p r i n t

Pira International – Profit Through Innovation i n g & p r e p

Keeping books alive using r e s on-demand printing s

David Taylor, Managing Director, Lightning Source UK Ltd

A genuine print-on- book is always available and that there-

demand proposition has at its fore a sale can always be made. In the p

core the ability to print and marginal world of bookselling and u distribute a single copy of a book from a publishing where every sale counts, b l

file that is held digitally. The ability to this is proving to be an increasingly i receive an order and print and distribute The acronyms attractive proposition. s a book in response to that order is a There are, of course, competing h i complete reversal of the traditional RPUC, RP or TOS alternatives to what I have described n publishing supply chain that requires as the genuine print-on-demand model. g the printing and storage of inventory all add up to one Rapid improvements in the capabilities in anticipation of orders. thing: a missed sale of digital printing equipment, coupled This model is typically characterised with fierce competitive pressures in the by the offset printing of speculative and an unhappy book printing market, have led to ever inventory at levels based on best guess smaller print runs being offered to a sales projections and the storage of that customer publishing market that in turn has a inventory in distribution centres. The growing appetite for inventory reduction sales effort is geared to the stimulation and just-in-time manufacture. Driving of orders. A key aim for the publisher’s out inventory costs can have a signifi- production function is getting the lowest cant impact on the balance sheet and possible unit cost for the number of cash flow of a publishing business. copies that the publisher wants to carry a nasty hole in the balance sheet of Ultra-short-run digital printing offers

based on their sales projections for the a publishing business too; in some an attractive option for publishers as it p title. extreme cases, they can kill off a also allows them to continue to utilise a

The more copies printed, the lower business. their existing supply chain model. c the unit cost but the more capital the Bad print decisions can also leave a Traditional publishers will often have k publisher ties up in inventory. The more hole in the profit and loss account as significant legacy issues that can slow a capital tied up in inventory, the greater sales are missed because the book is not the move to a genuine zero inventory/ g i the risk that the company takes. Print available. The acronyms RPUC, RP or print-on-demand model even though n too much inventory and run the risk of TOS all add up to one thing: a missed such a move could result in dramatic g write-offs; print too little inventory and sale and an unhappy customer. Ask any improvements in the fiscal profile of the run the risk of losing sales because you bookseller who has had to explain what business. ran out. Get the reprint wrong and you these terms mean to a customer. The For example, the publisher may have can be left with a lot of inventory you supply chain that the print-on-demand a requirement to continue to leverage can’t sell. Bad print decisions can leave model is now propagating means that a warehousing facilities and fulfilment

1 s s e r Pira International – Profit Through Innovation p e r p systems that may have been the subject So far I have only talked about what Some organisations, for example, offer of major investment decisions and that I call “traditional” publishers, those fulfilment systems that allow not only & therefore represent significant sunk publishers whose business model is publisher/distributor direct ordering but

g costs. Exit costs from such scenarios rooted in the established supply chain also a buy/sell relationship with book

n can be prohibitive and inevitably the and who have legacy issues to manage. wholesalers such as Ingram Book and i

t timescale will be long. These traditional publishers are Gardners, and Internet retailers such as

n Existing supply contracts with third currently using print-on-demand in a Amazon and Barnes and Noble. In this i

r party distributors that are premised on number of different ways, depending scenario, a publisher need not carry any

p exclusive distribution rights in a given upon where they are in their business inventory or indeed physically handle geography may also delay integration cycle and therefore what their priorities the book to fulfil an order. Inventory is with a print-on-demand supplier, are as a commercial organisation. Here printed from a digital file only when an although a number of major book are just a few of the many ways that they order is received. The only entry cost for distributors in the UK are now starting are using these new capabilities: the publisher is therefore the setting up to weave links with such companies into ● Keeping titles in print and capturing and management of the digital file and their supply chain offer to their client sales that would otherwise have been its associated metadata. publishers. lost; The effect of this model is to reduce Production values in terms of trim ● Bringing titles back into print from dramatically the barriers to entry in sizes, paper specification and binding out-of-print (OP) status and realising terms of capital for a start-up publisher; g types may also act as barriers to a new revenue; this in turn has stimulated an explosion

n ●

i traditional publisher moving quickly Issuing titles in paperback for the first in new publishers entering the market

h to a print-on-demand supply model. time that have only been available in for whom print-on-demand is core to s However rapid improvements in the hardback to date; their whole business model. This new i ● l product that digital print equipment can Reducing inventory levels and type of publisher is fundamentally a b produce, together with a growth in the reducing cash tied up in the business; selling/marketing model with a very u different-looking balance sheet to the p traditional publisher with its require- ment to hold and finance speculative inventory. The genuine print-on-demand model In addition, print-on-demand has allowed completely new publishing allows a publisher to operate a virtual models to emerge. In the US in particu- lar, there has been an explosion in the stock policy with titles being printed field of self-publishing in the last five years, underpinned by both the print- only when there is an order on-demand model and the ability to support and market these titles via the Internet bookselling model. The removal of the need to print large quantities of ● g variety of trim sizes that can be offered, Reduction of real estate warehousing; speculative inventory has reduced the ● n is starting to reduce the importance of Import and export via printing in real cost of publishing for those authors i these legacy issues. country rather than holding inventory who are willing to go it alone. g

a Another alternative to the genuine in country; The other major new model to emerge ● k print-on-demand model is the managed Development of new products and on the back of print-on-demand is the c inventory option. In this case, a distribu- revenue streams (e.g. large print). Content Aggregator. These organisations a tor may offer their publisher clients an will typically utilise the ability that p in-warehouse digital printing facility, There is little doubt that print-on- print-on-demand has to bring books topping up a publisher’s inventory with demand is becoming an increasingly back from the out-of-print graveyard. ultra-short-runs of their titles so that a important part of inventory and supply Titles out of copyright can be scanned book, in theory, never goes out of stock chain management for both traditional from the original text and reissued as a and therefore a sale is never lost. There publishers and their distributors; market facsimile of the original, even dropped are many different flavours to this model trends and advances in digital print into a generic cover, and made available but its essence still relies upon the capabilities are set to accelerate the in the market via the provision of meta- concept of inventory being on hand take-up over time and legacy issues data about the title to the book trade. ahead of orders being received. will decrease in importance. The unique ability of the Internet selling For the publisher this means commit- However, print-on-demand is having model to underpin the sale of the ‘long ting cash to the pre-order printing of another major impact in the global tail’ of backlist and highly specialised inventory and therefore still accepting book trade and one that is fuelling a titles is well-known. r the business risk that this represents, rapid rise in the number of titles that The effect that print-on-demand e albeit a reduced one due to the smaller are in print. The genuine print-on- is having on the book trade is in its p print runs held by the distributor. The demand model allows a publisher to infancy. One of the great ironies of this a

p distributor may also seek to lock in the operate a virtual stock policy with emerging trend is the new lease of life publisher’s printing of these titles via titles being printed only when there that a cutting-edge, digitally-based

& an exclusivity clause in line with the is an order. This model removes the technology is giving to one of the oldest typical exclusivity that a distributor need to tie up capital in speculative products on the planet – the paper book. p l would expect for the sales and distribu- inventory, thereby also removing the To paraphrase Mark Twain, rumours of u tion of a publisher’s titles in a specific need for real estate warehousing and the death of the printed book have been p geography. distribution facilities. much exaggerated. ■

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