Migrating to Digital Publishing? The Six Key Questions to Ask

(The following article first appeared in Publishing Perspectives.)

The publishing industry is not generally known for being agile or quick to change, yet it is facing one of its biggest times of change probably since the invention of the printing press. At the heart of this is the migration to digital.

Prior to this migration, a time-tested process and structure existed for getting books printed: from acquisition, to copyedit, to typesetting, to author review and proofreading, to print. Although hiccups occurred and no two companies had the exact same workflow, the foundations were the same and ensured quality products got released in expected timeframes.

With digital—whether it’s online or e-book, digital only or both print and digital—publishers are now faced with more questions than answers as to how to incorporate the new with the old. Below I provide a framework for those questions, using the traditional 6 Ws: why, who, what, when, which, and where.

Why?

Of the six questions, this is the easiest to answer. No publisher can afford to ignore the digital any longer:  the tipping point has come and gone; more and more e-books and e-readers are being sold weekly; and authors will begin demanding this, if they haven’t already. And traditional publishers need to offer all things digital to compete with the emerging “digital publishers.”

Who?

Even prior to the migration to digital, publishers would do one of two things to keep costs down: outsource as much as possible, keeping headcount down, or the reverse, which is hire talent to keep all services and costs internal. With digital, publishers have to make this decision anew. Should they invest in new talent from other industries (e.g., technology) or educating existing talent, those who are eager to learn and have a background in publishing and in their culture? Or should they turn to one of the many conversion and content solutions providers that exist in the market?

What?

What exactly is a digital product, or more specifically an e-book? Is it a replica of the print product or something that only starts from there and then adds interactive media? How much new content should be added to the digital product for consumers to choose that over the print product? Are they competing against each other and is there a way to bundle them? And what is actually a value-ad as opposed to bells-and-whistles that are more of a distracter and deterrent? Also, should publishers focus on frontlist alone or backlist too? How much of either or both?

And what should the price be for this digital product? If it’s a replica of the print, should it be cheaper given that there are no PPB (paper, printing, and binding) costs? Is this a reason to add new and/or interactive content to justify increased price points?

When?

Whatever the ultimate digital product, when should it be prepared and released? Should the publisher work in an xml-first environment and then from there publish across platforms, either simultaneously or at whatever schedule decided on? Is there a reason to do print first and then digital next? How long can a publisher hold off on releasing an e-book so as not to affect print sales?

Part of this question, and also continuation of the “who” and “what” question, is quality control. In the current process, we have production editors, copyeditors, and proofreaders, all with defined skills and quality checks they are responsible for. In this new digital workflow, publishers need to decide who is responsible for digital QC (internal vs external staff), what are they responsible for (proofreading the entire text to ensure conversion didn’t introduce errors or just flipping through pages on e-readers to ensure no major formatting problems were introduced), and when is this to be done (hopefully prior to release and not after complaints come in).

Which?

Which formats will e-books be made available in and which e-readers will they be targeting? Currently you can probably focus on a few (Kindle, Nook, and Sony) but many more are emerging.  Which will you continue to focus on or will you try to be accessible to all?

Where?

First off, where should digital and other content be stored? Hopefully a CMS (content management system) of some sort exists and can act as both an archive and an enabler of updates and reprints. If one does not exist, an archive of some sort—whether on a network drive, in the cloud, or via a third-party provider—is vital.

And where are these digital products sold through? Does the publisher have an e-commerce branch of their website with the technical support needed to sell their own e-books? Do they not want to bother and instead use distributors? Someone will need to ensure that the proper formats, metadata, and uploads are prepared for each of these distributors and updated as necessary.

As the above demonstrates, there is a lot for the publisher to consider before it can migrate to digital but to be done right, these questions and others need to be thought through before investments are made.

Bowker Reports U.S. Book Production Declines 3% in 2008, but "On Demand" Publishing More Than Doubles

NEW PROVIDENCE, NJ -- (Marketwire) -- 05/19/09

Bowker, the global leader in bibliographic information management solutions, today released statistics on U.S. book publishing for 2008, compiled from its Books In Print® database. Based on preliminary figures from U.S. publishers, Bowker is projecting that U.S. title output in 2008 decreased by 3.2%, with 275,232 new titles and editions, down from the 284,370 that were published in 2007.

Despite this decline in traditional book publishing, there was another extraordinary year of growth in the reported number of "On Demand" and short-run books produced in 2008. Bowker projects that 285,394 On Demand books were produced last year, a staggering 132% increase over last year's final total of 123,276 titles. This is the second consecutive year of triple-digit growth in the On Demand segment, which in 2008 was 462% above levels seen as recently as 2006.

"Our statistics for 2008 benchmark an historic development in the U.S. book publishing industry as we crossed a point last year in which On Demand and short-run books exceeded the number of traditional books entering the marketplace," said Kelly Gallagher, vice president of publisher services for New Providence, N.J.-based Bowker. "It remains to be seen how this trend will unfold in the coming years before we know if we just experienced a watershed year in the book publishing industry, fueled by the changing dynamics of the marketplace and the proliferation of sophisticated publishing technologies, or an anomaly that caused the major industry trade publishers to retrench."

(Editor's Note: Members of the news media who are interested in obtaining statistics from Bowker for specific industry categories are invited to email Daryn Teague, Bowker's public relations consultant, at dteague@teaguecommunications.com.)

"The statistics from last year are not just an indicator that the industry had a decline in new titles coming to the market, but they're also a reflection of how publishers are getting smarter and more strategic about the specific kinds of books they're choosing to publish," explained Gallagher. "If you look beyond the numbers, you begin to see that 2008 was a pivotal year that benchmarks the changing face of publishing."

Among the major publishing categories, the big winners last year were Education and Business, two categories that might suggest publishers were seeking to give consumers more resources for success amidst a very tough job environment. There were 9,510 new education titles introduced in the U.S. in 2008, up 33% from the prior year, and 8,838 new business titles, an increase of 14% over 2007 levels.

By contrast, the big category losers in 2008 were Travel and Fiction, two categories in which publishers clearly saw less demand during a deep recession in the U.S. There were 4,817 new travel books introduced last year, down 15% from the year before, and 47,541 new fiction titles, a drop of 11% from 2007. Moreover, the Religion category dropped again last year, with 14% fewer titles introduced in the U.S., and that once reliable engine of growth for publishers is now well off its peak year of 2004.

According to Gallagher, the Bowker data reveals that the top five categories for U.S. book production in 2008 were:

    1. Fiction (47,541 new titles)
   2. Juveniles (29,438)
   3. Sociology/Economics (24,423)
   4. Religion (16,847)
   5. Science (13,555)

Methodology

The book production figures in this news release are based on year-to-date data from U.S. publishers and include traditional print as well as on demand titles. Audiobooks and E-books are excluded. If changes in industry estimates occur, they will be reflected in a later published report. Books In Print data represents input from more than 75,000 publishers in the U.S. The data is sent to Bowker in electronic files, and via BowkerLink(TM), Bowker's password protected Web-based tool, which enables publishers to update and add their own data.

Books In Print is the only bibliographic database with more than 8 million U.S. book, audiobook and video titles. It is widely regarded throughout the publishing industry as the most authoritative and comprehensive source of bibliographic data available worldwide, and has been a trusted source of data in North America for more than 50 years.

E-books, Tree-books, and On-demand Books

I was fortunate enough to attend this year's Publishing Business Conference and although much was discussed in the two-and-a-half days' worth of sessions I attended, there were a few themes that kept reappearing:

1. Traditional books--or "tree books"--and print is not disappearing anytime soon, but publishers should keep inventory and costs down, as well as acquire and market more wisely.
2. E-books may be on the rise, but given that they are currently such a small percentage of book sales, publishers should use them to complement, not replace, tree books: e-book sales are not currently cannibalizing tree book sales.
3. Since print is going nowhere anytime soon, more and more publishers are turning to print-on-demand and short-run digital as an alternative to the traditional offset model. And while the unit cost for these may still be higher than that of offset, the total cost is lower.
4. Inkjet technology will be the tipping point for POD by making color POD economically viable.

And although there were some bleak discussions of the current economic clime, there were hopeful predictions as well. Here's to the latter...

O'Reilly and XML

I was fortunate enough to attend O'Reilly's StartwithXML Conference at the McGraw-Hill Auditorium. The focus of the conference was how publishers can get on the xml bandwagon, with pointers from publishers already doing so.

Since PW posted a great article on the conference, I won't repeat what they've covered, but I will mention the few points that stand out in my mind:

1. To save costs, xml is only one of three necessary steps a publisher takes; the other two are offshoring and using standard, automated templates.
2. To have xml be the most useful, you need to start with an xml-first workflow--not an xml-last one--and this means that the authors and editors need to be trained in xml tagging and taxonomy.
3. The more "chunkable" and repurposable your content, the more important it is to get an xml-first workflow going.
4. XML allows easier updates and synchronicity of multiple files.
5. XML allows for simultaneous deliverables that can be adjusted to any medium since it is content-centric and design-agnostic.
   

Overall, it was great hearing how many publishers have embraced the new technology and realize that it's all about the content--and not its container--anymore.

47 Tips for Cutting Costs Without Cutting Staff

(Book Business, James Sturdivant, 12/1/08)

With a battered economy dragging down just about every retail sector, a salient fact making headlines has been the ability of discounters to maintain sales growth—a sure sign that the “Wal-Mart Effect” has permeated every corner of the business world, and that raising prices is probably not the way to realize profits. This leaves cost-cutting, which, for obvious reasons, book publishers would like to pursue aggressively without sacrificing either product quality or valued employees. Here are some tips from a cross-section of the publishing world for reining in costs without sacrificing too much in the process.

Tips from...
Dwight Baker, president, Baker Publishing Group
Baker Publishing Group instituted a series of cost-cutting measures this fall and plans to review their effectiveness after 90 days. Baker says the company has not been forced to lay off staff despite the trying economic climate and is doing “everything possible” in formulating a comprehensive strategy to prevent future layoffs.

Short-term:

1. Reduce employee travel.

2. Reduce marketing budgets.

3. Freeze all hiring for new and vacant positions.

4. Reduce inventory levels.
The company is moving to smaller first printings and reprint quantities in offset. “We usually print a 12-month supply of trade books, and a 12- to 24-month supply of academic books. We’re reprinting smaller quantities lately,” Baker says.

Baker Publishing also has a digital component that handles about 15 percent of backlist titles, he adds. “We call the program short-run, because it is not technically an ‘on-demand’ model. We carry stock through the entire year, but never more than one carton,” he says.

5. Reduce book-packaging enhancements.
These include fancy covers with foil or embossing.

6. Reduce exposure at trade shows and conferences.

7. Make a push to sell overstocked inventory more rapidly.

8. Transfer work from outside suppliers/freelancers to in-house staff.

9. Hold off on all new equipment purchases.

10. Prohibit all overtime hours.

Long-term:

11. Avoid high-risk and expensive book projects.

12. Pace new book releases to match capacity of current staff.

13. Defer publishing expansion into uncertain sales categories.

Tips from...
Cären Yang, creative and production manager, Saint Mary’s Press
Winona, Minn.-based religious publisher Saint Mary’s Press has worked with vendor Transcontinental to realize savings in manufacturing and production by adopting lean manufacturing principles. “It affects how we make decisions,” Yang says, “by considering what’s the best way to implement [a practice] so it’s efficient for my upstream and downstream customers.”

14. Add a print-on-demand (POD) center.
For some publishers, it makes sense to add an in-house POD center, which reduces inventory and simplifies order fulfillment. (Saint Mary’s maintains its own shipping/fulfillment area.) “Eighty percent of the products we produce are produced internally,” Yang says. “So it’s a huge cost savings. We keep about one to two weeks of inventory on our shelves for those products.”

15. Set up an electronic inventory and warehouse management system.
Smaller publishers benefit from this as much as bigger ones, Yang says. It allows publishers to coordinate efficiently with printers in order to ship to their docks only what they need at a given time.

16. Use software to streamline workflow.
Saint Mary’s Press saves time and money by uploading documents via the Web for proofreading and other preflight work, eliminating costs for mailing hardcopy proofs. The system also allows errors to be fixed quickly and efficiently.

17. Drop the off-site warehouse.
Thanks to a well-coordinated printing, shipping and fulfillment program, Saint Mary’s now uses a small warehouse in its own facility rather than paying to rent a larger off-site facility.

18. Standardize your paper stock.
With so much volatility in the paper market, Saint Mary’s has worked to standardize the paper it uses. “We are ordering larger quantities of one stock for our products. … That’s been huge,” she says.

19. Print during off-peak times.
Work with a printer to utilize equipment at a discounted rate when not much business is coming in from other clients. With peak times tied to the religious/education schedule rather than other seasonal determinants, Saint Mary’s has gained significant savings this way.

20. Create more efficient PDFs.
Yang recommends asking your printer to share its PDF settings with your preflight specialist. Being in synch with a printer on settings for a print-ready file allows for smaller file sizes and fewer steps in the production process. “These are just little things, but sometimes the little things really add up,” Yang says.

Tips from...
Jim Kalajian, president & COO, Jenkins Group Inc.
Jenkins Group is an independent custom book publisher in Traverse City, Mich. President Jim Kalajian believes a cost-cutting campaign should be coupled with (and hopefully mitigated by) renewed efforts to boost sales—in his case, through lowering margins, offering new services and giving special incentives to smaller publishing clients that might be slashing their promotional budgets. “The bottom line, we have had to look at everything we do and determine if we can save money in some areas without affecting client service,” he says.

21. Ask for cost concessions from freelance designers and editors.
“Essentially, we have said, ‘If you want to keep getting work, you will need to do it for 20- to 30-percent less than last year.’ These changes are hopefully temporary during these slower times,” Kalajian says. Gaining a small concession on freelance costs can greatly improve margins and allow the company to keep in-house staff employed without reducing salaries or benefits, he says.

22. Shift work from freelancers back to salaried staff.
Staffers are now covering some design and editorial work that a year ago would have been sent to freelancers. Kalajian’s creative director will begin helping the marketing team with promotional material, rather than sending it to outside designers. “We also write 24-30 press releases a month for small publishers as part of our publicity-service offering,” he says. “Instead of sending all those to a freelance writer, we now have an in-house staff member write half of them.”

23. Reduce UPS costs bysending files to printers via FTP.

24. Use digital proofing more often to save on the cost of creating and shipping proofs.

25. Cut marketing spending that is not showing a positive return.
Kalajian recommends giving campaigns such as lead-generation or Google AdWords no more than six months to show results.

26. Switch Web site-maintenance services to a firm that bills in quarter-hour increments.
Jenkins Group has found that some firms charge $100/hour in half-hour increments, while others charge the same hourly fee, but allow quarter-hour increments—a significant savings when only a small tweak to the Web site is needed.

27. Cut office cleaning staff from once a week to twice a month … and do more clean-up yourself.

28. Modify a phone plan.
Money-saving measures can include cutting unused 1-800-number fax lines, and eliminating cell phone and pooled minutes across the company.

29. Reduce monthlycompensation of principles.

30. Reduce travel costs.
Kalajian reports a dramatic reduction by eliminating all marketing trips to New York.

Tips from...
Susan Spilka, director, corporate communications, John Wiley & Sons
STM publisher Wiley has been on the cutting-edge of cost-cutting, lately forming partnerships with other publishers and institutions to deliver services and information efficiently.

31. Electronically disseminate comp copies.
Working with other higher-education textbook publishers, Wiley has developed CourseSmart, a service providing digital course materials to consumers. Spilka says Wiley saves money by using Course-Smart to fulfill comp-copy requests, rather than having to mail print copies.

32. Offer supplementalmaterials on-demand.
Wiley has put textbook supplement transparencies in an on-demand program, whereby professors choose a transparency online, and orders are printed and shipped one at a time. This avoids inventory obsolescence for these expensive-to-produce items.

33. Institute a well-functioning content management system (CMS).
“Developing a companywide content management system … allows us to cost-effectively repurpose our assets” Spilka says.

34. Offer online options.
For journal customers, Wiley promotes the option of online-only subscriptions, which helps move toward shorter print runs and lower materials costs.

35. Move CD content to a Web site.
Some publishers have found savings by taking expensive four-color graphical elements and putting them on accompanying CDs. Wiley has taken this a step further by moving such content to Web sites associated with textbooks and other releases.

Tips from...
Dan Tucker, president, Sideshow Media
Sideshow Media is a small, independent book producer, creating illustrated books for publishers and corporate entities.

36. Expect more from your employees.
With today’s efficiency tools at hand, publishers should expect employees to wear more hats than in years past. Sideshow hires smart people and trains them well, says Tucker (who is also president of the American Booksellers Association), allowing them to work more efficiently and do more in less time than would have been possible a few years ago.

37. Keep an eye open for new suppliers.
“We are always looking for [lower-cost] suppliers,” he says. “We do a lot of manufacturing in China, and with costs going up, we are looking at other possibilities, such as India and Egypt.”

Tucker says he is willing to consider suppliers closer to home if the value of convenience and time/cost savings in shipping equals or exceeds the lower manufacturing costs available in Asia.

38. Be flexible.
Smaller publishers should leverage the assets that come with maintaining a leaner, more malleable supply chain, Tucker says, meaning they should always be on the lookout for better deals in printing or shipping, and ready to take advantage of these, especially in a volatile world market. “The difference between how we operate from a [major publishing house] is that, for them to alter the supply chain, I imagine is like trying to turn an aircraft carrier around in a pretty narrow straight. We are more like a small powerboat.”

39. Consider alternate staffing arrangements.
Sideshow has had success with employees working in remote locations and other positions being converted to half-time. These arrangements have led to some cost savings, according to Tucker.

Tips from...
Alex Holzman, director, Temple University Press
Temple University Press specializes in books on the humanities and social sciences. Holzman says university presses are used to operating frugally, but nevertheless can be subject to unexpected budget mandates from their parent institutions. “When cuts have to be made … they aren’t always made wisely,” he notes.

40. When you cut, cut judiciously.
Holzman advises thinking through the impact of any cuts on net revenue, noting that an in-house efficiency that results in declining sales is not a good idea (unless it somehow increases margins). “This probably sounds mundane and obvious, but it’s necessary to at least make an effort to avoid encountering unexpected consequences,” he says.

These consequences can ostensibly be non-monetary, yet affect sales and profits in the long run, he warns. An example would be a cost-cutting measure that damages author relations.

41. Embrace POD.
POD and “born digital” printing allow for tighter inventory control and fewer write-downs, Holzman says. “POD [also] helps with distribution overseas as one can print a book … [overseas] rather than shipping across the pond.”

42. Use electronic marketing tools.
Holzman reports success in steering people to online seasonal catalogs, thereby reducing runs for printed versions. Temple has also experimented with sending PDFs to book reviewers, though Holzman notes such practices must come with appropriate safeguards to avoid the risk of piracy. Marketing efficiencies are also realized by having books on Google Book Search and Amazon Search Inside the Book, he says.

43. Incremental workflow efficiencies add up.
Temple University Press uses Blackboard technology to transmit projects to its editorial board, cutting paper use. It also utilizes electronic copyediting tools and is starting to use XML workflows. “The former, of course, saves time and paper; the latter saves coding later,” Holzman says.

44. Leverage institutional talent.
University presses can sometimes benefit by drawing expertise from other departments, avoiding expensive consulting or service fees that commercial publishers often face when introducing new efficiencies. “For example, a university IT department can often provide very helpful guidance whether or not it also implements any change being contemplated,” Holzman says.

45. Trim paper costs.
There are many ways to incrementally decrease the amount spent on paper, such as, in manufacturing, considering alternative stocks and eliminating jackets for some hardcover titles. For in-house paper use, he says, “We use two-sided copying wherever possible. We try to send electronic files rather than create and then have to ship printed manuscripts. None of this is earth-shattering; you just take every bit of incremental saving you can get.”

Tips from...
Larry Bennett, vice president, Spanish language materials and POD, Replica Books
Replica Books, a division of Baker & Taylor, provides solutions for publishers looking to combine short-run printing of older titles with marketing and distribution services.

46. Use POD to automate the reprint process.
Work with a digital printer to save money by setting up an automatic reprint system for some “long-tail” titles, whereby books are printed and orders fulfilled without passing through a publisher’s hands. Bennett says this makes the most sense for expensive, low-volume titles such as textbooks and art volumes. “Your cost savings comes in avoiding inventory obsolescence and remaindering, and in the inventory-carrying costs. The more expensive the book, the more it makes sense,” he says.

47. Shop around for the best POD solution.
Different publishers have different needs, and one printer’s fee structure, manufacturing and shipping capability, and distribution network may make more sense from a cost-saving standpoint than another’s, Bennett points out.

Digital Directions: Does Design Matter in Digital Distribution?

(By Andrew Brenneman, Book Business)

An important characteristic of digital content is its ability to deliver to multiple platforms simultaneously—to print, Web and mobile channels. Invariably, the same content will look different when viewed on various output devices, and it should. Each device has its own display characteristics, and the design of the presentation should be optimized for that device. I can hear the groans from publishers already.

Reach for the ibuprofen now, because it gets worse: Content also varies within the same delivery medium. For example, content may be syndicated on the Web to multiple delivery partners, whose respective delivery models require alterations to the design. Even large-print paper editions require repagination and other adjustments.

This raises fundamental questions about the role of design in digital publishing:

• Do our production and design departments need to grapple with all these new modes of delivery?

• Should design of electronic content be the responsibility of the distribution partner or other external service provider rather than the publisher?

• For that matter, is design strategic at all? Is design an important competency for publishers to have internally?

These are tough questions. The answers are not obvious and will vary from organization to organization.

We were able to dodge this bullet somewhat when digital distribution and marketing programs initially asked for only Web-ready PDFs, digital facsimiles of what was printed on paper. “How nice,” many thought. “We can use the same design as the book. This won’t be so hard.”

However, it soon became evident that an image of the paper-page was by no means an optimal experience for Web delivery. For starters, the aspect ratio doesn’t match. And for mobile e-readers like Amazon’s Kindle, they don’t work at all.

Moving away from the use of Web-ready PDFs is a daunting prospect. It requires design departments to understand and deliver multiple designs for different modes of delivery. So daunting is this prospect that many digital-delivery initiatives assumed that this production and design challenge was too great for book publishers to undertake, and the task was off-loaded to the channel partner. Programs as diverse as those of Questia and Project Caravan assumed that the publisher would deliver original-application (manuscript or layout) files from which the channel partner would create the final design for delivery.

The decision to off-load digital-content design from publisher to distributor was a pragmatic one and helped get these programs off the ground. But it raised the question of whether publishers should be doing design at all. The content was what the market wanted, after all.

Is Design Important?
Tim Jones, art director at Harvard University Press, thinks so. “It is strategic. Our mission is facilitating communication of ideas, and design—both how the information is structured and how the page is visually designed—is an important part of that. It is not about being the coolest kid on the block,” says Jones, “but in facilitating communication.

“Great book designers are great at framing communications,” Jones observes. “We are going to be bringing back an edition of the ‘Songs and Sonnets of John Donne.’ The designer [of the previous edition] did such a wonderful job 50 years ago in making an extraordinarily complex layout effortless for the reader. We owe it to readers to ensure that this kind of thoughtfulness isn’t lost.”

The value of design in aiding communication will resonate with all of us who have suffered through a poorly designed book or Web site. And Jones’ position is certainly consistent with the publisher’s mission of facilitating communication. However, what of economic realities? Is there a sufficient return on the increased investment for digital design? In other words, can we afford to do all this?

“We can’t afford not to,” asserts Sylvia Hecimovich, director of production and design for The University of Chicago Press Books Division. “Chicago has an award-winning design department that has proven abilities in successfully designing works across a wide spectrum of subjects. This has always been a selling point in acquiring authors as well as marketing finished works.”

While clarifying the strategic and economic importance of design in publishing organizations, both Jones and Hecimovich acknowledge the need for selective investment. Not all titles require—or warrant—the same level of design complexity. While works of fiction and standard scholarly monographs can be translated to digital delivery relatively easily, complex reference works require much more investment to work well across platforms. “When you take something like ‘The Chicago Manual of Style,’ which is both critically important to this organization and incredibly complex, we need to take direct involvement and great care to successfully bring it into digital distribution,” says Hecimovich.

The ability or desire to invest and develop competency in digital-content design will vary from organization to organization. Indeed, it may vary across publishing programs within an organization. However, some common themes emerge:

• Strategy: Design is of strategic value. Design facilitates communication of content and is necessary to support the publishing organization’s brand to authors and the marketplace. Design is in the publisher’s vested interest.

• The hard truth: Each delivery device and platform will require differential design treatment to some degree.

• Technologies: “Web-ready” PDFs are not a long-term solution. PDFs allowed for some quick wins in digital delivery, helped everyone get their feet wet, and primed the digital ecosystem. But paper-page design will not provide optimal cross-platform presentation. Moving toward XML-based-production approaches will help support cross-device delivery, but the hard work of designing for different delivery modes remains. XML is a component to success, but not a panacea.

• Resources: Internal design staff needs to understand the design implications of the various digital channels and devices, whether they are directly involved in designing for these platforms or not. Digital design skills are key for all publishers.

Not all works can support high levels of direct staff design involvement—decide which titles and programs warrant it. If design is to be handled by distribution partners, your distribution agreements should include sign-off by staff designers before going live. If application files are submitted to distribution partners, ensure that licensing for fonts, illustrations and other embedded design components are consistent with such a hand-off.

I’ll be the first to admit it: This is a big deal for publishers, an area of long-term, fundamental change. It is also a key factor for successfully making the leap into digital content.

Don't Pull the Plug on Print Yet

(C) 2008 Business NH Magazine. via ProQuest Information and Learning Company; All Rights Reserved - Business NH Magazine

Jack Cummings has been around the printing industry for pretty much all his life. His grandfather stalled Cummings Printing in 1914. Young Jack forged his printing career working after school and during the summers, toiling in the mailing department, bindery and the pressroom. He also drove the company truck. After college, Cummings took a job in the typesetting department and eventually landed in sales at the Hooksett-based company. It was while he was in the sales department in the late 1990s that he realized that in order for Cummings Printing to weather the desktop publishing and Internet revolutions occurring at the time - and position the company for a more secure future - it had to become more than a local sheet-fed commercial printer.

In other words, Cummings Printing would have to become a company almost unrecognizable to his late grandfather and his small commercial press. To do that, Cummings invested heavily in new technologies and changed its business model. "If we had not laid it on the line and taken major loans to become a magazine and catalog printer - a Web printer versus a sheet-fed printer, which is what we were and what differentiates us from your local printer - then we would not be enjoying the success we am right now," he says. (Editors note: Cummings prints Business NH Magazine.)

Even with his firm conviction, however, Cummings endured his share of nerve-tacking moments - along with just about every other printer during recent yeas. Industry watchers predicted at the turn of the century that the Internet was going to make printers a thing of the past. "I thought we were dead. I thought we were in real trouble," Cummings says.

Today, Cummings employs 107 people and has embraced the Internet for all that it can do for today's printer. For example, its Insite prepress portal system streamlines customer interactions, allowing customers, via Internet, to track job activity and status, proof print jobs, collaborate with Cummings staffers, and approve jobs.

During the past decade, change has been one constant for printers. "Printing industries are less of a trade now, and things are more push button," Cummings says. "What used to take an hour of a skilled artisan's time now takes 10 minutes of a person with computer savvy." Gone are the jobs of the linotype operators, film strippers and conventional printing plate makers Cummings says.

When asked what his grandfather would think of today's Cummings Printing, the grandson says, "I think he'd be sad from a trades perspective - that the trade is much less a part of the industry. But also being a good businessman, he'd be proud that we stayed with technology, we've been able to remain an industry leader, and we've been able to evolve from a commercial printer to being a publication printer."

The Technology Blessing and Curse

The late '90s digital revolution has threatened the printing industry, but it's also enabled printers to become more efficient by allowing them to cut legacy machinery costs, trim headcount, speed up customer interactions and job delivery, as well as offer a wider range of digital services. "We're able to handle any file you can throw at us: from Word files to Publisher files to InDesign and Quark - all the different types of [design] programs out them," says Kevin Boyarsky, co-owner of Print Solutions, a commercial printer in Concord with seven employees that offers one- to four-color offset printing, and digital duplication services. His customers also use FTP (file transfer protocol) Internet technology to transmit computer files to Print Solutions. Boyarsky estimates that typical turnaround times have been cut in half, down to less than a week, from 10 years ago.

But all those efficiencies reaped from new and faster technologies have come at a cost. "Copiers and digital machines that used to last five years are now almost obsolete after two, and they're expensive," Boyarsky says. "We constantly have to re-invest in the company. We have invested a significant amount of money upgrading software, and digital and offset capabilities."

Re-investment in new technologies is an economic reality for Cummings as well. "Either we buy this new piece of equipment, which is going to cost us a lot of money, or if we don't buy this, we won't be competitive," he says. 'The companies that didn't buy them and didn't take the calculated risks, they're hurting now."

Peter Church, owner of Keystone Press, LLC in Manchester agrees. The company spent a quarter of a million dollars this past summer to install two digital presses to improve printing quality and efficiency. "It's state-of-the-art today, but it will probably be outdated in five years, so we have to make it profitable quickly," Church says of the challenge of keeping up with technology advances. "There are two kinds of printers - those who are not keeping up with technology and those who embrace it, invest in it and evolve with it."

Shrinking Industry

The most recent data from Printing Indus-tries of New England (PINE) shows that the Granite State ranks second to Massachusetts in terms of value of shipments each year ($1.2 billion) as well as number of printing-related businesses (226). Printers employ more than 7,500 people in NH; most significantly in the Manchester, Nashua and Portsmouth-Rochester areas, and the majority of the printing businesses have fewer Nan 20 employees, according to PINE.

At the national level, there's been a decrease of 200,000 printing industry jobs since 2000, according to an August 2007 report from the Rochester Institute of Technology. "Most of the decreases in employment can be accounted for by the increasing amount of automation present on printing presses and other printing equipment that traditionally had to be nm by hand," the report states.

The printing industry has long been known for its skilled craftsmen and artisans who worked the presses. But new technology has erased much of the need. "Highly skilled printing tradespeople aren't needed like they once were, and many of the skills that were once needed don't exist anymore," Cummings says. His business, for example, em-ploys 107 people, down from 165 six years ago. 'New technology has eliminated manpower and made it cheaper to run," he adds.

New Hampshire printers say that finding qualified people is difficult today. "There's plenty of people who apply for a job," Boyarsky of Print Solutions says. But there's not a lot of people qualified for the jobs."

The Rochester Institute of Technology report notes that many printers "have been having trouble finding qualified, trained workers to replace their retirees." In addition, there has been decreased enrollment in printing programs at colleges and other institutions across the United States. "Now that graphic design and other computer-based fields of study have become more popular, many graphic arts programs at high schools have been shut down due to a lack of participation," according to the report.

Boyarsky points to a troubling workforce gap in NH. "I don't think the people coming out of the schools necessarily have the skills because the focus isn't on the print side - it's more toward the Web," he says. And then there's the older people who came out of the old typesetting design, and they didn't upgrade their skills to the new technologies. So there is probably a gap in the number of qualified people."

New Hampshire printing executives all say that there are fewer printers in the state now than 10 to 15 years ago. But that doesn't necessarily mean that print is dying or there's any lack of competition. "I wouldn't say there's a dearth of printers around' Boyarsky says. "I think that the printers around have been able to do that same volume of work [when compared with I0 years ago], with less equipment because we am more efficient."

Church says his business is an example of the trends the industry will likely see more of in the future. He owned a smaller printing business when he acquired Keystone Press two and half years ago and merged the two businesses. "You will see a lot of that happening - two smaller companies merging to form a larger, more capable company," Church says. Keystone Press has 21 employees housed in an 8,000-square-foot facility in Manchester.

Challenges

New Hampshire printers are facing the same macroeconomic pressures as other industries face: economic belt-tightening and credit-market wariness, sky-high fuel and utility prices, and increases in health care costs. The printing industry, in particular, has witnessed steady price increases for paper and ink. The industry saw two rounds of price increases for most paper grades this year. "It used to be once every couple of years," Boyarsky says, "but it's now twice this year."

While there may be fewer local NH printers today, say printing executives, competition has only increased. A "survival of the fittest" mentality is apparent through digital printing trends, retraining or hiring employees with new skillsets, and investing in new technology. "There's a lot fewer players-" observes Frank Laguna, president of Papergraphics in Merrimack, a 14-person commercial printer founded in 1982. "But the equipment is more efficicntbecause there's more capacity, which leads to more healthy competition."

In 2000, Papergraphics was able to complete one or two color printing jobs in a day now the printer can do 10, he notes. An investment in a new HP Indigo 5000 digital press in 2007 has allowed Papergraphics to offer same day or next day turnaround on print jobs. That, in turn, has allowed Laguna to deliver short-run printing jobs simply not available just five years ago, he says.

Competition is not just about another printer in your town or one in the city 10 miles away. The Internet and its global networking reach have made any printer a local printer. Sophisticated venture capital-backed e-commerce printing Web sites are both technologically advanced (with design and other applications built in) and able to gain economies of scale that am tough to match - let alone beat - for some local printers, says Boyarsky. "I can't compete in that marketplace," he says. In addition, the desktop publishing revolution and its more user-friendly design software has enabled commercial and retail customers to do much of the work once resented for printers. "The common color copier being networked to a desktop has more bearing now [on the printing business]," Laguna says.

Church says customers are expecting more services, but for prices to remain stagnant. That's a challenge in an industry that is seeing its costs go up, he says. "You have to provide superior customer service," Church says, which will mean fewer customers bid-ding projects to other companies.

Lastly, the growing need to go "green" has affected some pieces of NH printers operations as well as their customer offerings. Boyarsky says that while "no printer can he totally green if they're doing offset printing," new innovations - such as assortments of recycled paper, soy-based inks and waterless presses - allow printers to be "as green as we can be with the technology were using."

Differentiate or Die

Even with the enormous army of challenges in front of them, NH printers are not hacking down. "When has this business ever not been competitive?" implores Cummings. "I've been here 31 years, and there's always some kind of competitive threat."

Print Solutions' Boyarsky says, in this economic climate, printers need to "look for other products and services to serve your clientele." For example, Print Solutions is looking at wide-format printos capable of producing outdoor banners and other types of large signage. "The machines have come down in price and become more friendly to the environment," he says. "That's enabled people to get into markets that otherwise they couldn't have."

The Rochester Institute of Technology report notes that many printers am attempting to reposition themselves as a communications or marketing partner and service provider as opposed to solely a print or commodity supplier. "Becoming a marketing partner or communications company involves going beyond taking print jobs to offering a wide range of print products and marketing solutions to consumers," states the report. "Thus, printing companies - manufacturers and suppliers alike - are striving to grow and sustain creativity and innovation to keep their competitive advantage in an industry faced with many challenges."

Church of Keystone Press says his company is increasingly working with marketing managers at companies where the company previously worked with purchasing agents. Church says he can help companies customize marketing pieces, such as a postcard campaign a company may be sending out. Keystone can individualize each postcard with customized photos and messages, and address them as they are printed.

Lisa Landry, president of Print Savvy in Manchester, agrees that targeted marketing and customization of printed pieces is the future of the industry. She points to Macy's, which developed a specific campaign for its bridal registry, as an example. After a couple was married, Macy's sent them a customized printed piece informing them of the items they did not receive on their registry and what's on sale. Landry says those customized pieces yielded a 70 percent return for Macy's. She says printers will need the capability to work with clients to deliver more pieces like that instead of flooding the market with a generic mass-marketing piece. "It will be more like harpooning. It's going to be targeted and specific," Landry says.

Print Savvy, which celebrated its 10th anniversary this year, has built its success on being a marketing partner with clients. The company manages printing projects for clients, finding printers with the appropriate technology to meet their specific needs. "We act as a sales and customer service office for printing facilities across the country," Landry says. That means Print Savvy can find printers with the latest technology, without having to bear the cost of investing in that technology itself, Landry says. It's a model that has worked well as clients' needs become more sophisticated, "If you have a sales tool kit with multiple components, there may be no one printer that could handle every piece," Landry says.

Printers say they are leaning on good old-fashioned customer service to compete - listening to what customers want and need, and helping them navigate through all the options available today - something that many of the online sites can't do. "A lot of times we get those clients who used an Internet site back - the card was wrong, there was no customer service, or they waited three weeks for a card and didn't get it," says Boyarsky. "I try to work with clients, understand their business and be able to provide a solution that fits with them. And it's hard to do that over the Internet."

The Rochester Institute of Technology report is cautionary about the future. "Print's long and illustrious history tells us that printing will remain. However, the form in which it will remain, the size of the industry and the types of output that will be produced are all things that no one can precisely predict." Boyarsky, however, is resolute. "I think that the business has definitely shaken out, but there am clients who still need printing," he says. "There's still a good future for print. A lot of it is that you have to be up on your technology to survive. You can't just muddle along with old equipment and old ways of doing things."

HP Partners with Timsons on New Digital Inkjet System for Book Production

Palo Alto, Calif.-based HP has announced a partnership with U.K.-based Timsons, the world's largest book press manufacturer, to develop a digital inkjet system for short- and medium-run book production. According to HP, the new solution will be designed "to take digital book production beyond niche applications to mainstream production."

Next year, European book printer CPI will be installing an HP Inkjet Web Press—which at 2,600 ppm is slated to be the most productive digital press for the publishing industry, according to HP—with a new finishing system developed by Timsons that will enable CPI to offer short- and medium-run book production. CPI is a beta user of the press, which is to become commercially available in the second half of 2009.

“Our collaboration with Timsons is a natural next step in HP’s strategy to move higher volumes of printing from analog to digital,” says Aurelio Maruggi, vice president and general manager, Inkjet High-speed Production Solutions, HP. “The digital book solution coming from this work will open a range of new possibilities to help printers and publishers optimize their supply chains, decrease waste and create revenue opportunities.”

“Timsons is excited to establish this partnership, as it offers a complementary opportunity to the book manufacturers Timsons has served for more than 30 years, with innovative new solutions to help our customers capture the momentum that exists with digital,” says Jeff Ward, managing director, Timsons Ltd. “Timsons is extending its business by offering more choices to our customers with short- to medium-run book solutions and by partnering with HP to gain the benefit of HP’s digital leadership credentials.”

5 Better Inventory-Management Tips for Book Publishers

Mike Shatzkin, founder and CEO of New York-based The Idea Logical Company, offered book publishers a number of tips on making more intelligent inventory-management decisions at the 2008 Publishing Business Conference in New York. A better approach starts with regularly collecting and analyzing data that is available to each and every publisher, he said.

“Most of the major accounts to which publishers sell will provide you with data that will enable you to know what’s going on between your warehouse door and the end consumer, if you choose to know,” Shatzkin said. “And that information can be very, very useful both to increase your sales and to reduce your inventory exposure.”

In the hour-long session, Shatzkin offered a wealth of advice to the room of book publishers. Here are just five of his tips from the presentation.

1. It is not the unit cost of what you print that matters, it is the unit cost of what you sell.
This advice, said Shatzkin, came from his late father. The point? If you print books that you don’t sell, you’re not saving any money -- an important thing to keep in mind.

2. Get weekly feeds from your major accounts.
Collecting this data once a month is not often enough, Shatzkin says. Be sure you’re getting the information on a weekly basis. Possessing this data from Barnes & Noble, Borders, Baker & Taylor, Ingram and Amazon can give you a sense of “a substantial percentage of the inventory that’s in the supply chain -- well north of 50 percent, because independent stores aren’t holding that much inventory anymore,” Shatzkin said.

3. Once this data is being collected and organized, analyze it.
First, examine by account what their sell-through is by title. Then, on a quarterly basis by account, look at stock turn and inventory by section for your retailers. Also, track both sales and stock on a weekly basis.

4. Identify spikes.
Identify books that are selling beyond expectations. Keep an eye out for those “fast movers,” said Shatzkin.

5. Identify future returns.
These are the books with high stock and low sell-through. Look at your top 25 books in inventory at Barnes & Noble and Borders. If you see, for example, 1-percent sell-through on a title, “you can be sure that that’s a future problem,” Shatzkin said. “You might want to start to address it early, and you certainly want to address it if your own warehouse is short of [that title] and you might be reprinting. So it’s a very important thing to watch both your highs and your lows.”

Publishing and the New Yorker

So all week I kept hearing about this article that foretold the death of publishing as we know it. I first heard it from an editor at work, then several NYU alumni at our meetup. Each time I made a mental note to Google it as soon as I could and then forgot, given the crazy week I had. So after forgetting it for the third time, I was surprised when my husband pulled our copy of The New Yorker out of the recycling bin (and I have to admit that I didn't even remember that we have a subscription) so that I could read this great article about publishing.

So I read it...Most of what it mentioned I had read about elsewhere to various degrees, and I didn't find it alarming at all. Yes, publishing as we know is is changing, not dying, but what industry can survive so long without evolving? And yes, print may not remain the primary medium for the industry, but that does not mean that it will only be a rare and expensive commodity either. What if instead of POD as a transition, it becomes another option for the consumer? What if the consumer of the future can easily decide which medium he or she prefers to have their content delivered on, and that the price difference is so small, if any, that everyone can afford it all?

I think instead of people worrying about something that will never die, that they embrace the change and the freedom it could eventually give us, both as publishing professionals who won't have to worry about ever-increasing cost of paper and production and as consumers. And if this new model means consumers pay before a book is "produced," whether in print or online, and then cannot return them, than the publishing industry will actually be healthy and strong enough to focus not on cost of goods sold, but on content.

Perseus Announces New “One-Stop” Digital Publishing Service

The Perseus Books Group, publisher and provider of sales, marketing and distribution services to independent publishers, announced this week the launch of a new digital publishing service called Constellation, which will enable independent publishers to offer their content in a variety of digital formats—including e-books, online content sampling services and digital files for print-on-demand—through a number of vendors. The service will be available to all independent publishers associated with The Perseus Books Group, including those owned by the group and joint-venture partners as well as those served by Consortium, Perseus Distribution and PGW.

The service already has partnership agreements in place with a number of technology companies, including Amazon (for the Kindle and “Search Inside the Book”), BookSurge, Sony, Google, OverDrive, Ebrary, BarnesandNoble.com (for “See Inside”), Lightning Source and Edwards Brothers (for digital printing). According to Perseus, additional partner announcements are anticipated.

Publishers can select which services, as well as which vendors, they want to use. Constellation negotiates agreements with these vendors on behalf of the publisher. Publishers then load print-ready PDFs to Constellation’s Web interface or provide them via a portable file transfer. (Constellation will also help with the digitization of files for publishers who don’t have them available.)

The Perseus Web site (http://www.perseusdigital.com/constellation/home.php) offers a detailed explanation of how Constellation works and what is required of publishers.

“Up until now, the full range of digital opportunities has been mostly confined to large corporate publishers owned by multinational corporations, and many independent publishers have been shut out,” says David Steinberger, Perseus president and CEO. “Constellation will level the playing field for independent publishers and make it possible to generate new revenues from ‘long tail’ content.”

“The Perseus Books Group is in a position to bring together independent publishers and create opportunities for us that would be much more difficult if we were on our own,” says Munro Magruder, associate publisher of New World Library, a PGW client.

Perseus COO Joe Mangan states in a letter posted on Perseus’ Web site: “This powerful technology- and vendor-agnostic service creates one, central repository and service organization that can help you manage your titles through their life cycle, leveraging—where appropriate—online marketing and sampling, e-book distribution and sales, short print run (short print runs to stock), and true print-on-demand (print only to order).”

North Plains is providing the digital asset management software to support Constellation. “As a company whose mission is to enable independent publishers to reach their potential, The Perseus Books Group is in a unique position to empower ‘long tail’ content owners to generate new revenues from the digital world,” says Hassan Kotob, president & CEO of North Plains.

Facing Today’s Manufacturing Woes

(By Alex Brown of Publishing Executive)

Publishers are being buffeted by cost increases on all fronts, and while there are no magic wands to wave, we can gather round to share our sorrows and consider a few basic cost-control tactics.

The latest blow is a 10-percent to 12-percent increase in ink prices announced by ink suppliers. Printers will differ in their implementation of this, but if yours is delivering bad news in the form of higher prices, you can accept it as a true reflection of the market. The costs of raw materials and freight have indeed affected the selling price of ink.

Your printer may spare you this increase, or you may hear of another publisher that has gone unscathed. There are good reasons for printers to differ in applying ink escalations.

First, some printers have an ownership interest in an ink supplier. They can let overall business strategy rule their decision on a price hike, and they can do it customer by customer.

Second, printers that are not tangentially in the ink business vary in the markup they initially impose on the ink they sell to you. Once again, a critical customer relationship may be important enough for a printer to absorb some or all of the escalation blow, particularly if he has a comfortable markup to cushion it.

Third, printers sometimes delay imposing an escalation. Your vendor may not be sending out the bad news quite yet, but it doesn’t mean you’re off scot-free.

Finally, ink costs generally represent 5 percent to 8 percent of a manufacturing invoice, not including paper. With today’s tight margins, that’s a significant amount, but printers may still have some negotiating room.

With all this in mind, the smart print buyer will look at a change in ink prices as an opportunity for negotiation. But tread carefully: The printer’s costs really are going up. What you’re negotiating is how much it will affect you. Keep your guns in their holsters and start out with sympathy for the printer’s situation. Then look for a fair way to absorb the rising price together.

The greater the printer’s ink markup, the more leeway it has for giving the publisher a break. You can look for a compromise on a lower percentage increase or a delay in its effective date.

The Bigger Problem: Paper
The ink increase, however it finally hits you, is small potatoes compared to the rise in paper prices. Mills are generally announcing a $50/ton increase for the third quarter, but with demand so weak, there’s reason to hope this will work its way down to the $30/ton zone.

The overall message, however, is clear: The mills want to keep hiking prices to compensate for the increases in their own costs, and they are not letting low demand dictate price policy. What they don’t get in July, they may well try for in October.

The wise paper buyer needs to understand that the mills are driven by two loud voices in their ears. First, the rising costs of energy and transportation are affecting mills, and price increases are necessary just to tread water. Second, strict profit goals are in place at all mills today, with the sternest tests at those held by private equity investors. The days of waiting out a market downturn or sharing a customer’s burden are over. If you can’t make money selling paper today, you shut down the mill and take your capital elsewhere. The lost jobs and lost customers don’t have a place in the equation.

The classic cost-control move when paper prices go up is to downgrade specifications. Cutting basis weight, trim size or paper grade are still useful moves, but not every square on the chess board is open.

Mills have gotten pesky about making basis weights they consider less profitable, and the spectrum of paper types is shrinking as mills consolidate. The nastiest news is the closure of Katahdin Paper’s supercalendared (SC) machine, announced for July. The loss of 180,000 annual tons of SC will mean that buyers trying to downgrade from grade 5 won’t find SCA easily. In turn, SCA shoppers may have to upgrade, making the price increase that much more likely to stick.

Meanwhile, our favorite price safety valve—importing paper—doesn’t work anymore. Mill consolidations have put a distinctly global face on the paper market, so there’s no more exploiting small pockets of unbalanced supply and demand. Globalization levels such anomalies. The weak dollar undercuts our buying power, so we can’t pit imports against domestics. And even if we could, shipping costs would gobble up all the savings.

The rising cost of fuel sits at the center of all the price increases swirling around us. You see it in fuel surcharges for overnight mail, the petroleum components in ink, postal increases, and freight allocations for paper shipments. And it’s buried only a little deeper in the power used to make paper and run presses. In short, the cost of a barrel of oil ripples through every manufacturing move we make.

Because this is affecting all publishers, all printers and all consumers, a price increase is easy to justify. But it’s going to be hard to collect. The hard-pressed consumer will resist, and publishers tremble at giving readers any reason to say no to a subscription renewal or a newsstand purchase. And raising ad rates can be equally perilous.

Printers in a Bind
There’s another constituency with nearly the same problem. Printers are hit directly with increases in operating costs, but customer demand is flat or falling, making it tough to impose increases that could drive demand still lower.

The prevailing price for printing is riding on some very gusty winds. Pushing it down is low demand that forces printers to compete hard for every job that can keep the presses turning. Pushing it up is the reduction in competition from a shrinking pool of vendors. With their own costs rising and profit pressures mounting, printers are twitching their escalation trigger fingers. If ever there was a textbook time when print prices should rise, this is it.

Or is it? A healthy publisher can absorb an increase in print prices, but a weakened one will switch to digital delivery. If there’s a large economic message here, it’s that making and moving printed pages is inefficient compared to putting images on screens—so much so that the current wave of increases in every manufacturing cost center should be enough to drive a lot of printing demand away.

Printers can scale down their capacity to compensate, but it’s not going to be an orderly march that publishers and catalogers lead. For now, printers must try to retain customers who can flee not just to another printer, but to another medium. Setting print prices has never been harder. Should prices be high enough to let printers evolve into artisans serving a micro-market? Low enough to prevent the market from shrinking that small? Or some spot in the middle that might, at least, prolong current conditions?

The tough lesson is that doing nothing won’t allow things to stay the same. Oil prices aren’t going to return to 20th-century levels, so this cost gauntlet we’re running through right now is not a drill. New energy sources will rewrite our economic equations, but all the variables in the formula will change, too. Printers will have to evolve even more than publishers.

For now, however, your printer will try to pass along the increases he’s experienced through your contract’s escalation provision. You can respond by negotiating an advance renewal that could lead to a price reduction or, if you’re at the end of the contract term, soliciting competitive bids. There’s no guarantee you’ll find the types of bargains we’ve seen for so many years, but it’s crucial to try. Opportunities still exist in a market with excess capacity, but they don’t drop into your lap.

Today, there’s nothing a publisher purchases that isn’t affected by energy costs. But the still larger wave running through the economy is the uncertainty about what major energy and environmental changes will mean to buying decisions. It’s impossible to forecast trends too vast to detect, but we know they’re at work, and we’ll slowly shift with them. It may be small comfort, but every business and every consumer is similarly affected. We’re all in this together.

Combating Rising Costs: United Business Media’s SVP Manufacturing on Her Company’s Cost-Reduction Strategies

(Book Business, August 22, 2008)

With magazine publishers increasingly feeling the crunch of rising paper, postage and gas prices, Publishing Executive Inbox checked in with Marie Myers, United Business Media’s SVP of manufacturing, about the effects these costs are having on the global media company, and some of the cost-reduction strategies it’s employing going forward.

Inbox: How much of a difference have co-mailing and co-binding made to your postal costs?
Myers: Co-mailing saves 13 percent on our monthly titles. That is after the freight is deducted from the postal savings. Co-binding weeklies [saves] much more. One of the books saves about $500,000 a year; the other is about $300,000.

Inbox: How difficult was it to get together with other publishers? Is having the right printer/distributor to work with the most important element? Is flexibility key when it comes to working with manufacturers to save money?
Myers: The printer brought us together. One of our co-bind partners is a competitive magazine and that took much more to get off the ground.

Inbox: What about drop-shipping? Is this part of your co-mail strategy, and how important an element is it in terms of savings?
Myers: Drop-shipping is part of our co-mail strategy, and it is hard to tell how much the co-bind vs. drop shipping saves us. That is why I gave you an overall savings. Drop-shipping is a very good portion of the savings. On some of our books we do drop-ship only. The savings for that is about $14 per thousand copies. Of course, the larger the print order, the larger the savings will be.

Inbox: The continuing rise in gas prices has changed the game a bit as private carriers are tacking on fuel surcharges, making them in some cases less competitive compared to the USPS (at least for now). How have recent fuel prices forced you to change your cost-saving strategies, if at all?
Myers: At this point in time, we have not changed our freight carriers. We are in the process of seeing if the USPS could be less for the monthlies. Weeklies using the USPS require many trucks and air freight to get the required delivery times.

Inbox: The ABM and MPA have been busy educating members on the need to utilize co-mailing to reduce overall costs incurred by the USPS for the periodicals class. What’s your take on the need for all publishers to work toward new mail strategies, and how do you think this can be done? What do you think will happen if they don’t?
Myers: We have tried this before by using a few different alternate delivery services. That did not do well, and we were paying more than the post office. I am 100 percent [in favor of] publishers getting together and coming up with an innovative way to reduce postage and freight costs. If the ABM or MPA wanted to start something, we would be happy to join the group.

Inbox: Is United Business Media reducing circulations as part of its cost-cutting strategy?
Myers: Yes.

Mega Printers: Pros and Cons

From the buyer’s perspective, there are pros and cons in working with a mega printer (a printer that represents $500 million or more in sales volume). Print Buyers Online.com’s (www.printbuyersonline.com) major print buyer members, of whom 60% give business to mega printers, recently shared their thoughts on the subject. Here are some of the reasons why buyers consider it an advantage to work with mega printers:

“We work with one of them on a large project where they do the production and printing of a catalog. They have handled it very well and have the resources for that kind of project whereas smaller printers don’t.”

“I use mega printers when a really large project hits because it can be much more economical.”

“As part of our hurricane preparedness plan, we require relationships with print suppliers well out of Florida and even away from neighboring states. Having a relationship with a mega printer not only gives us that emergency option, but in these times of high fuel costs, we are able to print large jobs close to their delivery cities and save charges as well as time on dated materials.”

“The mega printers certainly offer a lot more options.”

On the other hand, some print buyers find it is not advantageous to work with mega printers because they do not offer the personal relationships smaller print shops foster:

“The customer service level (with a mega printer) is far less than a print buyer experiences with a smaller print vendor.”

“In the past, I used one when one of the small operations was bought out and it merged into a mega printer. The errors in billing became such an issue that we decided to move our work to a smaller company.”

“They are continually trying to quote us the ‘whole package’ of our printing needs, but we do better on our own. We give them the limited few jobs that they can compete for on a job-by-job basis.”

“With the larger printers, the buyer is forced to adhere to the constraints within the mega print structure for invoicing, inventory reporting, etc. The buyer definitely does not have control in the communications from the mega printer.”

When more and more of the industry is looking to outsource everything from project management to composition to printing, have you chosen to go to the "big guns" or stay with the smaller ones? And which has saved you both time and money?

Creative Cost-Cutting Strategies

I was reading the August issues of Book Business this weekend, and I found James Sturdivant's article on "creative cost-cutting strategies" very interesting and timely. Here is a summary of the methods he suggests:

1. Think beyond the printed page: as paper prices keep increasing, think multimedia to keep page count down. Also, maximize efficiency with templates and paperless workflows.
   
2. Bringing printing in-house: several publishers, Harlequin included, have invested in technology to handle some of their own printing. If this is not an option, investigate "gang printing" and consolidated trim sizes to cut costs.
   
3. Jobs returning to North America: given the increasing cost of fuel, printing overseas isn't always the cost-saving measure it used to be. In addition, look into using lighter paper and better monitoring of inventory for further cost-savings.

The full article is definitely worth reading and can be found on their website (see link above).

POD for Magazines

I rarely blog about magazines since I've spent most of my career working with books, but I recently read an interview about MagCloud that I found interesting. What is MagCloud, you may ask: it's the magazine's answer to POD.

MagCloud is an HP Labs research project evaluating new web services that will provide small independent magazine publishers, online content owners, and small businesses the ability to custom publish digitized magazines and economically print and fulfill on demand.

To read the rest of the interview on Mr.Magazine.com, follow this link.

Full-spread E-Reader?

O'Reilly's Tools of Change blog reported today on a prototype e-reader, invented by reseraches from Berkeley and the University of Maryland, which further resembles a book. Not only does it have two screens--like a recto and a verso--but it allows you to detach the screens to better compare two different documents or you can just fold one screen behind the other. TOC even has a video of this prototype on their site, which has to be viewed to be believed.

What this prototype is trying to do, as explained by the YouTube video, is better mimic reading habits in an e-reader. With the two screens, it lets you better view more content, flip better, see an image across a spread, and more.

With the unbelievable leaps and bounds in iphone technology, I am sure that eventually "viewing" habits will overlap "reading" ones. For instance, the OnlineMediaCultist just blogged about how the next step will be Princess Leia popping out of your phone. As the video on his post demonstrates, this is possible nowadays with the "holo" text messaging feature of the iphone.

So will e-readers eventually have 3-d art that pops out at you? Will they have videos embedded into them as well? Will you be able to "record" comments instead of writing them? The possibilities seem limitless--or at least limited to the inventors' imaginations--given how far we've advanced.

But how will this affect production? We're all concerned with content being xml-ready so that it can be available for digital, whether online or via e-reader. What more will be necessary to get it "multi-media" ready? And whatever it will take, will have to start with editorial during the development and planning stage.

Any thoughts?

Offshore Outsourcing

Since more and more publishers are being forced to turn to overseas vendors and printers, whether for full-service or just for specific services, I thought it worth sharing with you Jen Butenschoen's article, based on her session at the Publishing Business Conference given in March of this year.

9 Tips for Building Healthy Offshore Manufacturing Relationships

Jen Butenschoen has spent the past 13 years with Harvest House Publishers, a Christian book publisher headquartered in Eugene, Ore., where she is director of production. She has extensive experience working with offshore manufacturers, and so she led the “Tips for Healthy and Profitable Global Sourcing Partnerships” session at the 2008 Publishing Business Conference this past March in New York. During her session, she presented dozens of tips on how to make the most of your relationships with offshore manufacturers. Here are nine of them.

1. Be sure offshore manufacturing is right for your products.
Offshore manufacturers have different capabilities and technologies than many of their U.S. counterparts. Some are behind on technology, so know what their capabilities are before giving them work.

2. Don’t hesitate to ask your printer’s input on anything on which you’re unsure.
Ask your printer for their suggestions on such issues as file prep, best manufacturing methods, special treatments, etc.

3. Make sure that all costs are accounted for.
Overseas partners do tend to price things out differently than what you may be used to with domestic partners. And be careful, because sometimes you get what you pay for. “Often, there’s a reason for that low price tag,” said Butenschoen.

Don’t forget about additional costs like freight and shipping, and customs’ import and export taxes. For example, there is a significant import tax in Italy on items a publisher would supply to their printer for the work.

4. Request a variety of samples.
Examine them closely. See what they’ve done for other publishers and take a close look at the quality. Would you be happy with the work? If you’re considering placing a job with the manufacturer, request dummies that are made out of the materials you plan to use. That way you can be sure you’re getting exactly the product you want and precisely the product that was quoted.

5. Keep an eye on fluctuating currency.
With the U.S. dollar constantly on the move, quotes can wind up being quite inaccurate by the time the work is done.

6. Pay attention to payment terms.
Strive to get equivalent payment terms with offshore manufacturers as you have with your domestic partners. Often you can negotiate 60-day terms, especially once you’ve built a relationship with the partner.

7. Specifically request not only manufacturing time but also lead time.
Partners will usually offer you a manufacturing schedule with the quote, based on the date of final file approval. You’ll want to consider the full picture, however.

8. Be aware of peak seasons and holidays.
“If you’ve worked with Asia [partners], you know they take a lot of holidays. And it’s not just a few people that take vacation, but the entire plant shuts down,” said Butenschoen.

Printing during peak seasons mean schedules will run longer. Plan your own schedules accordingly.

9. Plan shipping time accordingly.
“I allow up to six weeks … not because it takes that long, but because you never know when one of your shipments is going to be flagged for customs exam. They do that at random periodically and can hold your shipments up to two weeks,” said Butenschoen.

If you’re doing regular overseas work, you’ll probably begin to get a sense for how long it takes to receive your product.

How to Save the Publishing Industry, as per Henry Blodget

Despite Harry Potter selling 8.3 million copies in 24 hours, book publishers only sold 0.9% more books in 2007 than 2006--less than the country's rate of population growth.

How can publishers fix their business? Not by killing more trees. By radically retooling the business model.

Hardcover books should cost $25. And publishers should keep printing them--for people who want to buy them. Meanwhile, for everyone else, publishers should publish cheap electronic copies for 20% (or less) of the hardcover price.

$4.99 for a first run bestseller, downloadable to your Kindle, PC, or iPod--or simply readable on the Internet. The retailer keeps $1 or so, the author gets $1 or so, and the publisher takes home about $3. Some of that goes to marketing and some to overhead. And then you're left with the typical publisher profit of less than $1 (no returns, manufacturing, or distribution costs).

But here's what happens: book sales suddenly go through the roof.

Why?

Because you've made buying a book almost a no-never-mind. At $4.99, buying a book is like buying a couple of magazines: you can buy them on a whim and feel free to skim them. At $25, meanwhile, buying a book is like buying a two-pound guilt trip: Until you slog your way through it, you don't deserve to buy another one.

With a similar margin per book sold, cannibalization wouldn't matter. If publishers really wanted to get aggressive, however, they could cut book prices to, say, $1.99, compress all the revenue splits, and watch sales truly explode. Especially when they made available the out-of-print catalogs.

All that matters is the bottom line, and going digital could quickly resurrect the profit growth of the publishing industry. Unfortunately, right now, the publishing industry is obsessed with maintaining the status quo--which means print units and revenue.

Get over it folks. Time to get your butts out to Cupertino (Apple / AAPL) and Seattle (Amazon / AMZN), cut some real deals, and save your dying industry (and some trees, while you're at it).

I remember my finance professor at NYU explaining how, with the current return and advance policy, that everyone from publisher to bookseller had to mark up their prices to ensure they made their necessary gross margin. And although I don't necessarily agree with Mr. Blodget that sales will skyrocket as soon as prices go down with digitalization of all books, I do think that this is a growing market and a necessary direction for publishers to take.

To make the most profit of this change, publishers need to first fine-tune how to publish content on cross-platforms without further cost in translation, which is where XML and CMS comes in, and they need to figure out how to market to this new market.

And given how far some publishers have come, I don't think the industry is dead: it's just having a slow rebirth, which is only natural (ask any mother).

Publishing Trends

If you've signed up for PW Daily, or go to the Publishers Weekly website, these are some of the headlines you'll have seen in the last few days:

• Penguin Sees Major E-Book Sales Spike
• On Demand Titles Drive Jump in Book Output
• B&N Launches Mobile Friendly Retail Site

What's their common denominator? Non-traditional publishing platforms and operations. So while traditional publishing continues to be shaky, non-traditional publishing is ever-evolving and growing.

Publishing companies, as the above headlines indicate and as the recent BISG seminar indicated, are making appropriate adjustments. But professionals, especially print production ones, need to adjust as well. Personally, I've been taking web design and coding classes, signed up for alerts and blogs, and am just trying to keep abreast of all the changes and trends.

What adjustments have you made and which ones do you feel have or can be the most useful to keep your career on track?