How the Rise of Electronic Media is affecting Paper Prices by Jonathan Seybold, publisher of Digital Media Papermaking has been a cyclical business. Business was bad in the last recession. As the economy has improved and demand has gone up, the price of paper has been rising dramatically. Newsprint has seen the biggest gains, but the increases will be across the board. Normally, you would expect this to prompt paper companies to build more capacity, and for this capacity to come on line just in time for the next slump in demand.
Paper companies are under environmental pressure.
But a number of companies have chosen to close down old mills rather than try to bring them up to compliance with current regulations. Like all the rest of us, the paper company executives read all of the press stuff about the Information Highway, the rise of online services and the decline of paper-based publishing. Now, on top of this we have continuing environmental woes and a general consensus that significant chunks of our market will be moving away from paper. In essence, the fear of electronic media is causing paper companies not to invest in new capacity. This, in turn, will insure that the cost of paper continues to rise which will, of course, push publishers into electronic publishing and away from paper.