BRW’s Fast 100 shows book businesses the way

Lessons from some of the firms in BRW’s Fast 100 list for 2011:

#1 – Australian Power & Gas, 270% growth to $130m – A team of keen executives have learnt from working with larger companies and decided to roll out a new model with less overheads. Most systems are out-sourced (billing, invoicing, payments), their main costs are labour with a team of only 55 people. This sounds similar to Book Depository’s model.

Lesson: off-load, out-source, do whatever you can to focus only on the essential role of your business to connect readers with the book experiences they want, or, when they want them, or, where they want them, or, in the formats they want them in.

#5 – Sportsnet Holidays, 202% growth to $13m – a travel agency just for sports lovers. This is a terrific example of a business honing in on the specific customer experience they want to support and enhance. It is exactly what the more successful publishers are doing.

Lesson: Define your audience and their interests more narrowly, and deliver them enhanced experiences around those specific interests.

#8 – Farmers Direct, 157% to $104m – it may be a long bow to draw, but providing a more direct route from farmers to consumers has some parallels to the various self-publishing models that have taken hold over the last eight or so years.

Lesson: Self-publishers are still crying out for affordable help. Businesses that deliver them sustainable value will continue to grow.

#59 – Booktopia, 52% to $9m – Australian online book-seller. When our bricks & mortar stores are really struggling, its good to at least see a local online bookshop strongly growing. They don’t seem to be selling ebooks yet, but that doesn’t seem to have slowed them down at all.

Lesson: online, online, online, is the new mantra for book retailing.

BRW content taken from BRW Vol 32, No. 42, October 28-November 24 2010

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What can book printers learn from Lightning Source?

The Australian rumour mill has run rife 2 or 3 times over the past five years with the expectation that Lightning Source is ‘about’ to open its doors here. But with September’s announcement, it looks like it is really happening with the opening date set for June 2011.

What potential do they see that we don’t? Australia is such a small market it is hard to see how the board of the multi-billion dollar Ingram empire could be serious about this move.

Does this point to real growth in our own backyard, and perhaps growth of a kind that is very different to what we might have imagined up to now?

Major local book printers, like McPhersons, Griffin, BPA, and Ligare, have all been responding positively to the growing demand from their major publishing clients for shorter print runs. In fact, the competition amongst this group of local book printers has become so fierce during 2010 that, for quantities of even less than 20, prices have fallen by over 50%.  This means the production cost of a 200 page paperback, with B&W internals and a colour laminated cover, is getting down to the $4 or $5 mark. Perhaps they saw Lightning Source coming and knew they had to act in such a dramatic way, but is it enough?

Here are a few reasons why Lightning Source might not think print pricing is the only key to competitive strength:

1. Managing the data is what really matters – Lightning Source is a sister company to Ingram Digital that is offering publishers sophisticated content management solutions. Their two main products, Core Source and Vital Source, together with Lightning Source really do offer exciting opportunities for publishers to deliver their content seamlessly to both print and electronic media and through mixed distribution channels. Our local printers, even the best and strongest of them, will find it very difficult to compete with these integrated solutions, no matter how cheap their book printing becomes.

2. Global marketing requires global distribution – few medium or large sized publishers can afford to only focus on the Australian market. Setting up and maintaining global distribution arrangements that incorporate print-on-demand solutions is not easy. The Ingram/Ingram Digital/Lightning Source model makes great sense for them.

3. Has the horse bolted? – There is the possibility that the falls in local pricing reflects both pure desperation and a big shake-up that is about to come. The merger between McPhersons’s and Griffin that got knocked back by the ACCC previously might now be the only way to salvage these two companies, and perhaps others along with them.

On the positive side, there are still some reasons why local printers might continue to enjoy some competitive advantage over Lightning Source.

1. Relationships matter – local publishers are, on the whole, very loyal to their preferred printer. There have been a few examples of non-traditional printers breaking into the traditional book market, such as SOS in Sydney and their POD service for Random House. But mainstream publishers have tended to remain loyal to the established book printers and have worked with them to develop more responsive print solutions that deliver mutual value.

2.  Printed books are not going out of fashion – we know that, traditionally, about half the books printed in Australia are not for  mainstream book retailing (refer the PIAA and APA ‘Book Production in Australia – a Joint Industry Study’ 2001). We also know that the number of titles being registered with an ISBN is steadily increasing, due largely to print-on-demand (see evidence in the UK). It is reasonable to predict that the opportunity for digital book printing will grow (but it doesn’t  help volume off-set book printers).

3. Close proximity has value – The fact that Lightning Source can write a business case to invest in a plant here suggests that locating on-shore has real value. With smaller publishers likely to continue to prefer locally owned printers, not all the business is going to disappear.

4. Copyright is not straightforward – There are many tricky aspects to territorial copyright that even they may not have worked out yet – being able to print and ship in the US does not necessarily mean you can print the same book in Australia, it all depends who has the rights. Many Penguin, Harper Collins, Hachette and other major publisher titles are sold under a different publisher agreement in Australia. It is possible that Lightning Source still have hurdles to jump before achieving the print volumes that their current management information systems predict.

It is difficult to see any local book printer surviving for more than five years, in their current form, unless they really ramp up their digital offerings. Publishers will increasingly need to offer the full range of hardback, paperback, ebook, re-purposed, diced and spliced, electronic book products, through a complex international distribution network. To do this the publisher needs a print solution that is neatly integrated. If it is not all in the one business, it ought to be facilitated via the same file preparation tool, the same job submission interface, and the same order management environment.

It is particularly difficult for local printers to rise to this challenge when the publishers do not have a homogeneous set of technical needs. However, that’s business, and that’s why all book businesses need to be learning as much as they can from the moves of the more agile giants like Lightning Source and their parent, Ingram.

The iPad might give Libraries more sway with the publishers

Adelaide University has recently announced that all first year science students will be given an iPad in 2011. This is potentially a big event for the book world, but one that makes us scratch our heads to see what the fresh undergraduates will actually use them for.

It is a given that connecting via facebook, listening to music, watching video clips, and other activities will be part of most students’ daily iPad practice. But what about the learning activities that, we presume, even if only as an experiment, the university also had in mind?

Accessing the learning management system would be a natural fit for this very friendly and so-portable device. But once in there, how much of the textbook material will be available? Possibly very little, which may be less of a problem in the sciences than in the humanities or social sciences. But if they can access textbook content, will it be integrated into the students’ portal and learning management system, or only accessible via another online password-protected environment?

For the use of iPad-like devices to spread much more textbook content needs to become accessible online. The iPad is helping create an environment where publishers might become motivated to start working more closely with university libraries, and the campus book-sellers, to deliver textbook content (for a charge) to students via learning management systems.

Bookshops servicing self-publishers = new revenue AND profit?

Oscar Art Books in Canada is the latest bookshop to install the Espresso Book Machine. In this August article we read many of the arguments that have been floated for many years. ‘Anybody could do it’, ‘higher profits’, ‘production speed’, easy changes via an ‘updated Word document’, to name a few. But are they opportunities for the book-seller, or for the self-publisher?

They say the machine cost $CAD120,000, and one author says he is charged between $CAD4 and $CAD5 per book for printing. Here are some cost estimates in CAD to see what might be left after the raw inputs. Cover stock (60cents), paper (250ppX.005 = $1.25), printer click charges (250ppX.008=$2) and labour (say, $1.50 per book), these total $5.35. If these page and cost estimates are inflated by 25% then the costs might come back to under $CAD4. Whichever way we look at it, there is not going to be much left to go towards the capital cost or to reward the risk takers by way of profit. The cost structure is made worse by the fact that an operation like this will be geared to short runs, and therefore, higher labour costs. The major printing firms who are staking out a position in the short-run book printing market are reducing the costs dramatically with new production-scale equipment and smart online job submission systems.

Conceptually, it makes a lot of sense for bookshops to be exploring this as an opportunity. There is certainly an opportunity to compete on service and especially in providing self-publishers with publishing service and support. However, then it becomes a fee-for-service activity that will always be difficult to build scale around. Many have tried and failed to make a really profitable business out of it.

Bookshops setting up self-publishing and printing services need to consider the risk of over-capitalizing in this area at the expense of investing in new ways of interacting with, and stimulating, their whole book-reading customer base with new and innovative online services.

Publishers focussing on ‘curating’

Seth Godin recently gave an excellent speech to the 26th annual Independent Book Publishers Association Publishing University 2010. Hear the audio at this link. One of his main points is that the most viable role publishers have today is that of being curators. Therefore, he suggests, they might focus less on manufacturing (less reliance on long runs), distribution (just utilize the ‘infinite’ shelf space of online retailers), or sales and marketing (let your best customers sell for you), and more on content development around specialized topics targeted to well-defined audiences, or, in his words, ‘tribes’.

Pascal Press have taken this to a whole new level with their Mathletics site that reaches hundreds of thousands of students every year through more than 7,000 schools all around the globe.

Hardie Grant are practicing this successfully in a more conventional form with products such as their Wine Companion which appears to be enjoying considerable success building a community around wine with the web-site and the iphone app.

We love the book

This blog is for business people and professionals who simply love the book and who are committed to further building their business or career around it. The monograph is an impressive body of content that has had hours and hours of creative energy devoted to it. Through our experience of books we journey through many aspects of life where people from any walk of life might meet.

First and foremost though, the book is a story. Each book that we read reflects one or more aspects of our personal story. This is big, a personal story made up of many themes and chapters that have influenced our lives, our thoughts, our dreams, our inspirations. It may have supported us through arduous classroom learning and most probably helped us through some tougher lessons in life, these are often common lessons experienced in life. And in this way, the book becomes not just your story, or my story, it becomes our story.

What makes the book unique in this digital day and age is the long-form nature of its content, not short snippets to be skimmed or browsed. It’s a sturdy collection of words and pictures demanding some dedication, perhaps not quite as much as went into its formation, but sometimes it just might. A book invites us into a place of reflection that makes us vulnerable to a new message like few other intimate experiences can. Even when celebrating the delights of food, wine, and other indulgences, the printed work has its own tactile value to offer.

For those of us who remain drawn to a working life connected with pages bound, we know that a strong community exists within the industry. A band of book-lovers that sticks with the enterprises and the professions that sometimes appear to be losing their relevance in the online world.

Our businesses and our jobs will change dramatically over the next ten years. But, whatever format it is read in, and via whatever avenue it is purchased, borrowed, or gifted, the book will remain one of the most important forms of story-telling that our society shares. As online browsing and communicating rapidly reaches across social groupings, generations, and countries, so will our yearning for meaning be increasingly met by the depth and breadth of stories and experiences that books contain.

This blog will explore the many new opportunities that are emerging and being tried by book businesses. We will evaluate and report on these opportunities with evidence-based articles that demonstrate how, with almost every new web page or e-reading device being created, there is also a new chapter opening in the life of every publisher, printer, book-seller, librarian, and of every other business and profession in between.