Economics & Research Blog
Print's Prices are Declining: Just Not Enough
By Dr. Joe Webb
Published: February 19, 2008
Last week's audio chart compared the Producter Price Index (PPI) for a variety of commercial print categories, printing supplies such as ink and paper, and electronic technologies. It also compared it with the Consumer Price Index (CPI). The PPI is the measurement of prices as they are sold by their manufacturers. The CPI is the price in the marketplace that consumers pay. For many years, the PPI was higher than the CPI, with the difference being made up by the massive productivity improvements in distribution, logistics, transportation, coming mainly from decades-long investment in information technologies, boosted by networking and the Internet.
Based on the data presented in the chart, costs of printing inputs like printing ink and printing papers are not being passed on to consumers. The "overcapacity fanatics" typically jump on this to show that there are too many printers. But the number of printing companies has been declining for more than a decade, at about a net loss of 1000 printing businesses per year.
No, the answer is at the bottom of the chart, with the perpetual decline in prices of computer technologies and connecting them to others. There is an information marketplace, and print competes in that market against numerous less expensive and occasionally more effective new media alternatives.
So despite print becoming "cheaper," because prices are routinely less than inflation, alternatives to print are becoming cheaper yet. Moving electrons is less expensive than moving hard goods. Whining about how price competitive the print business is misses the entire point of the information revolution. You are reading this on the Internet, aren't you?