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THE INTERNET AS LORAX :
NETWORK COULD SAVE TREES BY REPLACING PAPER
Despite Rise in Office Paper, the Internet is Poised to Displace Hundreds of Tons of Printed Material
It is obvious to everyone that the "paperless office" heralded by the computer revolution never materialized. In fact, office paper consumption will probably continue rising into the foreseeable future (although at a slower rate). But the Internet is becoming the killer application that may do away with millions of tons of other paper products. These include newspapers, catalogs, and directories. A few major U.S. companies are even using the Net to make inroads against traditional office paper.
Paper is one of the most energy- and resource-intensive industries in the economy. Only chemicals and petroleum refining surpass paper manufacturing in total industrial energy use. Including transportation, production and raw materials, the carbon dioxide reductions achieved for each ton of paper avoided are estimated at 3.3 metric tons for newspapers and 3.8 for office paper.
Top Consulting Firm Analyzes Internet Impact on the Paper Sector
By 2003 the Internet will reduce net demand for paper by 2.7 million tons, despite increases in office paper, according to a comprehensive analysis by the Boston Consulting Group (BCG) - one of the world's top strategic consultants. The Center for Energy & Climate Solutions says the yearly energy savings would be the equivalent of removing 2 million cars from the road. Annual greenhouse pollution savings could reach 10 million metric tons of carbon dioxide. While it is difficult to accurately predict such complex business interactions so far into the future, BCG analysts say those savings could potentially double by 2008.
NEWSPAPERS:
As the biggest single paper consumer, newspapers will bear the biggest shifts in demand. As the BCG study notes, "the considerable information content of most newspapers, combined with high fixed costs and the subsidizing of content by advertising, makes them particularly vulnerable to electronic substitution."
Paper, distribution and printing account for 30 to 40 percent of newspaper production costs. Each of these stages involves considerable energy use. By comparison, online editions have a vast economic advantage. BCG projects Internet substitution will cut total newsprint demand by 1.2 million tons by 2003, compared to business as usual. They believe about 15 percent of the 1997 North American newsprint capacity will be "superfluous" by 2003.
Newspapers face another Internet challenge, regardless of subscription rates. Forrester Research predicts that over the next five years the Internet will siphon $27 billion - about 10 percent of all ad spending - away from traditional media. Advertising provides about 80 percent of revenue for U.S. newspapers, nearly half of which comes from classifieds. BCG calculates that 15 percent of the U.S. classified market will be online in 2003. Forrester Research puts the figure at 20 percent, worth about $4.7 billion per year.
CATALOGS:
Like newspapers, catalogs face stiff competition from the Internet. The cost of paper alone is 10 to 15 percent of total expenses. Printing and distribution costs increase that significantly. Lands End, for example, mailed 259 million catalogs in 1998.
BCG believes the Internet will reduce catalogs' demand for paper 15 percent by 2003 compared to business as usual. Merrill Lynch analysts predict Internet goods sales will increase more than 10-fold from 1998 to 2003, hitting $100 billion. Of that, they say $40 billion will come from the pockets of the catalog mail order industry (compared with current annual catalog sales of $55 to $75 billion).
Cisco, a maker of computer networking equipment, is saving $50 million a year by having product and pricing information on the Web and web-based CD-ROMs. Digital Equipment Corporation estimates that putting its promotional materials online is saving $4.5 million annually in catalog and mailing costs.
DIRECTORIES & OTHER INFORMATION BOOKS:
Of the 470,000 tons of phone directories published in the U.S. each year, just 10 percent are recycled. BCG projects that the Internet will reduce demand for directories by 25 percent compared to business as usual, saving 300,000 tons of paper.
The potential for information technology to replace other information-based books has already been demonstrated by the rapid replacement of hard-bound encyclopedias with CD-ROMs, particularly Microsoft's Encarta. Since 1990, Encyclopedia Britannica has seen sales of printed editions plummet by 80 percent. In October, the company made the entire encyclopedia - 32 volumes and 44 million words - available free of charge on the Web.
Indeed, the trend may already be starting. Unit sales of science and technology reference books have already declined from a peak of about 80 million copies in 1995 to 74 million copies in 1998, in large part because of the impact of electronic media. BCG results suggest that by 2003 electronic substitutes will displace 300,000 tons of U.S. paper consumption by books.
OFFICE PAPERS:
While most offices continue to use more paper, several companies are using computer network technology to significantly reduce the paper glut.
At Nortel Networks, a comprehensive program to reduce paper consumption by increased use of electronic and network technology result in a 17 percent reduction in paper use - more than 1,100 tons - from 1997 to 1998. Since 1993, paper use has decreased 33 percent - or 64 percent measured in tons per sales dollar.
AT&T has cut paper consumption by more than 400 tons. Measures included shifting the AT&T personnel guide from a 1500-page paper document that had been copied and distributed at least 20,000 times a year to an online resource. Distributing AT&T Today to 10,000 daily readers online saved 24 million pieces of paper. They also put their Environment, Health & Safety organization online, including a monthly newsletter that saved nearly 2 million pages. Almost 400 corporate forms were stored online, so they can be printed only when needed.
IBM reports that its Internet-based supply chain management system has cut paper consumption by five million sheets.
Be Glad You're Not Selling Envelopes
Systemic changes in Post Office business have substantial energy implications, because the organization has 36,000 local post offices and 200,000 vehicles. Already, the U.S. Postal Service estimates that business-to-business, first-class mail dropped by over a third in the late 1990s because of e-mail. Direct mail - what some of us call junk mail - is expected to suffer as advertising increasingly moves online. Forrester Research projects direct mail could lose up to 18 percent of its revenue by 2004.
The projected drop in postal business over the next five years due to electronic transactions could be as high as $17 billion. Another federal study predicted that first-class mail service will peak in 2002, after which it will decline steadily by 2.5 percent per year.
Nearly 6.6 million U.S. households did their banking online in 1998, according to the International Data Corporation (IDC), which projects the number will grow to more than 32 million by 2003. The reasons are simple: Savings and convenience. The U.S. Commerce Department estimates that using the Internet to deliver and pay bills could save up to $46 billion every year. That translates into a substantial reduction in the need for mail delivery and processing facilities. One estimate has it that as many as a third of U.S. branch banks could close in the near term.
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