Dr Joe's Printing Industry Blog

Download the files from http://members.whattheythink.com/home/webinars/webinar050928.cfm

You can see the presentation, download slides as a PDF, or download the MP3 audio.

Thanks to all who "attended," those who submitted questions, and of course to Kodak and WhatTheyThink.com.

A bunch of articles about Internet and media use are appearing this week in conjunction with a variety of trade events. Here are some of the more interesting ones.

Internet ad revenue
USA Today http://www.usatoday.com/tech/news/2005-09-26-online-ad-growth_x.htm
C-Net http://news.com.com/Internet+ad+revenue+climbs+26+percent/2100-1024_3-5882670.html

Ball State University Center for Media Design study of daily consumer media use
Ball State Daily News http://www.bsudailynews.com/vnews/display.v/ART/2005/09/27/4338e5562f885
Christian Science Monitor http://www.csmonitor.com/2005/0928/p13s01-lihc.html
Star Press http://www.thestarpress.com/articles/1/047373-5831-004.html

Press release
http://www.sun.com/smi/Press/sunflash/2005-09/sunflash.20050927.1.html

Free 90 day trial
http://www.sun.com/software/star/staroffice/get_eval.jsp

Article about the difference between OpenOffice 2.0 and StarOffice 8
http://software.newsforge.com/software/05/09/23/198225.shtml?tid=93

Interview with StarOffice product manager
http://www.osnews.com/story.php?news_id=11999

Remember the ideas of printing out far-away newspapers on copiers? Anyone who's purchased a two-day old New York Times in Tokyo for $40 knows what that means. You'd think the Internet would have eliminated the need for this, but there is still some interest. In this story, Canon becomes a partner with NewspaperDirect in, what they hope, will popularize the concept.
http://www.editorandpublisher.com/eandp/departments/technology/article_display.jsp?vnu_content_id=1001179258

This article, "Let's Lose the Definition of DM," caught me by surprise because it's an agency complaining about losing its work to a printer! Value-added has to come from somewhere, sometimes, and in this case, the printer got it and the agency lost it. Like the misguided efforts to bring ad agency work "in-house" only to find that creativity needs an immersion in the marketplace outside of one's business, I would not be surprised if this kind of work went to the printer and then they have to go back to an agency. Interesting reading.
http://www.dmnews.com/cgi-bin/artprevbot.cgi?article_id=34154

Advertising Age has good article on how consumer confidence data aren't all that hot for predicting things. Give me personal income, especially credit card use data, and I'd much prefer what's really happening to base prognostications on rather than "touchy-feely" data. Even depressed people spend money when they are confident in their ability to pay it back. Their confidence in the economy is meaningless. Watch what people do, and pay less attention to what they say.
http://www.adage.com/news.cms?newsId=46118

Another e-paper story
http://www.boston.com/business/technology/articles/2005/09/19/cambridge_firm_wants_to_transcend_the_print_medium/
Pew Internet Survey on status of broadband in the US
http://www.pewinternet.org/pdfs/PIP_Broadband.TPRC_Sept05.pdf

Emerging story: health care costs rising, especially for small business. When worker's don't get raises because of increased benefits costs, the grumbling will start. Look for this story to start dominating headlines next year.
http://www.nfib.com/object/IO_24675.html

It's not printing related, but this article about OpenOffice as an alternative to MS Office caught my eye. The final of OpenOffice version 2 is out this week, supposedly, and I'm switching ASAP via StarOffice 8 as soon as it's released.
http://www.suntimes.com/output/worktech/cst-fin-andy22.html

Well, there are many reasons, but one of them is that printers are small businesses, and small businesses have high costs of regulatory compliance.

This report from the Small Business Administration describes the issues:
http://www.sba.gov/advo/research/rs264tot.pdf

From the press release: http://www.sba.gov/advo/press/05-43.html
"America’s smallest firms bear the largest per employee burden of federal regulatory compliance costs, according to a study released today by the Office of Advocacy of the U.S. Small Business Administration. Firms with fewer than 20 employees annually spend $7,647 per employee to comply with federal regulations, compared with the $5,282 spent by firms with more than 500 employees... The report measures disproportionate regulatory compliance impact on small business. The study finds that small business faces a 45 percent greater burden than their larger business counterparts."

It's rarely discussed, but this is one of the benefits of printer consolidation. As environmental laws have grown in volume and complexity, a compliance manager who serves several plants rather than just one is an obvious example of the advantage a larger print business would have. Individual plants have to adhere to the same regulations as multiple plants do, and therefore have to assume greater overhead costs in their plant.

Compliance, therefore, has become a boon for consultants, such as financial, human resources, and legal.

Like higher oil and gas prices, compliance costs grab dollars that could be spent elsewhere, like building the core of the business, or heaven forbid, be used to pay employees more, or even worse, lower prices of goods sold to customers.

Think of it, a 10 employee printer does about $1,200,000 in sales. That means that $76,470 is spent on compliance with various regulations. That's 6%! And Starbucks is complaining about health care costing more than raw coffee? (That'll be in an upcoming WTT column, but I'll get some details on the blog soon).

As economist Milton Friedman always reminded anyone who would listen, regulations are created with only existing businesses in mind, and never to the businesses that will be formed in the future. Why would anyone want to start a manufacturing business? Page 55 of the report shows that $21,919 is the cost of regulation per employee for small manufacturing, the economic sector in which our industry is. Do the the math: it's not 6% of sales, it's 18%! No wonder the service sector is growing: $3,790 is their per employee regulatory cost, which is just one-sixth that of manufacturing. There is a great deal of hand-wringing about the loss of manufacturing jobs; the bulk of those have been "lost" to technological improvements and often non-manufacturing tasks have been shifted to service businesses that work "inside" companies (such as payroll services like ADP or PayChex, or cafeteria services like Aramark, etc.).

All these regulations are well intended when they start, but their slow cumulative effect is enormous. In the end, they create a barrier to entry for new firms, and those dollars, as the economists say, go elsewhere, to other sectors, and emerging offshore economies. Should we be surprised? We've made our own bed, as they say...

US News & World Report is making a huge shift of resources to the Internet and away from its print edition. Need I say that this is a very important story?

Article
http://www.foliomag.com/index.php?id=396&backPID=392&tt_news=1178
Interview
http://www.foliomag.com/index.php?id=396&backPID=392&tt_news=1179


IMF World Economic Outlook has been published. Though I disagree with their outlook in many ways, it's a great source of global economic data and well worth reading.
http://www.imf.org/external/pubs/ft/weo/2005/02/index.htm

Just like the release from American Business Media the other day, the Publishers Information Bureau reports higher dollars and fewer pages for their most recent month, in this case, August. Revenues were up +1.6% but pages were down -1.9%. For the year to date, revenues are up +8.9%, with pages up +1.6%.

The PIB plays it pretty straight on their release, basically reporting data, and not getting into any unnecessary "spin" about how good things are.

Revenue data can't really be taken at face value because they are rate card revenues. Rate cards? Oh, head to the fiction section of the library. But at least it's a consistently collected data series, which does have some value from a trending perspective.

Corporate discretionary spending appears to be contracting, if advertising is still an indicator, of which I think it is.

Press release:
http://www.magazine.org/Advertising_and_PIB/PIB_Revenue_and_Pages/Revenue
___Pages_by_Ad_Category__monthly___YTD_/13342.cfm

January to August 2005 vs. 2004 comparison:
http://www.magazine.org/Advertising_and_PIB/PIB_Revenue_and_Pages/Revenue
___Pages_by_Magazine_Titles__YTD_/13344.cfm

Last year we worked on a rather huge multiclient study, "Blueprint for the Future," that forecasted the commercial printing business from 2005 through to 2015. It was quite a project, the largest I had ever worked on, especially notable because it did not include a field survey as all of the previous multiclients since 1987. This was a very different project.

We had a small group of sponsors, as was intended, and it appears that they were quite pleased. This was a rare opportunity to investigate all kinds of technologies and trends that will shape our business for years and decades to come. The identities of the sponsor companies is confidential, as was this project, until all of the presentations and followups with our sponsors was completed. Now, almost four months after completion, we can finally announce what we did.

It was particularly gratifying to have some other consultants and writers work with us.

• David Zwang, who may be the smartest person in our entire industry, might be best described as a workflow technologist, but is so much more
• publishing consultant and curmudgeon Bob Sacks whose daily newsletter goes to 11,000+ executives (sign up by sending him a note at bosacks@aol.com), added considerable insight to this critical aspect of the demand-side of our business
• Jerry Ellis, who toiled for years as a press engineer and later a sales and marketing executive for our industry's "heavy iron"
• Mike Chiricuzio, who is a grizzled but loveable digital printing expert from the front lines
• Peter Muir, who trains people to produce and sell traditional and digital printing and whose head is constantly exploding with ideas and infectious enthusiasm
• Jim Whittington, who founded the TrendWatch business with me and is an expert on the creative side of the business as well as small business management, which is so important to understanding our industry
• Vince Naselli aided in guiding the project from beginning to end, and added the dose of practicality and realism that we needed, proving yet again he's one of our industry's best implementers
• Richard Romano, smarter and funnier than the better-known Frank Romano (isn't version 2 ALWAYS better?), pulled it all together editorially as well making significant and heroic contributions to its content and analysis
• We used the skills of Chris Yeich, former managing editor of Graphic Arts Monthly, and veteran writer Patrick Henry in the overall project organization and analysis
• we drove our researcher Debbie Papineau absolutely crazy in the entire process over a period of about six months; she's still going crazy because sponsors are still getting news updates of what's happened since our report was published, as we promised.

It's a fine piece of work. Sponsors tell us they find something new to think about in it constantly. That was the idea. Making people think is our primary job. Getting the accurate, appropriate, and timely facts and insights in critical to that.

The press release about the project is at http://www.prweb.com/releases/2005/9/prweb279025.php

For more information, contact Vince Naselli directly at blueprint@sfminc.com or 1-732-568-0316

Register at this address: http://members.whattheythink.com/home/webinarregistrationform.cfm

It will be conducted on September 29, 2005 at 2pm Eastern Time.

Questions can be submitted prior to the event using drjoesblog@gmail.com

If you can't "attend" be sure to register anyway so you get the correspondence about how to download the post-event files.

Data, data, data... Sometimes you can see a lot by looking, as Yogi Berra used to say.

American Business Media, in their 9/15 press release states:
“It is a good sign that print revenue continues to show positive movement even through the summer months,” said Gordon T. Hughes, II, president/CEO of American Business Media. “The modest progress of print continues to be an additive factor in the robust growth of business media and information industry overall.”

Gosh you'd think things were just chugging along. The headline was "AD REVENUE GROWTH CONSISTENT IN BUSINESS PUBLICATIONS" and the subhead was "Year-to-date ad revenue up by 3.35% over same period 2004"

Here's the full release:
http://www.americanbusinessmedia.com/abm/NewsBot.asp?MODE=VIEW&ID=131&SnID=609311191

Then, your highly trained industry statistician looked at the data:
http://americanbusinessmedia.com/images/abm/pdfs/resources/BIN/BIN_JULY_2005.pdf

July pages were DOWN 4.75%. Sure, revenue is up by 3.35%, but that means that B2B ad revenues are NOT KEEPING UP WITH THE ECONOMY. (To keep up with growth AND inflation, they would have to be up by 6.5%).

Hello? Is anyone there?

If I want to hear people say nice things that are not factual, I'd listen to proud grandparents all day ("...but he's the most artistic and intellectual one compared to all of the other inmates in the state prison..." is about the way it sounds).

Is the economy slowing? Yes it is. Advertising is the first thing to be cut and the last thing to be restored is the old rule of thumb. Well, isn't that worth warning people about? Don't give us sugar when we need protein.

Print05 was a good show. Its sales volumes did not appear to rival Print97, but for sure it was better than Print01 and last year's GraphExpo. There seemed to be more people in the mood to buy with specific interests and not just coming to look and kick tires.

I was asked numerous questions about what I thought of the show and whether I saw anything new. I can't say that I really did, but I saw lots of improvements, and was quite impressed with what I saw at XMpie. The idea that you can not just change images on the fly but also manipulate them to fit odd sizes or create transparency effects is quite amazing. Some of these manipulations would have taken hours at a stripping table with special camera skills and the craft techniques of veteran dot etchers to just output one static image. And that's for just one static image. I also learned what XMPie means, which is "cross media production in e-business;" that will be a trivia question at some time, I'm sure. It's not revolutionary technology in the sense that it has the potential of changing the industry, unlike Print80's demo of the Scitex Response, or shows decades before where offset was shown to be better than letterpress. It's a technology that enhances or accelerates, but does not change, a trend that is already in place. But it is really cool, and that's why I'm commenting on it.

That reminds me of something. I'm glad I'm not an industry writer having to cover all of these technologies and product announcements. Some say that the phrase "working press" is an oxymoron, but all of the writers I know work trade shows very hard and tirelessly. One of the reasons it's so hard is that they have to cover products whether they think they are cool or not, and they have to make it sound interesting.

Another question I'm asked is what companies will be around for the next Print or even for the next GraphExpo. I never know how to answer those because that's bound to be taken out of context or used in some unintended way. Whatever the answer is, I think we're at the stage where booth size will become less a of testosterone issue and more a reflection of real market opportunity. Some of these booth decisions were made years ago, when expectations were quite different. But expectations shouldn't matter, facts should.

Yet another question was whether or not attendance was good. I have no idea. The show was so large that the attendees were spread out, and crowded booths were more a function of having lots of equipment on the floor that inhibited quick passage or forced people to congregate in certain areas of the booth rather than others. With industry consolidation, trade show attendance is of quite a different nature now. Many plants in a group may be represented by one corporate technical or operations director. The decline in small plants means that there are many fewer of those business owners to come to fill up the same hall. Attendance may not be a good way to judge a show in the context that it was in the past. The industry is different, and trade shows reflect that, and the way they are judged reflects that as well. Many companies made it clear in casual conversation that they often viewed it as more effective to fly key client executives to national training centers or headquarters rather than to meet them at trade shows where their attention can be diverted and would minimize "shopping." But the question remains whether or not individual suppliers created their own attendance and interest in their offerings on their own rather than just hoping the show company did it for them, which is a mistake.

The most important thing that a company can do at a trade show is what it does before. There are still many executives who think trade shows "just happen" when they get there, and I'll never understand how they can spend that much money and not leverage it to its fullest with strong pre-show planning and recruiting.

Do trade shows have a future in our industry? That's another question I get. I almost don't know how to answer. Of course they do. Of course they'll be different. But an industry without a physical place where we meet, ever? I don't think so. Trade shows are here to stay. But the nature and frequency of them might be different. We need to get together; that won't change.

This was my best stay at the Hyatt McCormick Place. The staff seemed happier and more efficient than it has in recent years. I'm an early-riser and I tend to stay on Eastern time during my Chicago visits. After a half hour in the fitness center, I wandered downstairs to look for a cup of tea. I knew it was early, but hotels often have a coffee service set up in the lobby when the coffee shop isn't available. Well, there was none. The worker at the bell station called across the lobby and asked if there was anything I wanted. He ended up going into the office and making me a cup of tea. Didn't ask permission of anyone. Just did it. The Hyatt management knows that someone will end up writing about it, just like this. He could have easily said "the shop won't be open for another half hour." I called guest services later in the day and told them how much I appreciated it, and they informed me he was already up for employee of the year. Hope he gets it.

Two years ago, I was so confused by the time I went down to the fitness center and found it closed. After all, it was 5am (I looked at the time on my computer and not on my watch, and not the clock in my room, so it was all my fault). I called down to the front desk, and was informed that it was really 4am. They could have left it at that. Instead, they told me to wait, and someone came up and opened the fitness center for me.

This was a reminder that value is not something you add, as the buzzword so popular in the industry now. Value is not something you add, value is something you do. If you have to add it, then it's just a task. These weren't tasks that were added, these were acts in a culture that's flexible enough to let customers determine what "value added" is. Maybe that's the best takeaway thought from Print05 I can offer. Value added? Value intrinsic is better.

The audio MP3 and slides PDF are available at http://members.whattheythink.com/home/djwprint05.cfm

Thanks so much again to Yves Rogivue of MAN Roland for sponsoring the event, Randy Davidson of WhatTheyThink.com for creating the opportunity, and to Cary Sherburne for coordinating, providing wise counsel in the preparation, and for being the event's emcee.

I regret not leaving more time for questions, so if you have any please send me an e-mail at drjoesblog@gmail.com or by posting them as comments to this blog entry.

Today's my first day at Print05 and it's hard not to remember the last show because it was interrupted by the attacks of September 11, 2001. I was reminded of that quite clearly because that day is always part of me. I was home that day, having arrived home on the previous night's final flight from O'Hare to Providence.

The Print01 trip started strangely enough. On September 7, I arrived at Green Airport and realized that the center of my wallet had dropped out. That was, of course, the part of the wallet with family pictures and my identification. I walked up to the American counter, displayed my frequent flyer card and my credit cards, and after some harmless discussion I was given my boarding pass. That's wouldn't happen today,of course. It's paradoxical that the attackers all had ID's and were properly ticketed. Nonetheless, the innocent forgetting of ID is something I make sure wouldn't happen now. My wife FedEx'd me my drivers license and so on 9/10/01, I was processed normally at the ticket counter at O'Hare.

I remember distinctly being at O'Hare and getting to a payphone so that I could connect to AOL (my how things have changed, I long ago switched from AOL and haven't used dialup in years). I checked my messages and I had a note from classmates.com from a fellow student from grammar school. We hadn't seen or talked since grammar school graduation back in 1970. It was nice to hear from her. Life had treated her well, but it had some scary twists and turns in the process. She was happily married and living in Florida.

The morning of 9/11, I was sitting at my desk doing post-show followup, catching up with e-mails. Our son had just started sixth grade. I was watching CNBC as the events of that morning started to unfold. Something made me put a blank tape in the VCR and start recording. Maybe it was that the then suspected fire at the World Trade Center would be interesting historically since we had just been there the prior September.

That September 2000 day was just perfect. It was a Friday. Our son, a fifth grader, was surprised by our sudden trip to New York the night before. He was off on Friday because of a school planning day, we conspired to surprise him with a trip if the weather was going to cooperate. That Friday morning, we took the train from the Rye, NY Marriott Courtyard to Grand Central Station, then hopped the subway down to the ferry for the Statue of Liberty. Only the first couple of ferrys' passengers would be allowed to ascend the spiral staircase to the crown, which we did. Then we took the ferry from Liberty Island to Ellis Island for one of the best museum visits we have ever had. We still had time left, so around 2pm, we went to the top of the World Trade Center. It was one of those perfect weather days in New York. We stood on the observation deck and looked north toward Yonkers where we had grown up, to Long Island, where we lived for seven years, and then to the west toward New Jersey where I worked for a couple of years and where my father had worked for most of his adult life. It was hard to imagine Phippe Petit had walked a tightrope between the buildings. George Willig's signature on the inside of the facade was still visible, marking his climb up the side of the building. We ended the day with ice cream walking the shops of the WTC's underground pedestrian levels. We had left New York in 1989, and this trip back 11 years later as a tourist was more memorable than living there.
As we watched the second plane hit, all of these images came back to mind, our standing outside on the observation deck, the ride in the elevators, the inside observation, all so tastefully done, without the tacky plastic experience of the Empire State Building tour. The WTC was pure class, the kind of thing you'd expect in a city that's supposed to be great.

The e-mails with my former classmate started that morning. Neither of us could believe what had happened. Somehow, she started to make contact with others, and those next few days I connected online with a few more grammar school acquaintances. Somehow the WTC events made us more interested in corresponding. I found an eighth grade picture and was able to name every person, and we swapped notes about where some might be now or some story about who had a crush on whom or some particular event that made us remember them, usually fondly. It all seemed to help get through the horrible news as we all grieved.

I would find out a few days later that one of my first bosses died in the attack. He had retired, but had a one-day-a-week consulting job for a pension manager in the WTC. He had a heart attack as he headed down the stairs. The only blessing is that his family had a body to bury, unlike the numerous other families who had only memories. Though I worked for him as a teenager, things he said, jokes he told, and how he guided me are still a part of me and what I do. Tim O'Sullivan was a 6'8" 325 pound Irish giant, whom we suspect had even had green blood. If there was anyone who loved being Irish, it was he, with his infectious humor, and great affection for everyone with whom he worked.

Print01 was interrupted by 9/11, and for those who were at the show, interest shifted from the show floor to figuring out how to get home. Some of the stories showed incredible ingenuity, and were quite entertaining, and still are to this day. Let's hope that Print05 is memorable for all of the right reasons this time.

Accuracy of business data bases is probably the biggest problem with 1:1 VDP efforts. (I got yet another 1:1 piece the other day, and the track record is intact: I have never received an accurate piece). This release discusses the business costs of bad data.
http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20050906005059&newsLang=en

Publisher gets into podcasting
http://www.dmnews.com/cgi-bin/artprevbot.cgi?article_id=33973

More e-paper news
http://www.polymervision.com/New-Center/Press-Releases/Article-14693.html

Economist Gene Epstein writes in Barrons about the unintended consequences of price caps. Note that during Labor Day weekend, there was no shortage of gasoline. How come? Not because of greed, but because of the simple supply-demand curves we learned in Economics 101.
http://online.barrons.com/article/SB112570401451930749.html?mod=9_0031_b_this_weeks_magazine_columns

Hearst Magazines' Cathleen Black interviewed
http://edition.cnn.com/2005/TECH/08/26/cathleen.black.transcript/index.html

Data about newspaper inserts as published by TNS Market Intelligence
http://www.tns-mi.com/news/07252005.htm

Software Freedom Day is September 10! While the folks who are running it have little understanding of the value of proprietary software and also that of intellectual property, and even of economics, the open source and free software movement is growing in Asia and Africa, and the rest of the developing world. Open source and proprietary software will coexist happily as they are two totally different business models serving totally different needs. Do people really think that Sun Microsystems has no vested financial interest in the success of OpenOffice? Of course they do. Getting computing resources out in the world require many different strategies, and the open source and free software movement are critical to that effort. However naive they are, there are some great recommendations in this article. http://www.ccnmag.com/story.php?id=365
The official Software Freedom Day site http://www.softwarefreedomday.org/