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The Digital Revolution’s Impact on Paper Demand

As digital content distribution surges, growth in the demand for graphic paper is contracting.

In some cases, e-distribution can serve as a complement to, rather than a replacement for, hard-copy distribution, whether it’s newspaper content or reference material. The strength of the substitution effect varies by paper grade and market. But there’s no disputing the overall trend, and that trend will persist and strengthen over the next decade.

Four important digital-substitution levers are critical—e-media, which provide digital content that can be accessed with personal computers; e-devices, such as the Kindle and iPad, which provide an additional, portable means of accessing digital content; e-advertising, or the shift from paper-based ads to digital ones; and e-archiving and e-distribution.

These four levers will have successive impacts, each diminishing the demand that remains after the effects of the previous lever. The levers will likely be mutually reinforcing: wider use of e-devices, for example, will lead advertisers to spend more on e-advertising than on the offline, hard-copy equivalents.

Here are the effects each of the four levers has on the primary applications for graphic paper—newspapers, directories, magazines, catalogs, advertising, books, and office paper:

  • E-media. Online options directly replace some hard-copy content and also reduce the time users have available to spend looking at other paper-based media. Easily replaced directories are hardest hit; e-media have also had significant impact on newspapers, magazines, and books.
  • E-advertising. The cannibalization of paper-based forms of advertising by digital equivalents will lower the value of remaining outlets to the advertisers themselves. While proliferation of digital alternatives partly overwhelmed those advertisers, encouraging them to stay put or rely on paper publications, a strong online wave has hit the past five years.
  • E-devices. The rise of e-readers and tablet computers greatly expands audience reach, amplifying the impact on graphic paper producers. Their growth will feed on itself—the more devices that are available, the greater the pressure will be on content producers to focus on those devices as a primary distribution method.
  • E-archiving and E-distribution. Digital storage is a mature product, but its impact on office paper producers has been disguised somewhat by the impact of the past recession. Further penetration will reduce office paper demand by up to 30%, but the effect could be mitigated by institutional requirements for hard copies or individual resistance to new habits.
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