Since the 1960ies, many analysts have been busy predicting the shift towards the paperless society spurred by the technological advances in computer science. Until recently, they have been wrong, but now it is time for paper manufacturers to stop living in self-denial.
In June 1975, BusinessWeek published an article about the office of the future arguing that desktop computers were going to become the working tool of all clerks, including senior management. This development would lead to a sharp decline in paper demand as word processing, communication and storage would become digital. It was predicted that by 1990 most corporate record-handling would be electronic. In retrospect one can conclude that their analysis missed the fact that it takes time to change record keeping procedures (some of them regulated, like bookkeeping) and fine-tune new technology into efficient processes. Instead, the new computers together with the copying machine made document production easier which explains the boosted demand for paper throughout the 1980ties and 1990ties (figure 1). This outcome spurred the notion among paper manufacturers that the digital revolution posed no threat against their business model. An illustration of this optimistic perspective is the 1995 newsprint consumption projection for the U.S. market done by the Food & Agriculture Organization of the U.S. (blue line, figure 2).
Many developed markets experienced “peak paper” during the first years of this century marking the end of decades of stable growth and the beginning of economic struggle and industry consolidation. Since then, several experts like the Finnish researchers Hetemäki and Obersteiner (green line, figure 2) have predicted declining demand for newsprint and office paper in developed markets. However, the actual decline in demand has been by far more dramatic than the most pessimistic projections. A best guess for the coming years is that demand will continue to decrease at a fast and faster rate.
Some paper manufacturers might blame the tough market or the financial crisis and nurture the hope that volumes will grow again when the world economy stabilizes. Furthermore, some companies expect that paper consumption in emerging markets will grow and follow the same trajectory as in past decades in the industrialized world. However, during the last twenty years, paper has become less competitive as new affordable and functional gadgets have reached the market and the cost and quality of data communication has improved. Given the natural drawbacks of paper; logistics costs and lack of interactivity, the most probable scenario is that consumers in emerging markets will leapfrog office paper and printed media like they have leapfrogged landline telephony.
Therefore, the real question is not when demand will stop falling, but when will the industry take the bold strategic decision to adapt their business models to the new reality.
