When On Demand Books, a Print on Demand (POD) device manufacturer, released news that the New York Public Library had installed an Espresso machine, a debate on POD business models broke out on a small mailing list that I run. With the permission of the participants, the debate is reproduced below. I think it well reflects many of the key issues of distributing POD as a business model.
** Mike Shatzkin starts:
The question is not: “to POD, or not to POD”. The question will be “centralized POD, or distributed POD.” I think distributed POD has its place, but I doubt very much that it’s in the bookstores and libraries residing within fast shipping range of a strong centralized POD operation, for quite some time.
I don’t know the relative cost of an Espresso-generated book versus a Lightning one. But let’s remember that any bookstore or library can have any POD book in a day or two now. Once we get past the “wow” factor of having the book made on premises, the related questions of price and quality become determinants.
And before we get too carried away about what bookstores won’t need to carry or pre-manufacture (either way creating risk), recall that it takes Espresso (at least) five minutes to make a book. Not too many bookstores can survive selling 12 books an hour, so this supplements, not substitutes for, inventory. (I’m sure its creators well understand that.) And customers may find the “printed here and now” feature a little less alluring if there are four people in front of them.
But if this DOES work more efficiently than I’m imagining, then why stop at bookstores and libraries? Wouldn’t we expect to see one of these in every Kinko’s and Staple’s as well? If that were the case, great for the publishers and authors, but what would it do to the bookstores and libraries?
One case history worth recalling: a very large book retailer gave up its own POD operation several years ago and turned the activity over to Lightning. The idea was, “we’ll take it back in a few years.” A few years later, Lightning had added another trim size to its line, plus hard-backing and color capabilities. So the retailer, now having sufficient volume to support the prior capabilities, doesn’t have the volume to support the new ones. So they aren’t taking it back now, as they once thought they might, and Lightning keeps building new capabilities with added volume.
What will the Espresso-owning store think when they find they are ordering half their POD books from elsewhere because they can’t handle the size or other spec requirements AND paying more for the ones they make themselves than they’d pay to have it delivered?
** Jim Lichtenberg says:
Excellent Points. Three thoughts:
First, I don’t think this system was created for bestsellers or even front list books, but rather for slower moving titles from the backlist that probably wouldn’t find shelf space in most retail contexts. More like: “Amazon.com in 5 minutes,” vs., “delivered within 24 hours.” (Anyway, Mike, only New Yorkers are so freaked out about standing in line).
Second: PoD is part of the life-cycle management of a title, which would be transparent to the customer.
Third: PoD is a distribution mechanism, and as such, Espresso probably has an expanding role to play as future miniaturization makes it possible to print a book with a book-sized machine … well, maybe not that small. Just as we see certain books sold in non-bookstore venues, as time goes by, we will probably find on-demand book-printing systems in equally interesting places.
A report that I prepared last year on POD (available from Vista International, now Publishing Technology) includes a case study of Cambridge University Press‘ PoD/Short Run printing program, which makes the following point:
In summary, within Cambridge digital printing is not considered a different business, (although revenues are identifiable.) Rather than being seen as just a “printing” program, it has come to be viewed as a different variant of the supply chain. It is not really about printing, but rather about delivering books in a profitable way, and making product available to marketplace via a mechanism that allows the Press to achieve financially acceptable results.
** Mike Shatzkin says:
These points are accurate, but don’t address the central- vs. distributed-POD paradigm that concerns me.
To narrow the question from his first point, ALL the Espresso machine does is reduce the delivery time from 24 hours to 5 minutes (if there is no line) – not from days or weeks or months. That’s an advantage, but it is a LIMITED advantage. Within the same numbered point, Jim reminds us – accurately – that this capability is really for deep backlist, not for fast-moving new titles. So we are gaining this defined (and limited) time advantage only on a list of titles that is also defined, and though not so limited, generally constitutes books that can generally be waited for (if the wait is 24 hours.) Remember that PDFs delivered to the consumer’s own computer can also address the rare cases of great urgency at much less expense (though admittedly with much less of a “wow” factor!)
Distributed POD will have to deliver incremental margin compared to centralized POD to gain widespread acceptance. When you factor in the cost of the machine, the space to place it, the training to use it, the waste from screw-ups, and the management of components (paper plus), then we’ve given the distributed-POD model some significant hurdles to climb to match just ordering from Ingram (Lightning) for profitability.
** Jason Epstein says:
The Espresso machine does much more than reduce the delivery time from days to minutes. It compresses the existing supply chain to the time it takes to transmit a digital file to the point of delivery, thus reducing inventory and delivery costs to consumers and publishers, and radically decentralizing the world-wide marketplace for books so that readers without access to traditional sources can have the same access to deep backlist as clients of the New York Public Library, and greater access in the digital future than readers anywhere enjoy today.
Beta versions of the Espresso have been operating cheaply and efficiently for several months in The Alexandrina Library in Egypt and the World Bank Infoshop in Washington DC with only the minor glitches typical of prototype machines. A later commercial version of the machine now in development will print, bind and trim library quality paperback books quietly for a penny a page and can produce a 300 page book in about five minutes with minimal human intervention in infinite trim sizes between 4.5×4.5 and 8.5×11.
Cost of inventory, storage, delivery returns, etc. will be eliminated so retail prices can be reduced, and returns to publishers and authors can be increased. Unlike existing POD technology, the Espresso will not require factory placement or skilled operators, and will cost about as much as an office copier and occupy as little space. Readers will be able to order titles from their home computers or mobile phones and pick their books up from nearby locations at their convenience, or have them delivered that day by ground transport without waiting in line.
The Espresso is designed to operate 24/7. The machines will be leased, not sold, to booksellers and libraries. They might also be placed on cruise ships, at hotels, coffee shops, supermarkets and so on, markets which conventional POD cannot serve. Broader reach, faster service, and lower costs and prices combine to produce a compelling business case.
The Espresso is not intended for current hardcover best sellers, but for decentralized delivery of deep paperback backlist, the sine qua non of civilization that is imperfectly served by today’s technology.
** Joe Esposito concludes:
I don’t really have a point of view on this topic, but I want to note that the options are greater than the central vs. distributed POD paradigm; they include “pure” ebooks and “extreme” distribution to the edge of the network, meaning an end-user’s personal workspace. Hewlett Packard and Xerox (not to mention Kodak, with its huge retail presence) will certainly be watching as costs come down for POD; at some point POD will move to the desktop, just as color laser printing has.
Of course, if Espresso can get 5,000-10,000 machines out there, the number of corporate buyers, beginning with Amazon, is large. The POD winner will be the ace marketer. This is no longer a technical game.