues were down 6.0% to $1.0 billion vs. $1.1 billion last year.

  • Reported advertising revenues were down 5.7%
  • Classified revenues declined 5.0%
  • Circulation revenue was down 5.5%

Broadcasting revenues (which includes television and Captivate) increased 20.3% to $184.0 million vs. $153.0 million last year.

Digital revenues (which includes CareerBuilder, PointRoll, ShopLocal, Planet Discover, Schedule Star and Ripple6, but excludes Digital revenue from other segments) increased 8.3% to $154.1 million vs. $142.4 million last year.

Gannett also commented that company-wide digital revenue (including the Digital Segment and all digital revenues from other business segments), was up 9.7% to $252.2 million vs. last year. Company-wide Digital now represents almost 19% of total operating revenues.

Hmm! Clearly costs savings were the primary driver for improvements in profits (necessary in the short term, but not viable in the long term). More importantly, all the growth is coming from non-print related businesses. Based on current growth rates, Gannett’s Broadcast and Digital business will be larger than its Publishing business in less than five years.

Cross Media – What’s Your Strategy?

The publishing industry continues to shift to a digital model. Yes, print still accounts for the majority of revenue and volume, and there may be an increase in print-based volume and revenue as the economy recovers. However, I believe digital growth will continue to significantly outpace print and, in the increasingly foreseeable future, overtake print.

Equipment vendors, paper manufacturers, and print service providers need to take a hard look at their business strategy and identify new opportunities for growth. Within the “cross media” publishing industry key areas will include workflow, integration, and managed services (hosting, search engine optimization, digital asset management, etc.). It might be a good time to use your cash flow to finance an acquisition or two.

InfoTrends is conducting extensive research to better understand these trends and help vendors identify new opportunities. We are finishing up the research on a major study Capturing the Cross Media Direct Marketing Opportunity and will be sharing results at the upcoming InterACT! conference in Chicago. I hope to see you there!

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