Those who follow this blog frequently will know that I am currently in the process of finishing of a book called “Mastering the Unpredictable“.  We are having the official launch on April 14, and it should be available before that for pre-order on Amazon. Along the way I have learned a lot of book publishing, what used to happen, and how that entire industry is being radically transformed.

The Old Model

A majority of books today are still published on an old model of publishing which has remained largely the same for most of a century.  Manuscripts are delivered, editing, typesetting, layout, done by a team of people at the publisher. I was a little surprised that the official instructions from major publishers (McGraw-Hill, Addison-Wesley) recommended that the manuscript be delivered as a double-spaced hard copy.  It doubt there is any author today who does not use a word-processor of some sort.  There are “options” to send electronic copy, but they all must be accompanied with a hard copy to make sure that the electronic version is correct.  While surprising, this was not major area of disruption of the industry.

When the final layout is done a “run” of books is printed.  Those are physically delivered to the publisher.  There area  variety of listing services which publishers use to advertise the presence of a book. Batches of the books are delivered to distributors, and on to wholesalers.  Bookstores (including the online giant Amazon) order batches which they keep in their warehouses, ready for purchase by customers.

I can’t help noticing how similar this looks to a old style car factory, like the one that Stephen Spear talks about in “Chasing the Rabbit”.  The factory makes a “run” of carburetors, setting up the equipment once, and producing thousands of identical copies.  Those are stored in warehouses, and brought out as the assembly line needed them.  The reason for producing so many is that high volume mass production reduces the price per unit. This optimizes the cost of the part.

If you talk to any publisher, you will hear the same thing: “we need to do a run of thousands of books because the cost per book will be so much lower.”  This is a mass production model of publishing.

There is Waste

It was Taiichi Ohno who recognized that there is still waste in the system which is not being accounted for when you use mass production.  You have to store the parts.  Some of them are lost and or damaged in storage.  There are costs of moving the parts around. There is a capital investment that must be sunk into the produced parts which is not recovered until the final product is sold.  And the entire factory complex has to be bigger to store the mass produced inventory.

Ohno promoted lean, just-in-time production of part.  Make no more parts in a day, than you are going to use that day.  Better yet, make them just moments before they are needed, and schedule delivery to the minute in the factory.  The Kanban system is a way of tracking what is needed when, and assuring that exactly the right amount is delivered just in time, only when needed.

This is exactly the same kind of waste in the old model for publishing books.  Capital is invested in running batches of book.  The books take up space in warehouses.   They are moved 3 or 4 times in the process of selling.

There is a form of waste that is special to the book industry: returns.  I had not realized this, but if a book does not sell in a bookstore, it can be returned.  Usually the book is simply destroyed, with the cover being sent back to prove that the book was destroyed and not sold, because it is cheaper to print a new book than to pay for shipping back.   Returns are a complete loss: a book was printed, stored, shipped, stored again, and did not net any income.

Ohno identifies seven wastes, and I add interpretation for the book publishing industry:

1. Overproduction: the runs of books are printed before they are needed, soaking up capital.
2. Waiting hanging around: it costs to maintain a warehouse full of books.
3. Transportation handling more than once, unnecessary moving or handling: publisher, distributor, wholesalers, retailers all have inventory of books.
4. Inventory: run of books not yet sold
5. Motion: as new books enter the warehouse, space must be made for them as supplies wax and wane.
6. Over-processing: not all runs sell out, so some books are later dumped at steep discounts
7. Defective units producing or reworking scrap: returns

They are all there.  And, there is another annoyance: books that go “out of print” and can not be ordered any more.

Lean Publishing

I already knew about Print On Demand (POD) publishing, having self published a couple of books through Lulu.  What I had not realized is how dramatically this is transforming the industry.  I read “Aiming at Amazon” by Aaron Shepard who meticulously details his method for publishing a book in a far more efficient way than a typical publisher would.  Bruce Silver recommended the book, and uses this technique for his book “BPMN Method and Style“.

If you look at either of the above book, you will see that Amazon lists it as “in stock”.  The truth is that Amazon does not have a single copy of either of these book.  When you order one of these books, moments after you checkout, and order is delivered to the printer, Lightening Source.  Amazon skips the distributor and resalers, and connects directly to the printer.  The order is not simply for a book to be printed, but Amazon also asks Lightening Source to include Amazon packaging, and to ship it directly to the you.  The book is printed and shipped to you that day, and Amazon does not have to touch the book at all.

It occurred to me that this is simply the application of lean, just-in-time principles to book publishing.  Simply put: “Don’t print the book until you have a customer order for one.” You get all the benefits that Ohno suggests: no one needs a warehouse, not the printer, not the distributor, not the wholesaler, not Amazon.  There is no up front investment in printing a run of books.  The books are moved once, from the printer to the customer.  There is essentially no problem with returns because returns are 99.9% because of overstocking shelves, not because customers bring them back.

But each book costs more.  My estimate is that it is about $1/book more to print on demand.  On very large runs one might save more, but those are unusual books.   However, the savings described about can be as much as $10/book due to efficiencies.  Optimizing the price of the book is a false economy, when you can save so much elsewhere.  Plus, if the printing centers are distributed, one can print at a facility close to the customer, and save shipping costs.

I was surprised to learn that 90% of the price of a book goes into the “system” which pays for moving, warehousing, and returning books. With this Print On Demand approach, the cost can be cut substantially — possibly to half of that.  It is a dramatic change.

POD is a disruptive change to the industry.  Old style publishers will continue to insist that large print runs will save money, and that print quality is higher.  But they are already being replaced by POD based publishers.

What is the connection with the cloud?

Everything is done “on line”.  You ship the PDF files to print the book to Lightening Source.  I don’t really know where their print facility is, but clearly they ship these files to wherever it is printer.  It becomes a big, virtual printer.

All of the systems are connected together into a cloud: put information into Lightening source, and it automatically makes it to the Amazon product list.  Along the way many other databases and lists are updated automatically.

Because in the old system, there was a big difference between a book being “in stock” or not, Amazon will tell you if a book is in-stock or whether there might be a delay, and if the number gets low, they start raising the alert that it might go out.   Because of this, even within the system, Lightening Source will list that it has 100 books “in stock” at any time.  This triggers automated behaviors in the rest of the chain. And, in a sense, the concept of out-of-stock really does not apply to POD.

The entire supply chain is linked in a kind of cloud which enables an integrated response: customer order, and THEN the book is printed — whenever, wherever, however.

Future bookstores

I happen to one of those who loves to visit bookstores.  It is fun to do so.  But, I have to admit I rarely, if ever, find book that I need for my work there.  They are just too specialized, so I usually have to order them to be delivered.  Will all books be bought on-line in the future?  Perhaps I am a bookstore romantic, but I would like to believe that there is a place in the future for bookstores.

Imagine that the automated presses used to print books become inexpensive enough, it is possible for a bookstore to have one on site.  Instead of a store room, you would have a press.   The shelves out front would be smaller, because you only need to hold one copy of any given book, but many more which can be displayed on a screen.  If you buy a book off the shelf, a replacement is printed that day and the shelf replenished.  If the book you look for is not on the shelf, you order it, wait for 30 minutes, and they bring it out to you.  Printing a book is still far cheaper than photocopying.

That might be where it is all going.  One thing is for sure: the old way of printing book mass production is too expensive, and will disappear over time for all except for the top best sellers.