In a Dotcom World, Have Publishers Forgotten How to Negotiate Printer Contracts?
Keep an eye on the fine print.
Production departments have been among the areas most ravaged by lay-offs, and some observers say that loss of expertise leaves publishers at a disadvantage when negotiating printer contracts.
"When publishers got rid of the production manager, they got rid of people who understood contracts," publishing consultant Steve Frye tells me. "Now you have people negotiating printing contracts who are editors, art directors, publishers, who don’t really know anything about what the terms should be. Many standard clauses that protected publishers from increases have been eliminated."
Frye cites paper pricing as an example. "Publishers used to buy specific paper, say Chocktaw 40 pound, and the printer would say, ‘OK, if you buy this, your price is $42.50/100 weight.’ If Chocktaw raises rates, you’ll have to pay more for paper. Fair enough."
But, Frye says, the trend over the last few years has many printers selling generic grades rather than specific brands. "If you’ve got a 40-pound paper groundwood, it might be Chocktaw or it might not," he says. "Publishers used to be very specific about whiteness, brightness, etc. As an industry we don’t have that luxury anymore. Now printers say, ‘We will sell you 40-pound groundwood at $42.50′ and when 40-pound groundwood goes up, prices go up. But when it goes down, prices are supposed to go down. It was easy to track when you were tied to specific brand or mill. But when you’re tied to a grade, it’s based on rumor."
But if that’s the case, then you’re at the wrong printer, according to one former publishing executive turned printer rep. "Printers should be able to disseminate information in a timely manner to customers," says the source.
Potential Trouble Spots
For Blood-Horse Publications, key contract expectations include a clear understanding of the contract timeline; any allowances with fixed pricing or payment terms; the insurance statement in case of fire, flooding, etc; and a paper pricing agreement, which covers whether price is set for a specific period of time of if the price will fluctuate.
"In our situation our contract is very straightforward and clear," says production director Lisa Coots. "If paper prices increase or decrease, we receive proper notification in writing before the new price goes into effect. We also look for bundle prices since we publish multiple publications. And, if an electronic edition is included with the contract, we request a pricing model for those services."
While Ogden Publications has seen some more leverage in recent years due to a softening demand on capacity and currently uses in-house talent to negotiate contracts, publisher Bryan Welch suggests getting a consultant to oversee contract development if the publisher doesn’t have in-house expertise. "Contracts are highly complex, they change over time and it’s clearly a process in which each side stands to gain or lose great advantages based on technicalities," he adds.
Potential trouble spots include handling charges and paper storage prices, according to Welch. "Sometimes that’s below the radar and can hit a publisher hard. Whether a printer acquires or doesn’t acquire paper for a publisher, either of those arrangements can be problematic depending on how the printer is handling surcharges and commissions. Sometimes those have different names in different contracts-you have to drill down the terminology when it comes to paper, handling, transportation and storage. All those sorts of things can become quite expensive if we don’t negotiate aggressively."
Another area to watch is the printer’s prerogative to hold on to printed matter in case of disputed invoice, says Welch. "Historically, printers have reserved the right to sit on a dated publication until the dispute is resolved," he adds. "That can destroy a publisher’s business."
Require a clear outline of all charges and costs regarding co-palletization and co-mailing options, according to the publisher-turned-printer. "These are relatively new processes and often the charges for admin and freight costs are confusing," the source says. And in these days of rampant consolidation, there should be a clause giving the option of opting out of a contract if the printer is sold to another printer.