The other Amazon-publisher disagreement: print on demand

Everyone is paying attention to the e-book pricing fight against Amazon right now, but Bloomberg Businessweek reports there’s another disagreement going on between Amazon and the publishers behind the scenes that nobody has really noticed: the question of print on demand.

Amazon already offers its own print on demand services, used for mainly for small independent or self-publishing, and the technology has gotten a lot better over the fifteen years since it was introduced—print-on-demand titles are by now largely indistinguishable from large-print-run paperbacks.

The rub is that Amazon would like to expand its print-on-demand operations so that it can print copies of mainstream publishers’ backlist titles and cut down on the inventory costs of storing printed copies of those books in its warehouses for the consumers who do still want to read in paper. But publishers aren’t having it.

Asking publishers to move to print on demand “is largely about taking control of the business,” says Mike Shatzkin, founder of Idea Logical, a consultant to book publishers on digital issues. “It adds some profit margin, but it also weakens the rest of the publishing universe.”

As Bloomberg points out, publishers have spent a fortune on building infrastructure for storing and shipping printed books. If they were to move to print-on-demand, it would cause a significant upheaval in their business model. We’ve already seen how consumers think e-books should cost less than printed books because they don’t have physical items to be made, stored, and shipped. If publishers used POD to reduce infrastructure costs, there is little doubt consumers would demand printed books cost less, too.

And Amazon isn’t the only outfit seeing problems from this. The Espresso Book Machine’s POD bookstore, On Demand Books, has only been able to get HarperCollins of the Big Six to let it add some backlist titles to its catalog.

“The catalog is huge, but it’s overwhelmingly public domain,” says On Demand Books Chief Executive Officer Dane Neller, referring to older books no longer under copyright. “That’s a function of publishers’ reluctance to upset their existing supply chain, though we hope and believe that will change.”

But small publishers such as O’Reilly Media are seeing significant cost savings from moving to POD, freeing up cash flow to invest in R&D or other aspects instead.

And so it is that big publisher reluctance to cede Amazon control, or otherwise to change the way they currently do business, is tying up money supporting legacy infrastructure. This increases the costs to publishers and Amazon alike, and keeps costs higher for consumers. With print on demand, paper books could see a lot of the same benefits as paper books, but publishers would rather keep on doing things the way they’ve always done them.

Is it any wonder we’re reading the point where they need to adapt or perish?

(Found via The Passive Voice.)

10 Comments on The other Amazon-publisher disagreement: print on demand

  1. All publishers produce electrostatic, on-demand paper copies. Generally they are so indistinguishable from off-set that this transition is unnoticed. (Clue: electrostatic is odorless, of-set has ink volatiles) University presses have switched all backlist and current editions have shortened wet-ink runs filled out with dry-ink supply on demand.

    My guess is that Amazon is the one at disadvantage overbuilding warehouse supply. I have been in one of these operations and they merge with packaging and routing. I can imagine they want to take out the warehousing and integrate electrostatic printing in-line with fulfillment operations.

  2. Totally on the money Chris. POD is the only tail that paper will have and it could be substantial if the publishers copped on to how to ‘manage’ it instead of fighting it and trying to make it fit an outdated business model.

  3. Um, POD was originally ONLY used by large publishers as a way to keep books in print without over-printing. They’ve been using it ever since, and no one has to fight to get them to accept it.

    But you still have to crunch the numbers in order to decide when the costs favor switching from off-set to POD printing. You include cost of working capital, cost of warehousing, cost of shipping, and so forth. But on the other side, the printing part of POD is much more expensive than offset.

    And there’s yet another issue: most publishers would like to be able to choose which POD printer to use. Amazon, however, has a habit of penalizing those who do not use their in-house printer, CreateSpace for all the copies that go through their retail channel.

    LSI makes it much easier and less expensive to go through Ingram or Spring Arbor.

    Other POD printers have other advantages. Do you pay the set-up charges to use all of them? And then deal with the inevitable other admin hassles and confusions?

    Do you place the files with only one, and lose in other ways?

    It’s just not as simple as it may appear.

  4. Agree with Marion absolutely. Digital Short run and more recently POD have been in place with large publishers for a while. However the transition to POD takes a lot of technology changes at each end. I understand why publishers may want to control their own inventory, and obtain the cost benefits of larger purchasing power.

  5. As Marion has pointed out. The issue is not legacy publishers being reluctant to embrace POD, but rather they want the option of choosing which printer to use. This has a lot of echoes of the BookLocker-Amazon legal case a few years ago.

  6. Wrong. The question being discussed was never whether Publishers use POD. It was about POD in the delivery chain outside the control of the publishers. Their own use of it in-house is immaterial and irrelevant. Which is why Chris’ article is wholly correct.

  7. “Their own use of it [POD] in-house is immaterial and irrelevant.” ??? What kind of cock-a-hoop logic is that! By it’s very nature POD used by a publisher, whether for out-of-print titles or academic titles, requires partnerships and distribution platforms. A publisher may or may not want Amazon as part of that delivery chain to readers.

    Don’t get me wrong, Howard, I do see the point you are making, that publishers need to be in control and care about how books reach the reading public, by whatever means. But the landscape has changed, and holding onto the legacy idea that the publisher is both curator and disseminator of ‘the book’ – no questions asked or argued – to all mediums is gone.

    Every facet of what we once considered ‘the publishing legacy’ is gone. The idea of the big 6 businesses developing areas of print, distribution and marketing – who contend on the new world order of publishing on a sole business – will find that other platforms and businesses will do it better than the combined parts of what legacy publishing now offers. So the idea of doing anything ‘in-house’ or by your own rules – be that market identification, production or supply – is a folly.

  8. Mick – I must have expressed myself very badly because what you say is what I agree with :-)

    My point was that the comments above seemed to me to be diminishing the point of the article in pointing out the fact that Publishers have already been using POD extensively and inferring that this whole POD controversy is not significant. I was trying to move the emphasis back to the fact that it’s use was in-house and therefore not really an issue as regards the intention of the article above.

    I understand the pubs desire to determine the printer, but as POD spreads (and it will spread significantly) unless there is an agreed printer and printing standards then it is an impossible situation for retailers and operators of the POD system. It is hardly practical for them to use a separate printer etc for each publisher.

  9. @Howard

    “It is hardly practical for them to use a separate printer etc for each publisher.”

    Pure BS.

    Amazon could easily forward website orders directly to the publisher, who could print and send the books to the end consumer themselves much more efficiently than Amazon.

    But Amazon insists on it coming in their box, through their inconveniently located (to avoid taxes) warehouses. Because they have $600+ million a year in legacy warehouse leases (and BILLIONS in salaries for the warehouse workers) that are totally redundant.

    And its not just books- 3P sales, most of which NEVER see the inside of an Amazon warehouse, are by far the fastest growing segment of Amazon’s click-and-wait operation and already comprise a third of sales. Yet instead of reducing warehouse space, Bezos is doubling it!

    What was that about legacy infrastructure?

  10. Peter – if you held your tone until you actually read what I said, and thought beyond your Amazon-centric world, you may not have responded with the … ‘vigour’ you did :)

    To remind you what I actually said: “. . . but as POD spreads (and it will spread significantly) … It is hardly practical for them (paper book retailers) to use a separate printer etc for each publisher”

    So I was not referring to Amazon. In fact I was referring to the opposite end of the market to Amazon. POD will be spreading to all kinds of small and medium sized bricks’n mortar bookshops because that’s the only way they will possibly survive as the paper market dwindles and the cost of distribution is no longer justified in an effort to keep prices of paper books even remotely competitive.

    In those kinds of scenarios it makes no sense whatsoever to maintain five or ten or even more separate POD setups going , to deliver POD product to walk in customers.

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