Tag Archives: print-on-demand

Publishing 3.0: A World Without Inventory Part 2

In our previous posting we pointed out that today’s “speculative” publishing model, based on the returnability of unsold books, is no longer viable. It has served us well for the better part of a century. But the digital revolution has created a highly successful, efficient new model relying on pre-ordered and prepaid books printed on demand.

The publishing industry has had decades to deal with its addiction to returns. I have been beating this drum in vain for decades including an editorial in Publishers Weekly in 1992 (see Behind Publishing’s Wednesday of the Long Knives). Now it is too late. The old way can no longer be sustained. The good news, however, is that it no longer has to be. Amazon has demonstrated that the prepaid model is mature and ready to replace the old speculative one.

Publishing oracle Mike Shatzkin would seem to support this vision of things to come.  In a recent article he projected “about half of new book sales will be made through online purchases if we count the print book sales made through online retailers (mostly Amazon). Online print sales can be served through inventory generated on demand. So, if these estimates are right, we are less than three years away from a publisher (or author) being able to reach half the market for a book without inventory risk!”

“Every publisher,” he adds, “should be preparing for the disruptive effects” of this paradigm shift. Among his recommendations are:

  • Publishers are going to really have to rethink the development process for their ebooks.
  • It will be eminently sensible to launch books with a no-inventory strategy and move to press runs with returns allowable when reviews or sales have proven that it makes sense…The idea of printing and distributing speculatively will make less and less sense as the potential market to be reached by that tactic diminishes as a share of the whole.
  • By the end of 2012, we’re saying half of all the sales potential can also be reached with the product without a local nexus: no requirement of local inventory or any shipping or revenue collection facility beyond your digital distribution and print-on-demand partner.
  • Because books or ebooks will be purchased by half of their customers electronically, the potential exists to know exactly who those are and to establish interaction with them…This opportunity presents a new battleground for competitive advantage that publishers will have to pursue both for marketing and for author relations.
  • Publishers will have to start devoting the bandwidth and resources to direct sales that they devote to intermediary sales today. (See Direct Sales: Publishing’s Last Stand.)
  • There’s an inevitable concurrent downward spiral of brick-and-mortar retail inherent in this forecast that sales are moving online. The nearly-limitless online selection has been an increasingly powerful magnet since the day Amazon opened and in the new paradigm there will be a growing body of talked-about content not visible on store shelves.

“On-demand printing is very much in demand in 2009,” says David Taylor, president of Lightning Source, the biggest POD supplier in the business. “The business model, quality and cost structure have matured considerably in recent years. With POD, publishers can better match supply to demand, thus eliminating the risks and costs associated with the book market….A globally distributed print model, where publishers use the same file to print at multiple locations that are closest to the origins of the orders, has given the book industry a platform to publish smarter. POD is no longer an optional novelty; it is an integral and essential part of the future of publishing.”

Richard Curtis

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Publishing 3.0: A World without Inventory Part 1

By now it must be clear to all but a handful of diehards that the business model based on returnability of books for credit, a practice instituted by the trade book industry some 75 years ago, is no longer viable. In fact it has proven to be a bargain with the Devil.

The original principle on which it was instituted – to encourage bookshops to invest in otherwise risky literary forms like first novels and poetry – was an admirable one, and publishers can look back with pride that their good will made possible the launch of countless great works and authors. But soaring returns have rendered this practice utterly dysfunctional. Return rates approaching or even exceeding 50% have slashed profit margins of trade book publishers to single digits, no digits or negative digits.

Though the industry managed to keep a lid on returns until the latter part of the 20th century, in the post-World War II era the system deteriorated as return rates escalated, triggering cash shortages. The consequences were catastrophic: countless underfinanced houses were driven into the arms of larger ones. These big fish in turn succumbed to even bigger fish until we ended up where we are today – with a handful of bloated leviathans. But even they have discovered that immense scale offers no immunity from the same toxic business model that forced smaller houses to give up the ghost. Huge publishers may have more blood to hemorrhage than small ones but eventually they succumb too.

Yet, despite decades of proof that returnability is a sucker’s game, the publishing industry is incapable of curing its addiction to the practice.

The time has come for publishers to accept the fact, now glaringly apparent to all but those in total denial, that no business enterprise can afford to sell just half or even two-thirds of what it manufactures – and to foot the bill for the return and disposal of the unsold other half.

Some pundits ascribe the woes of our business to printed books themselves, saying that the medium is no longer appropriate for our times. In truth nothing is wrong with printed books. Everything is wrong with the way they are distributed.

And the way they are distributed is appallingly profligate, taking a dreadful toll on the environment in terms of paper waste and carbon footprints. The tortuous methods by which bookstores account to publishers and publishers to authors are imbecilic and arguably fraudulent. An alien visitor tracking the journey of a printed book today from editorial office to printer to warehouse to bookstore, back to warehouse and then to remainder jobbers or pulpers would have genuine reason to wonder whether there is intelligent life on this planet.

For over a decade we have had before us a technique for publishing books called print on demand. Those who witnessed its introduction at a book expo in 1998 declared the process revolutionary. Though it’s taken a decade or so to refine the technology, they were absolutely correct. The delivery system has matured and begun to make serious inroads on the traditional one. Though representing only 2.5% of all book production in 2009, it is expected to grow at 16% per annum according to David Taylor, president of Lightning Source, the nation’s biggest POD firm. The first generation of Espresso POD machines, now being installed in libraries and bookstores, promises to expand the technology’s popularity even further. As anyone who has seen a demonstration of the Espresso can testify, the process itself is a technological miracle and will most certainly be miniaturized. It is easy to imagine a day when POD kiosks – in bookstore or non-bookstore venues – will issue books from an infinite inventory of digitally stored titles.

But it is not just the technology that is so exciting to contemplate.  It’s the business principle underlying the process that promises the invigoration and perhaps even the salvation of printed books.

The Speculative Model

In today’s traditional model, which might be termed “speculative,” publishers relying on information gathered from booksellers make educated guesses about how many copies to print and distribute. The sale of a book occurs only after it has been published, placing the burden of financing its publication squarely on the shoulders of the publisher. To the degree that the publisher’s forecasts are incorrect, unsold copies will be returned. Settlement of retailer accounts are delayed or adjusted while returns are processed, delaying desperately needed cash flow to publishers. Publishers in turn must delay settlement of royalties to authors for months and even years until returns calculations are finalized.

In short, the entire system is founded on a negative principle: it’s not how many copies of a book are sold, but rather how many are not returned. Everybody in the chain suffers, from bookseller to publisher to author. Even readers suffer because the cost of all this inefficiency is passed along to them in the form of higher book prices.

The Prepaid Model

Now consider the business model created by print on demand, which we’ll call “Prepaid”. When a book is ready for sale it is displayed on the website of a publisher, author, retailer, or all three. Customers may browse or sample it online. When they decide to buy it they purchase it on the website, charging it to their credit card. Until that moment the physical book does not exist: it is simply a digital file on the server of a printing press. Unless the book shipped to the customer is defective, it is seldom returned. By adopting the print on demand model, the returns problem disappears. Settlement of bills is prompt. Whereas traditional publisher issue royalty statements semi-annually, print on demand makes quarterly or even monthly settlements possible – without reserves against returns!

Do the math: 30, 40 or 50% returns for the speculative model vs. 0% for the prepaid. Case closed. Or so you would think.  Yet traditional publishers cling to the topsy-turvy model of paying a lot of money upfront for books they believe will be hits, then making educated guesses on the size of the audience, then overprinting, then recovering unsold stock and remaindering it or sending it to a pulp mill.

These practices can no longer be sustained, and the good news is that they don’t have to be. Amazon has demonstrated that the prepaid model is mature and ready to replace the old speculative one like a creature that has outgrown its carapace.

In the second installment of this posting we’ll hear what a well known publishing industry oracle thinks the industry must do to prepare for paradigm shift.

Richard Curtis

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New Digital Print Technology Could Crown POD’s Conquest

The conference is called “drupa” but “the Olympics of printing” sounds a lot sexier. This year’s event, just concluded, may be the most significant print convocation since the Chicago Book Expo in 1998 that introduced print on demand.

Drupa is held, Olympics style, every four years in Düsseldorf, Germany. This year’s drew some 400,000 visitors, and what they saw will make POD look like a mimeograph machine.

“This year,” writes  The Guardian‘s Mark Piesing. “visitors will see a number of rival technologies launched, each of which promises to deliver a ‘second digital revolution in printing’ that will allow the digital printer to kill off the offset press for commercial printing, and may even allow the printed page to compete with the iPad in terms of visual quality and individualization of content.”

As readers of this column know, we have often said that there is nothing wrong with print books – it’s the way that they are distributed that has placed the book industry in jeopardy. (See Publishing 3.0: A World Without Inventory, Part 1 and Part 2) Publishers must accept that the future of book distribution is POD.  The unpretentiously-named drupa conference may bring that future closer.

Details in Rivals launch a printing revolution that could be as significant as Gutenberg

Richard Curtis

This blog post was originally published by Digital Book World as Second Digital Revolution – But This Time It’s Print

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The Attack of the POD People

Pea OD

Richard Curtis, literary agent and founder of E-Reads, the independent ebook publisher, recently posted an article on Digital Book World about print on demand. He was subsequently interviewed about it by GoodeReader.

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“E-Reads has been using Lightning Source for its POD services since we began in 2000. LSI is the biggest in the industry, perhaps in the world, in print-on-demand. Because they are a division of Ingram, a book distribution company that has very successfully made the transition from a company that serviced print publishers to a company that now services the digital book industry, we feel that there are advantages to being with LSI that you simply cannot get with any other POD publisher. Among other things, their core source service enables us to reach indie bookstores, a great many of which we could not otherwise reach.”

One aspect of POD that Curtis mentioned in his recent blog post is the prohibitive cost per book when comparing a typical print run of a trade paperback with the cost of printing one title at a time per customer request. Lightning Source has countered that cost in a deal with EPAC, one of the largest POD suppliers in Germany.

“From speaking to executives at LSI and asking if there is any possibility in the future that the costs of producing PODs might come down, they have told me that there are developments that they cannot currently discuss that make them hopeful that the prices will come down.”

But why such a keen interest in print-on-demand? Isn’t the point of digital publishing and the surge in popularity of e-reading related to all the negative things that digital has stripped away, like eliminating paper and ink costs, shipping costs, and wait times to receive new books?

“Many authors want their books available in paper and many readers still want to read books in paper even though they are available in digital format. I’m considered somewhat of a trailblazer in the digital world but I still much prefer to hold a printed book in my hand than to read one on a screen. Even though POD used to represent about 50% of our income in the days when there were no Kindles or Nooks or viable digital readers, POD now represents about 8% of E-Reads revenue, the rest being from digital. Even though POD books are very expensive compared to those printed in the traditional way. A book that might have been $12 to $15 in a traditional print run might cost $20 as a POD, but people are willing to pay it.”

While POD might be a smart move for the indie authors and a certain demographic of readers, whether the publishing industry as a whole will adopt POD as a viable solution remains to be seen.

“I think the industry is being forced into it. The closing of Borders and of so many independent bookstores, the reduction of floor space in bookstore chains like Barnes&Noble, all point to a reduction to the space available to deliver printed books to the consumer on the street. This same segment of the population is going to have to turn to POD. The publishing industry for the last 100 years has distributed its books on a returnable basis. At the beginning of the industry 5-10% of books were returned; now we’re up to as much as 50% of books being returned by bookstores. It’s no longer possible for publishers to sustain 50% returns when POD is an alternative.

“My vision for POD is kind of the Espresso vision, where the Espresso Book Machine will come down in size and complexity to where it will be truly closer to desktop than refrigerator sized. When that happens, you’ll see bookstores with kiosks with thousands of books displayed where you can choose one, but they’re not on a bookshelf, they’re on a screen. You can browse electronically, pick one out, and have a cup of coffee while it prints. It may not be in the immediate future, but I would say within the next ten years you will be able to go into a space and print the book you want. Right now, you have that by simply going on Amazon, but if you prefer the experience of going into a store and browsing for a book that looks interesting, you will see that model evolving. And when someone predicts 10 years, it’s usually five.”

Print-On-Demand: The Future of Publishing? A Talk with Richard Curtis
By Mercy Pilkington

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Ingram Moves: Big Boost for POD?

Gutenberg's POD: prohibitively expensive

LightningSource Inc., a subsidiary of Ingram, has been E-Reads’ POD printer of choice since our founding in 2000. And because – through no fault of LSI’s – the high cost of on-demand printing has prevented the process from achieving its full commercial potential, our hearts beat a little faster when LSI announced in Publishers Weekly a number of initiatives suggesting POD prices could come down.

From the outset of the Digital Era, we have made our titles available in print on demand and steadfastly predicted that POD will become the principal means by which most books will be distributed (See A World Without Inventory, Part 1 and Part 2).

However, this progress has been compromised by the high cost of on-demand printing is a one-copy-at-a-time process, as opposed to traditional press runs. As with any form of individualized manufacture, the price per unit is very high. Where a 5,000 copy print run of a typical novel might cost $.50 or $1.00 per copy, a POD of the same book might cost upwards of $5.00. The result is 300 page trade paperbacks that cost $20.00 compared to $12.00 or $15.00 for that book produced as part of a long print-run.

In essence, Ingram has licensed print technology developed by the German company EPAC, and acquired two EPAC printing plants. “Incorporating the use of EPAC technology is expected to increase the number of copies Lightning can print cost effectively,” PW reports. Ingram Content Group chairman called the EPAC print technology “groundbreaking. With our years of print experience, Ingram will take the promise of print-on-demand to the next level.”

We look forward to standing beside LSI when it happens.

Details in Ingram Acquires Two EPAC Plants, Licenses POD Technology.

Richard Curtis
Note to readers: Digital Book World has invited me to post my blogs initially on its website before releasing them on E-Reads, and this content is re-published with DBW’s permission. Click here to view the original posting.

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Espresso POD Gaining Mo

Book by book, author by author, venue by venue and investor by investor, the Espresso print on demand machine is picking up momentum as the paper book publishing mode of the future.

Just how close is that future? The machine needs to get smaller, faster and cheaper, the investors more open-handed and the installations more abundant. Above all, the concept needs to sink into the mentality of a publishing industry that lives in denial that the distribution system that prospered in the 20th century is going to survive in the 21st. With the erosion of traditional bookselling through store chains and independent shops, the handwriting is on the wall for a system built around trucks – trucks that not only deliver books from printers to distribution depots to stores, but carry the unsold books back to their doom in a pulping vat. The number of copies returned can exceed 50% of the number distributed.

With the alternative distribution system of e-books in place, the idea of returnable books, or at least books returnable in stomach-turning numbers (e-books are actually returnable, but the percentage of return is miniscule), has become a preposterous anachronism. The “handwriting on the wall” is actually eInk.

Print on demand on demand is another form of digital publishing, except that the end product is tangible. That publishers do not yet embrace this simple truth is part of the tunnel vision endemic on the part of book industry leaders.  It’s easy to understand why it is so obdurate: distributing books into stores via fossil-fueled vehicles generates most of the cash that flows through the publishing industry. But the unprofitability of that system, compared to one in which printed books are manufactured at the point of purchase, is appalling.

The paradigmatic shift of the book business from the current distribution model to a POD-based one is inevitable. What is delaying it is a lack of imagination on the part of industry leaders. Though they have dipped a toe in the water by issuing backlist books in POD, none has yet dared to abandon the long print run and the returnable distribution model.

All this is preface to an article by John Tozzi in bloomberg.com about progress in the installation of Espresso print on demand machines, On Demand Books Bets on Self-Publishing, which we urge you to read. It describes the efforts of On Demand chairman Jason Epstein and his investment partners to gain acceptance for the Espresso throughout the land.

At the dawn of the digital book industry, a trade publication named Jason Epstein one of three “Grumpy Old Visionaries”.  Over a decade later his original vision seems a lot fresher than that of many book industry executives half his age (he summed it up compellingly in an article published in 2010).  We wish him the gift of time to see his vision achieved and profit handsomely from it.

(And if you’re curious to know who the other grumpy old visionaries were, you may click here).

Richard Curtis

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For the First Time In History, Print Is Optional. Now What?

Despite the gloomy talk about the death of the book it’s pretty clear that printed books serve an essential function in our culture and will always be with us. For those who greet this statement with skepticism, we reiterate that there is nothing wrong with printed books – just the way they are distributed.

The big difference between the past and the present is that for the first time in history, printed books are optional. The implications of this fact are profound.

Until very recently the only mode for publishers to introduce content was print.  Printed books defined publishers. With the advent of digital technology, however, a new breed of publisher arose that can if it chooses publish a book originally in digital format and postpone the print edition or skip it altogether.  Well into the present decade traditional publishers like Random House and Simon & Schuster and Macmillan clung to the imperative to issue print volumes before releasing them as e-books.  Eventually they yielded to the exigency of releasing the e-book simultaneously with their print edition.  Issuing e-books without having to do print editions at all, however, is not a measure to be taken lightly.

One reason is commercial. Original e-books put traditional publishers at a serious competitive disadvantage. Whereas those houses currently pay 25% net royalty to authors, most independent e-book publishers pay at least twice that much, and self-published authors can get as much as 70% royalty by direct uploading of their content. The Hachettes and Harpers and Penguins can reason that they are adding value and brand-name prestige, but that argument doesn’t hold water for many authors who are simply in the game for money.

More significantly, by electing not to print a book at all, these so-called legacy publishers put themselves in danger of losing the very thing that defines them. What profiteth a publisher to gain the world and lose its soul? Today Random House is a completely different species from independent e-book publishers like Open Road.  But by becoming a pure e-book publisher, the playing field is leveled, and the difference between Random House and Open Road becomes simply one of scale.

When we talk about the death of printed books we are really talking about the death of printed books distributed in bookstores.  With the death of a Borders and the announced reduction of Barnes & Noble’s  bookstore floor space by 25%, print on demand, a business model that does not depend on store sales or the returnability of books the way traditional bookstores do, increasingly becomes an option. If publishers elect POD for all their books they will not only continue to make money from printed books but could potentially rescue their identities, and maybe their souls as well.

Richard Curtis

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Stop Presses: Publisher Has Something Good to Say about Amazon

Stephen Roxburgh, founder of a small press called namelos llc., has written a guest editorial in Publishers Weekly defending Amazon.com against accusations of predatory behavior and thanking it for its support, without which namelos might not have survived.

Besides the obvious boost in e-book sales, Amazon’s POD program made a huge difference for this embryonic press. “Our new company publishes titles simultaneously in hardcover and paperback using print-on-demand technology, and e-books. Because our books are nonreturnable, most booksellers will not carry them. Amazon does.”

Though Amazon may not strike many as being in need of friends, Roxburgh feels the behemoth has been excessively vilified. “Not since Hester Prynne walked out of prison with an infant in her arms and ‘a rag of scarlet cloth’ in the shape of the letter A has there been such public hue and cry as Amazon has provoked in the past few weeks,” he declares. “From the point of view of this lunatic fringe publisher, Amazon, with all its glitches and stumbles, is crucial to our success. And I, for one, applaud the innovation and transformation Amazon has brought to the publishing world.”

Okay, that’s one. Anybody want to make it two?

We will. Without Amazon’s retail clout and marketing genius, E-Reads would still be in the dark ages of the 20th century (when it was founded).  We are also happy to shout out our other indispensable partners: BN.com, Ingram, LightningSource, Apple, Sony, Google, Kobo, Diesel, Content Reserve, Baker & Taylor and Fictionwise. In 2011 E-Reads sales exceed $1 million and we could not have done it without them.

For Roxburgh’s full editorial in PW, click here.

Richard Curtis

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HarperCollins Announcement re Espresso Backlist Program

New York, NY, – In a first from a major trade publisher, HarperCollins Publishers today announced “Comprehensive Backlist.” This program will allow all physical bookstores, from the largest to the smallest, to promote and sell the HarperCollins backlist through in-store “Digital-to-Print at Retail” (DPR) using the Espresso Book Machine (EBM). The program will enable bookstores to offer thousands of trade paperback books from the HarperCollins catalog through a mix of traditionally printed books and DPR, as space and cash flow restrictions will no longer be a factor. DPR editions will be sold on an agency model. It is expected that the independent bookstores that already have the Espresso Book Machine in place will join the program.

At launch, HarperCollins will work with On Demand Books, LLC, the maker of the Espresso Book Machine, to enable instant distribution of books that are not currently stocked in stores. With the push of a button, books can be printed, bound, and trimmed to a bookstore-quality, perfect-bound paperback book, with a full-color cover, in minutes.

“Even as digital book sales grow, bookstores continue to be an important place for customers to shop for physical books. The goal of this initiative is to give the local bookseller the capability to provide customers with a greater selection of HarperCollins titles in a physical environment,” said Brian Murray, President and Chief Executive Officer of HarperCollins Publishers. “For authors this is a win; titles will be more broadly available, which increases sales with full print royalties. Depending on the size of the store, 25%-80% of our backlist titles are not stocked due to physical space limitations. DPR technology means the books will be there for the consumer at small and large bookshops.”

“We are delighted to add HarperCollins to the Espresso Book Machine network,” says Dane Neller, Chief Executive Officer of On Demand Books. “By committing thousands of titles to the program, HarperCollins is showing its clear support for bookstores and authors, and reaching more readers. Digital-to-Print at Retail is a powerful new sales channel for publishers. It eliminates lost sales due to out-of-stock inventory and provides a new marketing platform in partnership with bricks and mortar booksellers.”

“The ability to have available any book that our customers could possibly ask for is key to our vision of how to thrive in this challenging environment,” said Jeffrey Mayersohn, Owner of Harvard Bookstore. “The HarperCollins partnership with On Demand Books brings us much closer to realizing that vision. This is great news for independent bookstores everywhere.”

“With HarperCollins making their titles available for the Espresso BookMachine, the original vision and full potential of the machine will begin to be realized. Thousands more titles will be directly available to my customers, and we will capture many, many sales which are currently lost,” said Chris Morrow, Owner of Northshire Bookstore. “I hope other publishers see the potential of this sales channel and get on board. This can be a key element in the development of the bookstore of the future.”

HarperCollins trade paperback books, including adult and children’s titles, will be available on Espresso Book Machines starting in November. Titles from Zondervan and HarperCollins Canada will be available early next year. Booksellers who are interested in exploring HarperCollins “Comprehensive Backlist” offer should contact their HarperCollins sales representative to determine the optimal level of core print books that stores should carry, relevant incentives, and merchandise opportunities. The program will be available to any bricks-and-mortar book retailers. Book retailers can work directly with On Demand Books, or the vendor of their choosing, to install the machine in stores. Booksellers can contact their HarperCollins sales rep for more information.

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The Day of the Kiosks is Upon Us

By our count we’ve written eight or ten articles about e-book and print on demand kiosks, and the same number about the Espresso, the bantamweight book-producing machine that will one day stand at the heart of those kiosks. (See“An ATM For Books”).

Though the technology hasn’t taken off as dramatically as expected, we have never abandoned our confidence that it must inevitably prevail.

Our optimism was reinforced by HarperCollins’ announcement of plans to upload into Espressos some 5000 backlist titles. “The program will enable bookstores to offer thousands of trade paperback books from the HarperCollins catalog through a mix of traditionally printed books and DPR [Digital-to-Print-Retail], as space and cash flow restrictions will no longer be a factor,” declared HarperCollins.

Details here.

RC

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