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New Ideas for a New Market

hen PW began this series in September

although gains are occurring there as well. This uncertainty

2013, the book publishing industry appeared

has led companies to keep first print runs as close to ini-

headed to a market where print and digital

tial orders as possible. And while offset is still often used

books would coexist. After explosive gains in the 2010

to cover first printings, more and more publishers are

2012 period, e-book sales began to cool considerably in

turning to digital printing to meet reprint demand.

2013, while the decline of print book sales also slowed.

The offset-digital printing combination can be used for

Those trends continued into 2014, so that now there is

much more than meeting production of new titles. As the

no doubt that the book industry is in a hybrid market in

articles on the following pages demonstrate, publishers

which consumers will be buying books in both print and

see digital printing as a way to meet the demands brought

digital formats for the foreseeable future.

on by new business models, improving the efficiency of

While it is unlikely that e-book sales will return to

double-digit annual growth rates any time soon, the
emergence of the format as a permanent part of the

the supply chain and taking advantage of international

One new way publishers are using digital printing is to

book market has resulted in profound and lasting

fulfill demand for midlist and backlist titles by producing

changes in the industry. The most significant from a

print-on-demand books in quantities as low as a single

manufacturing standpoint is that print runs are down

copy. With todays technology, books can stay in print

in all categories, ranging from general trade to educa-

forever, and digital printing is being employed to better

tion. The economies of scale that publishers once

manage the long tail of backlist titles and the life cycle

relied on to keep costs down are now more difficult

of each book. In the education market, adaptive learning

to attain using traditional printing methods. As Mitch

is being adopted more and more in higher education,

Rogartz, founder of independent publisher Triumph

resulting in a growing need for customized textbooks.

Books, notes, gone are the days of 12,000-copy first

New developments in technology have created new

printings: today he is looking at runs of 5,0006,000.

challenges and new opportunities for publishers, who

The change in consumer preference has made it

are finding that digital printing opens up options for

much more difficult for publishers to forecast demand

longer title life as well as new sales possibilities for

for print titles. Indeed, the market share for e-books

niche titles.

varies tremendously from genre to genre, with digital

books generally selling best in
fiction and less well
in nonfiction,

HP T400 Web Press


Toward a Hybrid Market

By Jim Milliot

Print and e-books will live together

ven though the physical book market is more unpredictable than ever, print is here to stay, declares
Stuart Applebaum, spokesman for Penguin Random
House. But that doesnt mean it is business as usual
at the countrys largest trade publisher when it comes to its
manufacturing strategy. Our accounts are more conservative in
the amount of inventory risk they want to take on, and so are
we, Applebaum adds. Large print runs increasingly result in
excess inventory. Fast turns and shorter, more frequent print
runs are what we need now, and our partnerships with printers
will need to reflect this new paradigm.
What Applebaum is describing is the reality of todays publishing marketplace, in which print books and e-books will coexist.
Indeed, after the explosive but unsustainable growth of e-books
between 2009 and 2012, e-book sales slowed noticeably in early
2013. After increasing 33% in the first quarter of 2012 over the
same period in 2011, adult e-book sales rose 13% in the first
period of 2013, according to the Association of American Publishers. Data from Bowker Market Research also shows slowing
growth for e-books and a more stable market for print books.
E-books accounted for 13% of spending on books in the first six
months of 2012, with that share rising to 14% in the first half
of 2013. While the share of spending on hardcovers fell by three
percentage points in the same period, trade paperbacks rose
from a 33%share in the first six months of 2012 to 34% in 2013.
The new figures point to the difficulty of predicting the future
in an industry that is still evolving, but it has become clear that
print books will remain a very important part of the book business, albeit with fewer sales than in the past. To meet the changing needs of publishers, digital printing is often the best option.
The development of new digital equipment allows printers to
produce print runs ranging from one copy to thousands.
Printing flexibility is important because evidence continues
to mount showing that sales of e-books are much deeper in some
categories than in others, with fiction categories experiencing
the biggest e-book sales gains. According to Bowkers 2013 U.S.
Book Consumer Demographics & Buying Behaviors Annual Review,
e-books accounted for 25% of spending in the romance category, while penetration levels in nonfiction segments are much
lower. In cooking, for example, e-books made up just 6% of
spending and 18% of units in 2012. That fiction-nonfiction
divide continued into 2013. Sales of illustrated books in digital
formats have gained only a little traction in 2013. Quayside,
which publishes a large number of illustrated books, reported
that 5% of its sales were for e-books. Weve built the [digital]
platforms, now we are waiting for the customers to come, says

Quarto CEO Marcus Leaver.

So the book publishing industry
appears to be headed toward a
hybrid market, meaning that consumers will be buying a mix of
e-books and print books. Financial
reports from six major trade houses that have large North American operations show the demand for both print books and
e-books. Penguin Group, for example, reported that worldwide
print sales rose 13% in the first half of 2013 compared to the
same period last year, while digital sales increased 28%. At
Houghton Mifflin Harcourts trade operation, print sales rose
at a faster pace than e-book sales in the same period, with print
up 30% and e-books ahead 13%. At Harlequin, whose total
sales fell 5% in the first half of the year, CEO Donna Hayes notes
that print retail sales in North America were stable in the second
quarter and that e-book sales were up, but digital sales growth
was much slower than in the same period last year.
The splitting of markets is also evident among printers. In
its most recent quarterly report, Courier Corp. chairman Jim
Conway discussed how the company is integrating new HewlettPackard digital printers with its offset equipment to meet the
needs of publishers. We head into our fourth quarter with a
strong order flow for both our digital and offset manufacturing
facilities, Conway says.
In other parts of the supply chain, the impact of fewer print
books being published has been felt. As part of their move to scale
back their warehouse footprints, HarperCollins and Macmillan
reached agreements with Donnelley and Ingram, respectively, for
those companies to take over more of the publishers print-ondemand requirements, as they seek to keep as many books in print
as long as possible, to take advantage of long-tail sales opportunities that exist today with the growth of online retailers. In May
2011, when Harper and Donnelley announced their partnership,
Larry Nevins, executive v-p of operations and technology at
Harper, said that the combination of declining demand for print
copies and improving printing technology created the right
opportunity to reengineer Harpers supply chain. That reasoning
is even more sound in 2014, and to explore what solutions digital
printing can provide to publishers, PW produced a series of articles (reprinted on the following pages) starting in late 2013 covering the technologys role in everything from streamlining the
supply chain to creating new revenue opportunities. 
This educational series is brought to you by
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Digital Printing Moves
Beyond the Long Tail

By Andrew Pate

Offset, digital now work in tandem in a books lifecycle

here have been great advances in short-run digital

printing (SRDP) and print-on-demand (POD) technologies over the last decade. The manufacturers of
high-volume digital presses have made huge
improvements in print quality, formats, speed, and workflow.
Monochrome text printing solutions have evolved to support
both monochrome and color book printing and have the ability
to customize and personalizeall with the speed and quality
required by publishers and customers. These developments have
changed how publishers assess the life cycle of a book, and they
come at a good time. With first printings down across the board,
gone are the days when one large offset print run can cover
demand for a book over its entire life.
Melissa Serdinsky, v-p of digital operations and manufacturing for Perseus Books Group, says that while, in the past, digital printing was only used for extending the life of a title in the
long tail, now titles are candidates for digital print at almost
every stage after the initial lay down. Perseus often sets titles
up for digital at the same time as the initial print run, Serdinsky
explains, so if a bookstores initial stocking order is short, additional copies can be produced quickly to meet demand. Because
the content setup and transaction costs for digital printing are
very low, print costs at every stage of a books life cycle are economical. And keeping books in print longer has given Perseus
an extra benefit in the digital age: E-book sales are actually
driving sales for printed books in the midlist, especially in the
nonfiction categories, says Serdinsky.
Craig Bauer, senior v-p, publishing operations and strategic
planning for Hachette Book Group, was also an early adopter
of digital printing and has seen it mature to become a regular
part of the companys production mix. We are seeing both
toner and ink-jet technologies utilized in various segment and
product combinations, such as memory books, self-publishing,
and rapid replenishment during inventory stock outs, Bauer
To operate most efficiently, POD and print-to-order content
and order management should be fully automated. In such a
system, publishers, retailers, and distributors receive and process orders that are then passed directly to the printing systems.
Turnaround times range from one to four days when all the
workflows are in place.

P U B L I S H E R S W E E K LY N O V E M B E R , 2 0 1 4

In the case of SRDP, individual

orders might be for 20 or more copies and are typically for
inventory replenishment. When a customer orders several titles
from a publisher or distributor, but sales forecasts for some of
the titles are unavailable, SRDP can reduce the risks of overstocking. Printers often have good Web interfaces, allowing
orders to be placed online if an automated interface isnt in
place. Turnaround times on these orders are typically five to 10
In the final stages of a books life cycle, when sales are infrequent and most orders are for single copies, a publisher can
place the title on a print-to-order platform. Large libraries of
out-of-print and otherwise hard-to-find titles have been aggregated and made available for sale online, creating new opportunities from older titles as well. And the inventories for these
titles are entirely virtual, using print-to-order technologies.
With the advances in both color toner and ink-jet printing,
titles can be produced whose quality is comparable to that of
the original editions, which were made using offset printing.
In this case, the new printing systems provide a new lifecycle,
when before there wasnt one at all.
A key reason digital printing is now in the manufacturing
mix is that current digital printing platforms have greatly flattened the cost curve across order quantities, and publishers that
consider the total cost of ownership are rapidly taking advantage of these technologies. A new paradigm is emerging in
which, rather than relying on large print runs, publishers order
fewer copies of each title and then replenish their inventory
more frequently, without increasing their expenses, thereby
reducing inventory risks and conserving cash. And because of
automated workflows, smaller publishers and distributors that
dont have large IT infrastructures can take full advantage of
digital printing. Placing an order might not be automated, but
much of todays printing is. As Bauer says, Ink-jet technologies have enabled improved inventory management in single
and multicolor education and Scientific/Technical/Medical
titles. With the ability to economically produce very small
runs to address niche markets, customize content, and meet
demand at all stages of a titles lifecycle, publishers have more
tools than ever before to address the needs of their customers
in the new book-buying paradigms. 


The Next Generation of
Custom Textbooks

number of new developments and new technologies

suggest that custom textbook publishing is on the
cusp of a boom not seen since the early 1990s. While
the overall market for higher education textbooks
has been sluggish, sales of customized texts have been growing
at double-digit rates for several years. Outsell Inc., a leading
research and advisory company that closely tracks custom textbook publishing, believes the global custom textbook publishing segment will continue to grow at a [compound annual
growth rate] of 14.7% through 2015. In addition, a relatively
new technology called adaptive learning could significantly drive
the sale of new individualized printed textbooks in the future.
Over the past 30 years, virtually every major publisher has
either built or licensed a Web-accessible, page-based custom
textbook publishing system, and most of these solutions are for
the higher education (HE) market. These systems make it possible for college professors to (legally) mix chapters of copyrighted material online. The content is then electronically
stitched together, the customized textbooks can be downloaded
as e-books or digitally printed, and then shipped directly to college bookstores, eliminating the need for warehousing in most
cases. Another emerging type of custom textbook publishing
system involves ingesting and storing the complete works and
disassembled pieces of a book (tagged with XML markup and
metadata) in a centralized content repository, which editors can
search and update. They can then select and organize content for
delivery as customized textbooks, or fast-track the creation of new
products, which can be delivered in any form the customer
requires. Potential applications include both HE and K-12.
Today, the vast majority of customized HE textbooks are
printed on high-speed 100%-variable ink-jet printing presses.
When it comes to HE custom textbook printing and publishing, Steve Franzino, v-p of Courier, believes that everything we
do is about streamlining the preparation and delivery of custom
content through a process thats fast, easy to use, cost-effective,
and totally reliable. In mid 2013, Courier made a strategic
investment in a Brazilian book manufacturer and licensed its
proprietary custom textbook platform to Santillana, the largest
Spanish/Portuguese educational publisher in the world.

Advances and the Next Big Thing?

Imagine a custom publishing system that harnesses the exponential growth of computer processing power, the Internet,
cloud storage, fiber optic networks, etc. Now, visualize an intelligent custom publishing platform capable of ingesting, orga-

By Allen C. Schulz

nizing, and storing waves of content, streaming data, social media,

and other types of information
from virtually any source. Such a
system would utilize humanlike
cognitive abilities to mark up that content with rules, logic, and
metadata relating to permissions, royalties, security requirements, etc., and to validate everything in real time. Next, picture being able to build and run automated queries that filter
and collect relevant content from the massive amounts of data
available on virtually any subject. The pieces of technology
required to build such a system exist today in real-time variable
document composition systems such as HP Exstream.
Many believe the next big thing in custom textbook publishing for both HE and K-12 may be intelligent adaptive learning
systems and software. Adaptive learning systems provide multiple pedagogical approaches and personalized trajectories for
practice, instruction, and learning. Essentially, the technology
uses powerful embedded algorithms and software to measure a
students cognitive abilities, proficiency, learning speed, and
retention level in order to create an individualized instructional
path. These systems also provide teachers with important information about individual students, so the teachers can more
effectively manage their one-on-one time with them.
There is evidence that publishers are racing to commercialize
this exciting new technology. A number of publishers have
already acquired, licensed, or formed partnerships with leading
adaptive learning companies, and early products are receiving
praise in the marketplace. A number of industry watchers
believe that potentially breakthrough applications will begin to
appear in HE and K-12 classrooms in just a few years.
This raises important questions about how, when, and where
print will be used in conjunction with adaptive learning systems and individualized learning. Its simply too early to tell,
truth be told, but, logically, digital printspecifically, highspeed, 100%-variable color ink-jet printingis likely to play
a key role. Its important for learning systems architects and
pedagogy experts who are producing adaptive learning products to understand that individualized printed books, portions of books, lessons, and other materials can be printed and
delivered anywhere in days. The inclusion of printed materials
as a part of adaptive learning solutions will help harness the
power of print, and a number of studies indicate that print
books increase retention, engagement, and overall student
W W W . P U B L I S H E R S W E E K LY. C O M


The New Supply Chain

By Andrew Pate


Teri Tan

New tools are helping publishers manage

the supply chain more efficiently

he book publishing supply chain has been completely transformed by technology. New tools
ranging from electronic data interchange, which has
become fairly standard, to new, cutting-edge ink-jet
technologieshave reduced supply-chain costs and eliminated
steps in getting books from manufacturers to consumers.
Improvements in printing technologies, in particular, are giving publishers new ways to manage the supply chain, both
domestically and, increasingly, internationally. New digital
print platforms have far less waste and require less set-up time
than older ones, and that higher productivity allows lower
prices to be passed along to publishers.
One of the pioneers in supply-chain innovations is Strategic
Content Imaging (SCI), a New Jerseybased digital printer that
offers tailored supply-chain solutions to its customers. Dale
Williams, v-p of SCI, says that the companys Automatic
Replenishment Program (ARP) shifts the focus on reorders from
per-unit pricing to sell-through rate. According to Williams,
the program is perfect for publishers that are not ready to
embrace the true one-off POD mind-set. Even for those not
fully participating in the ARP program, the concept allows
publishers to keep inventory on hand at predetermined levels,
and that inventory can be shifted according to changing
demand. As a book moves through its life cycle, Williams notes,
another part of ARP gives publishers an option for a true printon-demand service when a books sell-through rate falls to a
certain level.
SCI offers these programs across an array of platforms, including HP digital ink-jet, Indigo, and others. It also has a broad
offering of finishing options, including hardcover binding.
According to Williams, having different finishing operations
in-house extends digital printing into many lines of publishing
that are just now switching over from offset. He says that recent
trends support his view of how publishers should interpret
manufacturing costs. For years I have argued for total cost of
ownership, rather than unit cost, to be the central concept in
managing a publishers supply chain, he says. Now publishers
are reaching out to us, and the discussions are about how fast
SCI can implement an ARP for them. Certainly the adoption of
high-speed ink-jet technology has been the primary cause for
this shift.

P U B L I S H E R S W E E K LY N O V E M B E R , 2 0 1 4

Blurb, a leading online publishing platform based in San

Francisco, is another company at the forefront of improving
the supply chain. Bruce Watermann, senior v-p of operations,
notes that because of advanced workflows and common print
file specifications, customers can order books from one area
and Blurb can produce them domestically in several countries.
This reduces the cost of freight and eliminates the administrative costs of exporting, and it shortens delivery times
as well.
As indicated by Watermann, companies are looking to
improve supply-chain efficiencies beyond the U.S. On the international front, HP, the market leader in high-productivity inkjet systems, has more than 50 billion pages of potential capacity
across more than 30 sites worldwide, including locations in
Australia, China, Europe, Japan, Latin America, the Philippines, and Singapore, enabling global book publishers to adopt
distributed print models.
For Pearson, in the Asia-Pacific region, production director
Vicki Bzovy finds that hybrid printing is key to meeting her
companys varied market requirements. We have used digital
printing for short runs, customization, on-demandeven if it
is just for one copyas well as end-of-life stock fulfillment,
she says. For Bzovy, there are many reasons to choose digital
printing, but the primary one in most cases is being able to
print low runs relatively economically, whether for new titles,
reprints, or custom titles. And as digital printing has become
more efficient, higher quality, and more flexible in terms of
trim sizes, stock availability, and finishes, we have been able to
address other issues such as stock holdings, obsolescence, personalized publishing, and end-of-life printing.
According to Bzovy, there are many variables to consider
when choosing digital printing. It is not always about price
or quality or turnaround time, she notes. For us, digital printing is another option as a delivery method. It allows us to
provide a different offering to our customers. Digital printing
also allows Pearson to reduce its inventory, freeing the company to invest in new areas of its business. Digital printing
provides us with more flexibility.... It is about selecting the
optimum printing method for the right productat the right
stage of a books life cyclethat produces the best result,
Bzovy adds.


Digital Printing for Every
Stage in a Books Life

ultinational publishers know that regional book

editions increase their options for selling titles,
especially in the education segment. The goal is
to have students and readers engage more deeply
with the texts as a result of a more relevant approach to how
books are presented.
In many markets, the start of this regionalization is already in
play, but its often limited to book covers. John Currie, global
business director of CTPS, a Hong Kong-based export printer
with clients in education, SSTM, and reference segments, says,
With 100%-variable digital printing, it is only a matter of time
before publishers turn to text-page customization to generate
individualized printed textbooks. Curries SSTM and trade
publishing clients already print on demand and take advantage
of fulfillment and logistical support provided by CTPS within
the Asia-Pacific region. Publishers that understandand
quickly seizethe opportunities in complementing e-learning
initiatives with customized textbooks, or e-commerce programs
with print-on-demand, stand to reap the advantages, he adds.
In Curries view, publishers that adopt title differentiation
using segmentation, personalization, and other techniques have
a competitive edge in the book market, whether theyre operating
in the K-12, higher education, or professional segment. Such
workflow is getting simpler and smarter, as digital printing technologies and solutions advance and adapt to current publishing
needs. Now publishers can supply basic design concepts and a
content database and let the HP Exstream real-time document
composition system, for instance, merge the two to produce
on-demand and customized products, says Currie, pointing out
that this process requires digitized content.
Regional manufacturing with distributed print solutions also
allows for low-volume book production closer to the point of
consumption, reducing inventory and shipping costs, while
shorter transit times allow books to get to market more quickly.
In Australia, Vicki Bzovy, Pearsons Asia-Pacific production
director, has identified probably 90% of [Pearson] titles that
could be printed digitally if we have the digital files; the print
quantity is low enough500 copies or lessand the price is
right. There are adequate digital printing technologies around
now that will provide the required quality for most of our products. So it is a matter of getting the right price for the right
quality for a particular title.
Instead of hunting for the lowest printing cost per unit, publishers are starting to factor in the total cost per book, which
covers the whole supply chain, including inventory, distribution, and warehousing, observes Currie. Publishers are spend-

By Teri Tan

ing more time evaluating digital printing as a comprehensive

solution that offers reduced inventory and more efficient supply
chain, with short-run and on-demand advantages. The financial
benefits are immense when you consider the costs saved in
regional shipping and distribution. Throw in a lower carbon
footprint and near-100% recyclable consumables with digital
printing, and you have a cost-effective and greener win-win
solution. CTPSs digital printing floor runs on two HP ink-jet
Web presses (T300 and T410) and three HP Indigo presses
(W7250, 7500, and 10000), with a soon-to-be-launched Webbased solutions platform that includes auto-ordering, stock
replenishment, and track-and-trace functions.



Publishers should also look at the life cycle of a titleprelife, midlife, end of lifeto see where digital printing can be
applied to generate the most impact and best margins. Digital
printing can be used at any stage of a books lifefor producing
limited quantities of bound galleys for book events or for test
marketing prior to rollout (pre-life); for publishing promotional
freebies for market launch (new life); for generating customized
versions of popular and proven titles (midlife); or for reviving
out-of-print titles (rest of life) with on-demand printing. The
backlist is often a good starting point to try digital printing,
enabling new revenue creation by repurposing old content.
Given that most in the publishing industry have more experience with offset printing processes than with digital, however,
knowledge of the advantages of 100%-variable digital printing
is not enough to effect a shift in mind-set. Executive buy-in starts
with an internal analysis of the cash value currently locked up in
the warehouse and its potential write-off. The issue of total cost
vs. lowest printing cost per copy (which many production directors swear by) must be addressed. The next step is to determine
how much of the list (front and back) is digitized and catalogued,
and therefore how much is ready for digital printing. Armed
with that information, any publisher can start to unlock the
benefits of digital printing for its titles (and its bottom line).
W W W . P U B L I S H E R S W E E K LY. C O M

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