iTunes now for the Magazine Industry

Maggwire.com has confirmed a model that allows magazine publishers to monetize online content. Maggwire will let readers browse magazine articles—currently almost 10,000 per week, including Time, PCWorld, Vogue and Yachting, among others—free of charge. But , the new model will use the Apple iTunes system which proved people will pay for reliable music downloads, now they people will pay for a personalized magazine experience.
Current thought for the economics include subscriptions priced at $1.99 to including one magazine title and one channel; each additional title or channel $0.99. Single articles outside of reader-selected titles or channels will be $0.15 per basic article, and $0.25 per cover article (determined by the publisher).

Worldcolor and Macmillan Partner Up

Worldcolor announced it signed one of the largest book printing agreements in North America with a multi-year agreement with Macmillan. The agreement is for Woldrcolor to print approximately 800 million major trade bestsellers, textbooks and mass market (paperback) books. Also included in the agreement are related warehousing and distribution services. Some of the Macmillan names in book publishing include St. Martin's Press, Farrar Straus & Giroux, Henry Holt, Tor, Forge, Bedford/St. Martin's, and W.H. Freeman and Worth Publishers

Meredith Posts Positive Results

Excerpts from Meredith release-
Meredith’s national media group reported $39 million in operating profit, a 14 percent increase of the prior-year period, the company said. Revenues dropped, though, from $294 million during the fiscal 2009 first quarter compared to $272 this year. The group’s operating expenses declined 10 percent to $233 million, including a 9 percent drop in paper prices.
According to Meredith president and CEO Stephen M. Lacy, national media advertising revenues are “trending in the right direction, and we continue to outperform our major peers and gain share.” Meredith said its share of overall magazine industry ad revenues increased to 12.2 percent during the fiscal first quarter, compared to 8.7 percent this time last year.
Eleven of Meredith's 14 PIB-tracked titles increased share of advertising revenues during the third quarter, the company said.

Stora Enso Boosts Largest and Fastest SC Machine

Stora Enso’s Kvarnsveden paper mill in Sweden houses PM #12, which is the largest paper machine producing supercalendered paper like newsprint and uncoated magazine paper, with capacity of 420,000 tons. PM #12 set speed records, reaching 1,929 meters/min increasing productivity and capacity.

Newsday to Charge for Online News

Coy Paper recently heard that Newsweek has decided start to charge a fee for access to the news on their website. This new model will make the paper the biggest general-interest daily to charge for access to its digital information. The service will be free to those who currently subscribe to the printed edition - or pay $5.00 per week.

West Coast ‘Green’ Mill Closes

Freshwater Tissue, California's last pulp mill and the only chlorine-free/dioxin-free mill in the USA, plans to permanently close. The mill has struggled since the mid 1990's to compete with foreign competition. The owners were planning on building a tissue mill as well. This west coast mill was a model of responsible and environmentally sound American manufacturing, but failed to attract both federal assistance nor private investors.

New York Times and Gannet Report Revenue Down

Like so many other national newspapers, the New York Times continues to reduce costs (estimate 2009 reduction of $475Million) due to declining revenue (down 16.9% from last year).
Advertising continues to struggle
-Classified down 38.3% (automotive,-32.1%; real estate, -44.1%; and help wanted,-52.5%)
-Retail advertising down 25.1%
-Circulation revenue actually increased 6.7% last quarter (but, both the NYT and Globe introduced price increases)
Meanwhile Gannett Company posted a revenue decrease of 53% in the third quarter. A few comments-
-Print newspaper advertising down 31.2%; revenue fell 28.4%
-Online advertising declined 18.5%
-Classified down (automotive, -35% ;real estate, -37% ; employment, -56%)

Paper Wins Another Battle

The San Jose, California City Council joined several other city in their fight against plastic bags. The group voted to make the city the largest in the nation to ban most plastic and non recycled paper shopping bags. This will take effect until 2011, war on plastic bags continues! The council reported that it would allow paper bags made with a minimum of 40 percent recycled materials.

Corner Brook Mill Starts up

The Corner Brook Pulp and Paper mill will start up. It was down since October 12.

Update on Containerboard Market

International Paper announced 1.4Million tons (4% of the market ) to be removed from their capacity (still no word from Smurfit). This will boost operating rates into the mid 90s and the producers are hopeful that pricing will improve. The real improvement will come when the economy improves and end users begin to buy things that go into boxes!
Current pricing (although there are discounts available)-
-42lbs Linerboard $525-535
-42lbs Unbleached kraft linerboard $440-460/ton

Update on Uncoated Free Sheet

The current curtailment of 800,000 tons by International Paper and Domtar, higher pulp prices, and lower inventories, as well as a 'very' slight increase in demand have all assisted the producers in achieving a price increase. While business papers (cutsize) pricing remains at approximately $1010-$1060/ton; the uncoated offset - 50lbs witnessed an increase of $35-40/to to $845-865.
Shipments through September are still down 13.5% from 9/08. Envelope producers just announced a price increase for November of $40/ton.
One area of concern is the new Portucel uncoated freesheet machine in Portugal. The 500,000TPA machine has started and 30% of the production might hit the USA.

Regional and Town Newspapers Surviving Well

As Coy Paper has reported in recent past releases that the big daily newspapers are losing circulation and advertising revenue. The New York Times, today, published an article outlining decreases in circulation for the countries national and large metropolitan papers; confirming over a 10% drop this year. However, the story is not so grim for community and small town newspapers. Many of the small papers actually grew. Although the internet has cannibalized much of this media, the small town papers are very focused on local issues, local events, nearby movies and restaurants, etc. These writers live, eat, and ‘play’ in the community.

Packaging Segment by Shipments

Total North American packaging industry shipped $79.7Billion worth of products in 2008
Folding Carton $10.9Billin
Tag and Label $15.0Billion
Corrugated $25.8Billion
Flexible Packaging 28.0Billion

International Paper Announces more Equipment Curtailment

International Paper will curtail 2.1Million tons of capacity. The company, the world's biggest supplier of containerboard, will shutter 1.4Million tons of containerboard (note, this is 12% of the mill's capacity and 4% of the USA capacity). Regarding the uncoated shutdown, International Paper will close 600,000 tons of capacity which is 19% of the mill's capacity. They are the second largest producer of uncoated paper. IP also reported to curtail 140,000 tons of bleached coated board which is 7% of their capacity.

Until the markets improve, the mills effected by this announcement include, plants in Albany, Ore., Pineville, La., Franklin, Va., and the Valliant, Okla., mill.

Following these permanent shutdowns, IP will have about 10 million tons of North American containerboard capacity, 2.6 million tons of North American uncoated freesheet production capacity and 1.7 million tons of North American coated paperboard capacity.

This should significantly assist the mill in correct the excess supply and poor demand.

Poor Advertising Causes Fortune to make Changes

Fortune Magazine recently announced it will publish 25% fewer issues, which translates into 18 issues versus the current 25. Fortune lost 35% of their advertising pages this year. The publisher will restructure the organization, 'beef up' and perhaps charge for content on the website, and add editorial pages to the magazine in an effort to generate additional revenue.

Pulp Inventories Continue Downward Trend

World pulp inventories were reported to be 26 days in September - down substantially from 44 days in September of 2008. As released in earlier Coy Paper articles, pulp producers curtailed production in the first half of this year because of limited demand, but, today, China continues to purchase large shipments. Therefore, the second half of 2009 appears to witness strong shipments. Worldwide shipments increased nearly 11% in September (vs September of 2008) to 3.5Million metric tons; meanwhile, North American market pulp producers shipped 628,000 market pulp tons, down 3% (vs September 2008). Note, shipments to China doubled to 638,000 metric tons.

This is National Forest Week

In 1960, Congress, in an effort to recognize the forest products industry, announced October 18-24 as National Forest Products week. Our industry makes up 6% of of the GNP manufacturing sector. The paper industry is included in the top 10 manufacturing employers. The industry now estimates that 57% of all the paper consumed is recycled.

Direct Mail Still Surviving

The DMA just reported that direct mail advertising is enjoying a larger share of total advertising dollars. The forecast for 2009YE is for Direct Mail to grow to 54% of total (although the total pie is down). DMA estimates total advertising will be down 11% to $150Billion for 2009. They forecast a steady spend for the end of 2009 and a slight rise of 2% for 2010.

Playboy Reduces Advertising Fees

Playboy, like the majority of other magazines, has suffered with depressed advertising demand and revenue. The publisher just announced they will reduce its advertising rate base by 38% in an effort to stimulate demand. Will other magazines follow?

Domtar Reduces Paper Capacity and Adds to Pulp Production

Domtar will shut down its Plymonth, NC paper making operations and transition the equipment to Fluff Pulp. The company will invest almost $75million to accomplish this and effectively increase capacity of their Fluff Pulp by three times current output to 444,000TPA. This project will be completed by 4Q2010.
After Domtar ceases to produce paper in Plymonth, they will have reduced capacity of uncoated business papers by 200,000TPA.

More on Pulp Market

Coy Paper continues to be surprised at the current strength for market pulp. The price increases all seem to be accepted, and the deep discounts are drying up. The strong demand from China along with low mill inventories and curtailed capacity have all assisted with the tightening of supply. NBSK will soon be up another $30/MT to $800/MT; SBSK also up $30 to $750/mt; BEK to $700/mt; HBSK to $690/mt; and SBHK to $670/mt.
With new list prices at this level, one might assume some of the curtailed pulp producing equipment might be re engaged!

Postmaster General Reports no Increases for 2010

Postmaster General Jack Potter recently confirmed that the USPost Office would not increase postal rates for market dominant products in 2010. This includes First-Class Mail, Standard Mail, periodicals and single-piece Parcel Post. Changes in pricing for other products such as Priority Mail, Express Mail, Parcel Select and most international products, These USPS products are still under consideration.
This should assist the magazine, Catalogue, and direct mail vendors.

Newpage Confirms more Down Time

Consistent with our earlier Coy Paper release, NewPage will take 160,000 tons of market related downtime in the forth quarter. The #63 coated paper machine in Whiting, WI will be shuttered 'indefinitely' and #10 in Rumford. ME will be curtailed until market demand and production can be better balanced. NewPage, along with other USA coated paper producers have combined efforts with United Steelworkers to file an anti dumping duty case against China and Indonesia in violation of international trade rules.

Conde Nast Evaluates more Publications

Conte Nast’s two golf publications were the most recent causalities for the company and the publication industry. Golf Digest’s advertising pages are down 21% and Golf World is down 24% causing the company to reduce staff for both magazines to cut costs.

AbitibiBowater Starts up Paper Machine

AbitibiBowater restarted its #6 paper machine in Fort Frances, Ontario and will keep it operational through mid November to meet orders. As reported in earlier Coy Paper releases, it has been down since early March.

China's Yueyang Paper Starts Paper Machine

Yueyang started trial runs on the new #9 uncoated paper machine in Yueyang City, Hunan Province. Coy Paper has reported on this expansion with a forecast to have a capacity of 200,000 TPA.

Fewer Magazines Folding in 2009

By: Vanessa Voltolina
Once again, the number of magazine closings has outpaced the number of titles being launched, according to the latest report from MediaFinder. But when comparing the number of titles (383) folded through the third quarter of 2009 to the same time period in 2008 and 2007, the pace is significantly less.
According to MediaFinder's most up-to-date numbers, 643 magazines ceased publication in 2007, and a total of 613 magazines closed in 2008. Right now, that means we’re 230 titles off from last year’s total. So unless there’s a dramatic push in closings through the fourth quarter, it looks like the industry may be looking at fewer magazine closings from the past two years.
Of the 259 titles to launch so far in 2009, the report showed that publishers have pulled the plug on 104 more magazines since the first half this year, when 279 folded publications were counted. During the third quarter, 72 titles launched while 104 magazines closed, including the high-profile closings of publishing giant Condé Nast's four titles—Gourmet, Cookie, Modern Bride and Elegant Bride. Other titles to vanish in ’09 included Meredith’s Country Home, Hallmark, American Express Publishing’s Travel & Leisure Golf, Time Inc.’s Southern Accents and Rodale’s Best Life.
Of the launches in 2009, the regional category topped the list with 15, but also experienced the most folded titles (31), including Tampa Bay Living. Both business and lifestyle categories also declined, folding 14 and 13 titles each, respectively.
The food (14), health & fitness (13), and home (13) categories proved to be popular for launches this year.
B-to-b publications accounted for 75 of the new title launches, 130 of the shuttered magazines, and 24 of the magazines that ceased print editions over the past nine months, the report said.

A few thoughts on Paper

Most of the paper companies have attempted (some successfully) announcing and successfully implementing price increases or at least transaction prices (that is reduction of deep discounts). Although pulp prices continue to increase, many of the other raw materials have been steady such as labor costs, transportation and energy.
Creating demand continues to be the biggest challenge and Coy Paper safety predicts more capacity rationalization - both shuttering equipment and short term production curtailment. Beyond stimulating demand, prices will remain under pressure and the end to the infamous 'black liquor ' credit are large concerns.

New York TImes will not Sell Boston Globe

The New York Times Company has decided not to sell The Boston Globe indicating that it did not think the bids it received were high enough to merit a sale.
The NY Times management had been considering shuttering The Globe because of heavy losses ($85 million estimated for 2009). But after deep cost cuts, some achieved in a bitter showdown with labor, the paper’s finances improved.
Two bidding groups reportedly had made preliminary offers of about $35 million cash and the assumption of pension obligations

Magazines find Success with Niche Publications

The magazine publishers are finding that special issues are attracting the advertising dollars. This follows the same logic as to why advertisers pay premiums for the Oscars or Super Bowl, special issues are seen by more people who are more engaged and it creates a lot more buzz than regular issues. Publishers such as ESPN’s Body Issue was up 35%; Time’s ‘Man of the Year’ and People Magazine run several special issues a year, they report 20% more advertising dollars.

NewPage Shuts Down Another machine

NewPage will shutter #63 paper machine in Whiting, WI. The machine produced 160,000 tons of coated paper. Customers will be supplied for coated groundwood publication papers from Biron, WI and Rumford, ME, where capabilities have been expanded.

MeadWestvaco to Sell Specialty Paper Mills

Onyx Specialty Papers agreed to the purchase of MeadWestvaco's South Lee, MA complex. The facility produced laminates and many other special industrial papers. Onyx was formed by the plant’s current general manager, Patricia Begrowicz, and vice president of Sales and Business Development, Chris Mathews. The deal is expected to be completed this year.

Business Week Sold

Looks like Bloomberg will purchase BusinessWeek.

Market Related Shutdown at Corner Brook

Corner Brook Pulp and Paper in western Newfoundland will take the mill down for two weeks.
The company has been effected by the poor demand resulting from unfavorable market conditions, the loss of some orders, the high Canadian dollar, and the low price of newsprint.

Containerboard still down

The major producers of containerboard grades continued to offer an additional discount price of $10-20/ ton for September shipments in an effort to stimulate demand. Prices have been sliding steadily since May. Short of the economy improving, allowing for folks to start buying products that 'go into boxes', - many look for the two market leaders, International Paper and Smurfit, to shutter capacity to balance the excessive supply.

Magazines need to Think Outside the Box

MediaWeek recently published an article on the depressed advertising revenue for magazines. They stated the obvious, that is, no one needs reminding that 2009 was a horrible year for print. Overall, the industry was headed to shed nearly twenty percent of its advertising pages, although some are seeing their pages plummet by as much as 50 percent. MediaWeek, like many others, believe pages are unlikely to return to levels titles enjoyed in the past. To stay afloat, magazines are aggressively seeking new initiatives of growing revenue outside the traditional ad-based model. Fewer advertising pages generally lead to fewer editorial pages which yields less paper demanded; this is especially bad for coated groundwood publication grades.

Sun Times to now be Sold

The bankruptcy court approved the sale of the Sun-Times Media Group to STMG Holdings LLC, led by James Tyree.

Kruger Elects to keep one Machine Running

Coy Paper had reported that Kruger was to shutter two coated publication paper machines; however, management just announced they will continue one of two coated paper lines at Trois-Rivieres. Annual production will shrink from 130,000 to 75,000 metric tons. The remaining paper machine and the pulp plant will shut down indefinitely later this month.

European Survey Reports Paper Shipments Down

As an update to an earlier Coy Paper release on current news of the Pulp and Paper Industry, The Association of European Fine Paper Manufacturers, CEPIFINE, reported on August uncoated and coated woodfree papers and the news reflected a decline in shipments. The coated woodfree shipments in August fell nearly 21% to 576,000 metric tons. On the uncoated woodfree grades, these deliveries declined 20% to 411,000 metric tons.

Pulp and Coated Publication Up, Containerboard Down

As Coy Paper reported earlier, the price of pulp continues to increase and all the majors are standing firm on their price increases and capacity slowdowns. Also, discounts are slowly being reduced.
Recently, the producers of groundwood containing coated publication papers are working with end users toward a reduction in discounts by as much as $60-$80/ton (must feel good after witnessing a decreased price level nearly every month so far in 2009). Demand increased better than 15% in September (vs. August) and the paper market for these grades are ‘only’ down 8% vs. this time last year.
Meanwhile, containerboard demand still remains somewhat weak and pricing remains under pressure. The real key in near term is will the big producers (International Paper and Smurfit) reduce capacity to control supply.

Another Publisher Files for Chapter 11

Questex, who publishes 23 trade publications as well as 150 digital publications filed for bankruptcy protection

Printing Shipments Continue Downward Trend

Commercial printers reported on their August shipments and commented they continue to trend downward. The August shipments dropped to $7.3Billion, down 11.5% or $950 million, the steepest dollar decline so far in 2009 (vs. last year).

Conde Nast closes Four Publications

Conde Nast announced that they would close four magazines: Gourmet, Cookie, Elegant Bride and Modern Bride because the advertising pages dropped significantly, The company reported that Gourmet was down 46%, Cookie’s down 19.5%, Elegant Bride down 32.5% and Modern Bride down 21.5%. Remaining Brides magazine will increase frequency to monthly and Bon Appétit will continue. Condé Nast is keeping alive Bon Appétit, an in-house rival of Gourmet.
Gourmet's circulation is 950,000 and Bon Appétit's is 1,300,000.

Most Recent Pulp Price Increase...Done Deal

Pulp inventories continue to be low, China's appetite for pulp is on the increase, and supply is in balance (with several producers shuttering equipment) - the October pulp increase of $30/MT for HBSK and SBSK is being being paid.

Worldcolor to End Production at Olive Branch Plant

Worldcolor (previously called Quebecor World) will stop production at their Olive Branch, MS printing facility by end of this year , 2009. Two other divisions will take over the production upon closure.

Flexible Packaging Demand to Increase

Excerpts from Converting Magazine
World demand for converted flexible packaging is forecast to increase 3.5 % annually to over 19 million metric tons in 2013. Factors contributing to this rising demand will include growth in food and beverage production, which represents the largest market by far. In addition, cost, performance and source reduction advantages, will continue to favor flexible packaging products over their rigid counterparts.
Gains will be limited by the mature state of the packaging industry in developed areas such as the US, Western Europe and Japan, where the main markets for flexible packaging but are well-established.
The fastest increases will occur in the world's developing regions. Asia, Latin America, Eastern Europe and the Africa/Mideast region will all outpace the global average.
Some of the best gains are expected in China, which has surpassed Japan to become the world's second largest converted flexible packaging market (behind the US); and India, which will benefit from strong growth in domestic output and consumer product markets. The fastest world growth (5.2%/year) is forecast for the Asia - Pacific region. Rapid gains are also expected in Russia and Indonesia, which will benefit from greater investment in state-of-the-art manufacturing equipment, resulting in improved product quality.
Plastic films, which account for almost three-quarters of global converted flexible packaging material demand, will continue to make inroads at the expense of paper and aluminum foil.

Ahlstrom Joins in with Price Increases

Ahlstrom is beginning to inform customers about price increases on all of its specialty paper grades, a result of rising costs for raw material and energy.
Ahlstrom's Specialty Papers segment has production sites in Brazil (Jacarei), France (Bousbecque, La Gere, Pont-Audemer, Rottersac, Saint-Severin and Stenay), Germany (Osnabrück and Altenkirchen), Finland (Kauttua), Italy (Turin) and USA (West Carrollton).

Apple to Introduce Tablet ... it will Create a Challenge to Publications

Apple is aiming to redefine print using the Apple Tablet – just as they did with the computer, cel phone and MP3. The Apple Computer device is expected to be ready for sale in January. If the Tablet becomes popular for digital magazines, publishers will be correct in fearing a faster decline in printed material.

USA Paper Shipments Continue to Fall

From a AF&PA Report -
A new report by the American Forest & Paper Association presents final data for the U.S. paper and paperboard industry for 2008 and shows total production of these products declined 4.9% to 88.4 million tons, the lowest production amount in 15 years.
“These results follow a modest 0.8% decline in 2007, and reflect the severity of the recession in 2008 on the paper and paperboard industry in the United States,” said AF&PA Chief Economist Dr. Stanley Lancey.
The report shows the peak year for paper and paperboard production in the United States was 1999 when production totaled 98.6 million tons.
Ironically, worldwide economic forces suppressed imports to and boosted exports from the U.S. during 2008, according to Dr. Lancey. The report shows imports of paper and paperboard declined 9.5% in 2008 while exports increased 6.1% to an all-time high of 15.5 million tons.

Europe Reports on Downward Paper Demand

Report from CEPIPRINT
(tonnage figures are in metric)
The Association of European Publication Paper Products, reported a decline across all European paper in demand and shipments in August.
• Coated Mechanical demand dropped 16.5% to 527,000 tons, shipments down 18% to 635,000 tons. Volume to US/Australia down, with growth to Japan.
• SC-Magazine demand dropped 10% to 300,000 tons, shipments down 16.5% to 346,000 tons. Exports down 43% to 46,000 tons, due to US/Australia/Brazil.
• Uncoated mechanical demand fell 18% to 150,000 tons, shipments down by 22% to 183,000 tons.

Advertisings Spending Still on the Decline

Spending on advertising across 27 countries dropped nearly 6% in the second quarter, (note; less than 1Q09 drop of 8%).
Some highlights-
Asia spending +2.2%
North America down 15.9%
Europe down 9.1%.
Marketers in automobile and financial services cut back most, while retailers, consumer product and health care increased slightly.

Nielson Online Reports top Sites for News

Each month Nielson reports on the top sites, by unique visitors, for learning about current events. Note, only three newspaper websites hit the top ten list – NY Times, Tribune, and Gannett.
August results-
Yahoo! News -- 43,469,000 -- 7%
CNN Digital Network -- 38,024,000 -- (-2%)
MSNBC Digital Network -- 36,450,000 -- (-30%)
AOL News -- 26,309,000 -- 14%
NYTimes.com -- 17,183,000 -- (-13%)
Fox News Digital Network -- 16,999,000 --- 22%
Tribune Newspapers -- 15,801,000 -- (-10%)
ABCNEWS Digital Network -- 13,873,000 -- 4%
Google News -- 13,442,000 -- 11%
Gannett Newspapers/Newspaper Division -- 12,981,000 -- (-10%)

Are Printed Catalogs a Goner?

Most of the successful catalogers now compliment their respective printed publications with an on line e-ecommerce website. In today’s challenging economy, with distribution and printing on the rise, many are now focusing on the electronic editions. Websites allow for efficient speed, accessibility and overall ease over the printed catalog. Biggest benefit with online catalog is the large audience capability to expose potential end users. The web allows for timely data and updates on both current product offerings and new items. The online catalog also provides side-by-side comparisons and 24/7 satisfaction.