At Least Fifty Shades of Short-Run POD

Like percentage screens of black and tints of process color, short-run book print orders can come in myriad varieties and quantities. In today’s world, any author can produce a novel or tome because there are no longer technological or cost barriers to doing so. Press runs are lower for major publishers, too. With large bookstore chains like Borders gone and Barnes & Noble downscaled, consumers increasingly go online to buy books from Amazon, Costco, and Walmart.com.

But know this: Shorter runs can be a very good trend for smaller printers. So says Steve Johnson, president/owner of on-demand, digital printing pioneer Copresco, Carol Stream, IL, 34 miles west of Chicago. The $2-million firm has been all digital since its inception in 1987, reproducing mounds of books, manuals, and other publications for customers in the general business, printing trade, technical, and institutional fields.

Looking forward, the overall volume of digitally printed books are forecast to increase 15.2 percent annually through 2019, according to a recent digital book printing study by Interquest, a market and technology research firm. “We have never owned an offset press,” confirmed Johnson, a Digimaster aficionado. Copresco has five of the Kodak monochrome models and added a Ricoh Pro C901s+ color device 10 months ago. These toner-based systems feature “smaller, more uniform particles that deliver laser-sharp images …,” he stated.

“As runs get shorter, books become a more specialty item – not a commodity,” Johnson added. “People need to have a reason to print [something]; they need to be interested in value. Otherwise, they could just do an e-book.”

Johnson writes a regular column for Quick Printing (see “Johnson’s World” on page __) and has been for many years. Last December, when he and I sat down to a pre-holiday lunch, he told me he doesn’t own an inkjet press either – not yet, anyway. Toner-based devices still play a major role in the primarily monochrome, short-run book work that Copresco prints, but he understands why people think inkjet is the future of books. “Toner has peaked,” he admitted.

From the rise of amazon.com’s POD (print on demand) service to the February demise of British book press manufacturer Timsons Ltd., the book printing and publishing worlds are, indeed, changing. However, Johnson believes that this flux has less impact on short-run print firms such as his. “There actually are more opportunities for niche printers,” he contended.

How e-books effect ink on paper

Johnson challenges the perception that, because of electronic books, fewer printed books are being produced. “This is simply not true,” he said. “Total quantities are not being reduced. Most e-books never would have seen the light of print anyway.” He is quick to point to the recent rise of E.L. (Erika) James’ Fifty Shades of Grey, which has sold 100 million copies in print, to date, worldwide. What most people outside of the printing and publishing industries don’t know is that originally, before mass production was warranted, James self-published her erotic-fiction content as an e-book and then printed it -- on demand.

In fact, printed consumer trade books are showing surprising strength versus what had been expected to be a dramatic shift to e-books. According to Nielsen BookScan, the Association of American Publishers, and other book industry reporting, there was an increase in printed books sold in 2014. According to an R.R. Bowker study, there continues to be significant annual increases in ISBN-registered book titles being fueled by small publishers and self-publishers who want to see their books in print. Additionally, a new Nielsen Books & Consumer survey shows that printed books are outselling e-books by a healthy 2:1 margin.

“Trade is an excellent example in the U.S. where e-books seem to have stabilized as have the print volumes,” added John Conley, VP of global publishing production inkjet solutions at Xerox Corp. “We will see a change to the supply chain in this segment as publishers move to low or zero inventory and the technology enables profitable growth on smaller print inkjet devices doing purely distributed print.”

Interestingly, it was a Twilight fansite on the Internet that jump-started the Fifty Shades phenomenon. “It began as an e-book,” Copresco’s Johnson explained, “then took off into print, first with on-demand printers and then with the big guys.” Hence his proven theory: that being in print is a sign of success.

For mass-market publishers, a few bestselling authors have dominated the market: On the superstar print scale, think Harry Potter, The Girl with the Dragon Tattoo, and the Twilight series. “But small printers don’t touch that work anyway,” said Johnson. Bigger publishers might laugh at someone who sells 1,000 e-books, he continued, but for some people that is an impressive number. It’s all relative, after all. “They might want to take the next step and print maybe 100 books,” he explained. Such a customer may require more books to be printed down the road, “so it could turn into printing 100 books ten times. Those books always will be [printed] toner or inkjet, never ink.”

The untimely downfall of Timsons, the 119-year-old book press company, is particularly telling, said Johnson, even more so than Chicago-based RR Donnelley’s acquisition of Courier Corp. three months ago. Timsons restructured late last year and stopped manufacturing its conventional web-fed, rotary offset presses with inline folding, focusing instead on a digital future and its inkjet-web T-Press, which employs Kodak print heads. But with only one order since drupa 2012, that future was short-lived as Timsons, sadly, was placed into voluntary liquidation this past February. (Timsons Engineering still maintains the installed base of litho presses in the field.)

Timsons going out of business poses a challenge for one-color offset printed books, according to Conley, who enjoyed a distinguished book career at RR Donnelley before joining Xerox 11 years ago. The U.K.firm had been the primary provider of web-offset technology to the mono print book market for the past 20 years, he noted. “This may cause the publishers to rethink the way they do first printings,” Conley said.

Big book printers

Book industry and print consolidation occurs at the top end, Johnson observed. In spending approximately $260 million to purchase Courier back in February, “Donnelley bought a market,” he said. Their fight over Courier shows that Donnelley and Quad/Graphics need the work, Johnson contends.

Courier was an early adopter of digital printing, including HP’s T Series inkjet-web technology. “By adding our digital printing and content management capabilities to RR Donnelley's current business, we will be even better positioned to meet our collective customers' needs,” commented Courier CEO Jim Conway.

In mid-January, Donnelley CEO Tom Quinlan had told the audience at the EFI Connect conference: “Physical books have started to come back, based on [our] 2014 numbers” -- especially one-color printed books, he added.

Xerox’s Conley, the former RRD exec, believes “this move solidifies Donnelley in both offset and digital in the trade book segment and in the education segment, both K-12 and higher education, with significant capacity in inkjet, web-offset, and toner-based technologies. The print platforms and focus are complimented with fulfillment and distribution capabilities,” he added. “This is an excellent combination of services to meet the print needs of the publishers in these segments going forward. It was the move they needed to make to maintain their leadership share position in trade and education.”

Also telling is Quad/Graphics’ January announcement that it is purchasing at least 20 high-speed, color inkjet-web presses from Hewlett-Packard. The Sussex, WI-based mega print firm rang in the New Year by detailing a three-year strategy to transform its book platform to give publishers a full range of options for producing and delivering books on demand, bringing zero inventory and just-in-time delivery closer to reality. In addition to the fleet of HP digital presses, the investment will include front-end workflow solutions for accepting orders and putting them immediately into production as well as back-end integrated systems for finishing, distribution and fulfillment, including shipping directly to the end recipient with an auto-generated invoice.

Quad/Graphics said it is putting five of the HP presses into production this year, the first of which was finished installing in February. The other 15+ presses will be installed in the remaining two-year period. Once all units are installed, the printing company will have the capacity to produce nearly 3 billion color pages each month.

"We aim to be the book producer of choice," CEO Joel Quadracci proclaimed. "We have a clear vision for the future of this industry and we are taking the bold, necessary steps to realize that vision for the benefit of a $30 billion book publishing industry."

Conley added his and Xerox’s perspective: “We are seeing the ongoing consolidation of the book business taking place globally and believe there will only be one or two dominant, centralized offset-based book printers within each book segment in each geography,” he commented.

Jenga of Books

Remember all the inventory and mountains of books that used to prevail? “Long gone are the days when publishers had to have books in every store in all towns,” Johnson said. The “returns model” is outdated: a significant portion of those books went unsold or became obsolete. “Most people now go on the Internet to buy their books from Amazon or Walmart,” he noted.

Quadracci added, “With this investment in digital presses and integrated systems we can support a broad industry transition to a print-on-demand, zero-inventory model. Our digital press solution will help redefine the entire book supply chain, giving publishers increased customization and versioning capabilities; faster time-to-market; reduced waste, inventories and obsolescence; and lower fixed costs.”

Conley added, “We know publishers are forming true TCO [total cost of ownership] models to use in their print decisions and creating algorithms for automatic replenishment programs. Zero inventory is achievable in many segments because of the economics enabled by production web inkjet solutions. It is no longer an inventory management practice but a cash flow and working capital practice,” he said, “and the reward systems within publishers’ supply chain management are changing to drive this process. That is a paradigm-shifting change that will help to eliminate an enormous amount of waste characteristic of the offset-only driven print model.”

2020 Vision

Longtime industry veteran Conley maintains a well-balanced view of the book market, having spent 27 years at RR Donnelley, North America’s largest print firm, before joining Xerox in 2004 as VP of commercial print and publishing. “John … was an early advocate of how digital printing can change the publishing business model, leading to the adoption of digital print in the publishing industry,” observed Michael Allen, principal at Allen Consulting LLC, who has indirectly managed Conley.

RR Donnelley account manager Chuck Jackson called Conley a visionary. “He was one of the first in the book manufacturing industry to understand the impact of short-run printing as a tool to reduce inventory and increase publishers’ financial flexibility,” Jackson recounted.

QP asked Conley about his vision of the book print/publishing industry in 2020. “The book industry is going to look very different in five years in terms of being more robust with new products and complexities,” he predicted. “For example, the supply chain will be divided up between the physical product providers and the digital/network product providers. This change will be entirely dependent on the form content takes as it goes to market.”

Conley’s last role at Donnelley was as senior VP in the education segment, where he was responsible for sales, strategy, marketing and business development for the K-12, higher education, and digital print market segments.

“We will see complete automation for order replenishment on the part of publishers,” Conley continued, “and they will be plugged into networks of printers to fulfill the print order in the most efficient manner possible. Segments such as education, both K-12 and higher education, may look 100 percent different depending on the primary classroom product. Today, it is still a printed book but we have already begun to see some dramatic change in behavior in the K-12 space, and higher education has been searching for the right new combination for several years. The big textbook may still be the leader here, but you will be hard pressed to find anyone who would bet their career on it.”

Johnson noted that more affluent school districts and private schools already are feeling pressure to make textbooks go away. “The interesting thing here is that end users don’t control the buying: Students may be crying for printed books, but school boards are going the tablet or e-reader route,” he said. “These trends had a huge impact on Courier.

“There likely still will be an option for printed teacher’s editions,” Johnson added, and that’s good news for smaller printers. “But it hurts the ‘big boys.’”

However, Johnson thinks there may be a backlash back to print over time. While iPads and other tablets or e-readers may be perceived as “cutting edge” technology, research is showing that many students actually learn better through the print medium. Ultimately, “school boards want what’s best,” he said, “so the tide may turn over time.”

In the nearer term, by 2018 expect to see more automation in the entire process, especially as it relates to the management of print. “That is not as easy as it sounds, as this is more of an IT [information technology] challenge then a print technology challenge,” Conley said.

“Within three years we will see strong positive momentum for this aspect of supply-chain management,” the Xerox executive continued. “We will also see the development of global print networks which the publishers will utilize to optimize print management. Publishers will begin to issue a single PO into the global print management network that will drive required volumes of print at the optimized quantities for local demand on local digital print assets. This will eliminate redundancy in the publishers’ supply chain, time to market, shipping costs, and all issues involving customs,” Conley said. The issue around rights is one that will need to be resolved, as this is still an area of great complexity, he noted. “New copyright agreements will need to be developed to enable this kind of network, and that effort may be as complex or greater than the creation of the networks.”

Offset Print: Not Going Away

“Let’s be clear,” Conley continued, “offset is not going away in the large geographies of the world. You will still have offset for first printings where the demand case or reprint demand is greater than 5,000 books. This is usually front-list territory in the U.S. and other large geographies. Case binding will also stay in offset a bit longer, while the finishing solutions improve to the point that they support the economics which production inkjet has already brought to adhesive-bound solutions.”

That being said, Conley also believes that “digital print will consume as much as 40 percent of the volume over the next five years. Finishing will have to deliver solutions which keep up with the print platforms, both large and small, to enable this number, but it is achievable.”

One benefit we do know about web-offset presses, said Conley, “is that, in the hands of a good printer, they can last effectively for decades.”

Print Is Only 1 Part of the Overall Equation

Thousands of commercial printers have already made the move to digital solutions, Conley pointed out. “Workflow, finishing, data management, and mailing capabilities are all part of what has already moved solidly into commercial print. This change will continue as the content providers better understand what print can do for them that ‘e’ alone cannot achieve.

“For example, we are seeing this in the catalog business today,” Conley continued. “The graphic communications [GC] provider needs to be a solution provider to his/her customer base”. This means several things, he said, such as:

• constantly thinking about how technology can improve the delivery of client content/message and how it can improve profits,
• educating agencies on what is possible in print with changing technology
• using metrics of success that are tied to improved results of their customers and not just the throughput in the shop.

“In many ways, for GC providers, the ‘print’ part of the solution actually becomes the easiest part of the equation,” Conley said.

The E-book Pricing Challenge

“In addition” Conley concluded, “trade publishers are wrestling with how to fairly burden the cost structure of an e-book with its fair share of the author advance. This is no small issue when considering the price points of e-books. That being said, it is not fair to have the print products carry all the weight. The same problem will have to be considered with each new product that arises as a derivative of any original piece of intellectual property where there is a rights agreement.”

Read John Conley’s inkjet print blog, “Book Supply Chain Providers: Where will your Chair be when the Music Stops?”