Making the case for digital printing Tools of Change in Publishing - PowerPoint PPT Presentation

1 Making the case for digital printing Tools of Change in Publishing Ashley Gordon and Brian O’Leary February 22, 2010

2 Digital printing: a summary  Three overlapping segments  Can make financial sense when you look at all of the costs involved with creating and managing inventory  Potentially significant opportunity to use digital printing to maintain or grow the availability of niche content  The benefits available from digital printing depend on the size, page count and annual demand for any given title  Models (tailored to address the nature of specific imprints and titles) can help identify the best uses 2

3 The vocabulary of digital printing …  Digital printing  Wholesaler/distributor  Print on demand  Distribution/fulfillment  Short-run printing  Metadata  Ultra-short-run printing  Chunking/bundling/repurposing  One-off printing  Alphabet City: PDF, XML, DAD/ DAM, ONIX  Self-publishing  Content  Author services 3

4 It’s useful to first confirm the overlapping models Digital printing vendors Onsite Author services services 4

5 A range of digital printing suppliers  Lightning Source (Ingram) Digital  CreateSpace (Amazon) printing  Textstream (B&T) vendors  Bookmobile  Colorcentric  Edwards Brothers Onsite Author  ePac services services  Quebecor-World  R.R. Donnelley  Friesens  Sheridan  Transcontinental The firms shown are representative; list is not exhaustive 5

6 Among digital printing vendors, there is overlap… Traditional Ultra short Pure POD short run Offset run (1 to 100) (300 to (1,000+) (50 to 500) 2,000) Lightning Source Quebecor-World Transcontinental Various (Eusey Press) Vendor examples are representative only (not a complete or preferred list; vendors can and do cross segments) 6

7 All part of an evolving value chain … Digital Partners/ Wholesalers printers Retailers Lightning Source (Ingram) Ingram Amazon CreateSpace (Amazon) Baker & Taylor LibreDigital Textstream (B&T) NetGalley Bookmobile SharedBook Colorcentric Value Chain International Edwards Brothers ReadHowYouWant ePac Quebecor-World R.R. Donnelley Friesens Sheridan Transcontinental 7

8 Digital printing set-up requirements  All look for PDFs; most will (try to) process properly structured documents in XML or native-application formats (InDesign, Quark, sometimes Word)  All offer direct or third-party conversion (scanning) of material not available digitally  Digital conversions cost less and take less time than scanning  Conversion costs occur once; if you work with a digital asset distributor, they may provide it as part of their service (i.e., don’t pay twice!)  Separate, lower set-up costs for cover and text/body copy are typical 8

9 Typical limitations of digital printing services  Paper choices  Trim sizes Some vendors offer some of these  Maximum page counts services; no vendor offers all of them. Before committing to digital  Foil stamping or embossing printing, evaluate requirements  Rough cut edges against current and expected market capabilities.  Sewn bindings  Case-bound color  Spot colors 9

10 How do you typically work with these vendors?  Most maintain relationships with traditional royalty publishers Digital printing  Most offer conversion services vendors  Some offer warehousing and/or fulfillment services Onsite Author services services  Options can include: “no” inventory (print only when ordered); limited inventory (order 1, print “n”); and minimum inventory (fill-in) 10

11 Author-services firms come in many shapes  Author House (Indiana)* Digital  iUniverse (Nebraska)* printing  Trafford (British Columbia)* vendors  xLibris (Pennsylvania)*  Lulu (North Carolina) Onsite Author  CreateSpace (Amazon.com) services services  Bookends (New Jersey)  Blurb (California)  Picaboo (California)  Picturia Press (California) *While these firms are now part of Author Solutions, they operate independently and offer different types of services The firms shown are representative; list is not exhaustive 11

12 How do author services firms typically work?  Compete for authors as customers; may make some money selling books Digital printing  Authors invest in editing and digital vendors printing services (basic services generally under US$1,000)  Clear agreements on what each service Onsite Author provides (and does not provide) services services  Services can obtain ISBNs and arrange for listings  Typically, the services do not promote (unless you buy that)  Usually do not handle fulfillment 12

13 On-site services (POD “kiosks”) are more limited  Instabook (Bookends) Digital  On Demand Books (Espresso printing Book Machine) vendors  Limited but growing market penetration at this point Onsite Author services services  Promising uses: local demand for OOP titles; customized content (special editions, course packs, etc.); high-traffic sites with limited inventory (e.g. airports) 13

14 So how is digital printing used by publishers?  Backlist (but not just long tail)  Just-in-Time Inventory – New Imprints – Distributed Print – Overseas Expansion  Bridging/Crashing  New Formats – Large Print – Personalized Content – Custom Content 14

15 Just-in-time inventory saves on the rent  Free Books: Bloomsbury Publishing Launches “Radical” New Academic Imprint – Library Journal , 9/23/2008  The Perseus Books Group Announces New Digital Printing Partnership with Edwards Brothers Edwards Brothers press release, 1/28/2008 –  Northshire Bookstore Prepares to Launch Print-on-Demand Publishing Service – Bookselling This Week, 2/20/2008  Lightning Source UK and publisher Thomas Nelson Inc. announce best-seller title program – Lightning Source press release, 2/26/2007 15

16 Crashing & bridging: printing “miracles”  Chelsea Green Makes Obama Book Available Early Exclusively on Amazon – Publishers Weekly , 8/15/2008  Gov. Sarah Palin biography brought to market by Epicenter Press and Ingram content companies – Lightning Source press release, 9/2/2008  University of Nebraska Press selects Lightning Source to bring Nobel Laureate titles to market – Lightning Source press release, 10/15/2008 16

17 Digital printing can lower the unit cost of books sold Spoilage/ Returns/ shrinkage unsold Manufacturing Carrying costs cost Total cost per book sold 17

18 Digital manufacturing costs are typically higher  Unit costs per POD book printed are higher than seen Spoilage/ Returns/unsold shrinkage with conventional technologies (studied books between 80 and 320 pages) Manufacturing Carrying costs cost Total cost  Unit costs per POD book sold per book sold can be lower, depending on sell-through for a title  POD can be set up to produce a single copy of one or more When POD is dismissed by consistently formatted titles publishers, it is typically based on manufacturing costs alone. 18

19 POD can help reduce or eliminate returns/unsold copies  POD technology allows publishers to choose their Spoilage/ Returns/unsold shrinkage inventory objectives  Supports zero inventory (order, Manufacturing Carrying costs then print) as well as structured cost Total cost maintenance of low volumes of per book sold ordered titles  Titles printed POD can be sold as non-returnable Our research shows that the share  Titles printed POD can also be of unsold copies is often much fulfilled directly, through higher on small press runs (smaller contracted services base, greater uncertainty). 19

20 POD can also reduce inventory spoilage/shrinkage  Shrinkage (loss or theft) and spoilage (from handling) can Spoilage/ Returns/unsold shrinkage consume as much as 10% of a print run Manufacturing Carrying costs  Little or no inventory also cost Total cost means significantly reduced per book sold spoilage/shrinkage  Coupled with fewer returns or unsold copies, lower spoilage While spoilage and shrinkage also improves POD’s cost per vary significantly across titles, the book sold longer a book is held, the greater the loss becomes… 20

21 Reducing inventory cuts carrying costs  Warehouse costs can range from $0.12 to $1.80 per copy, Spoilage/ Returns/unsold shrinkage per year  Costs of capital (paying for Manufacturing Carrying costs printing well ahead of when the cost Total cost books are sold) per book sold  For slow-moving titles (demand below 50 per year), carrying costs can exceed manufacturing Because warehouse and expense financial expenses are usually not part of a departmental or title budget, the costs are often not factored into POD analyses. 21

22 However, this analysis compares just “books in print” Dimension POD Traditional Manufacturing cost Higher per unit printed Lower per unit printed Returns/unsold Little or none Varies by title Spoilage/shrinkage Little or none Up to 10% of inventory Carrying costs Little or none Warehouse storage Cost of capital Flexibility Fill in when required Some lead times There is another, important consideration unique to POD… 22