Getting started in Digital Print: a Publishers Perspective

[GUEST BLOG]

This article was initially published to accompany a Ricoh Americas Event for Publishers late 2013.

Mike Gallagher, Vice President, Penguin Books

No matter who starts the initial conversation about digital print, book publishers and printers need to exchange an enormous amount of information if a print agreement is to be successful. Assuming both parties are starting from scratch, here are the key drivers:

• Publishers want to reduce inventory/cost and expand sales by keeping titles in print.
• Printers want to enhance their service platforms and add new profitable sales by keeping alive more “long tail” titles.
• Publishers determine the scope of their projected program and provide the printers with volume requirements by week, month and year—with numbers based on format, units, orders, print runs, bind styles, 4/c cover specifications, finishing, paper grades, carton packs, shipping information and electronic systems.
• Using the publisher’s data, printers decide which equipment to acquire:
  • Cutsheet, toner, digital web, inkjet, 1/c or 4/c print engines
  • Finishing options and in-line or near-line binding and trimming to match demand
• Printers provide a plan and price based on a cost model that utilizes equipment options, depreciation, labor, maintenance, consumables, overhead, productivity and margin.

Publishers want to reduce inventory/cost and expand sales by keeping titles in print.

Inputs for volume requirements

Volume requirements are based on several inputs. For example, out-of-print titles which are being ordered by customers, or titles that are due for reprint but for which the annual sell rate falls below a breakeven number for offset printing. Depending on the volume, a publisher could request a print-on-demand model (print only when an order is received) or a small inventory model (auto-replenishment model) for the titles.

The quantities for marketing materials such as bound galleys, advanced readers’ copies and catalogs can be determined based on historical purchases. These are added up by monthly and annual volume to determine aggregate book and page volume. The trend is moving toward digital in these examples, in large part because  the minimum print run for offset now is 1,000 to 2,000 depending on the printer and the printer’s equipment. By not over-printing, and printing on an as-needed basis, a publisher saves a lot of capital.

All-in pricing factors

A digital print price per page all in (paper, ink, engines, binding, packaging and delivery to publisher’s inventory) is common. This approach provides a consistent way to request pricing, but the data provided to printers must be accurate. All-in pricing makes life easy for the publisher, but it requires printers to know their cost structure very well, down to size of carton packs, frequency of shipments and ability to maximize full truckloads. Standardization of formats, paper and cartons are key issues because this improves productivity and reduces cost.

Sometimes, the per-page price applies only to text, and the cover is additional. There are always extras, and these include case binding, Wire-o binding, cover lamination, UV coating, prep corrections, direct ships and fifth color. Labor also factors in, because I’ve observed that if a printer is running only one shift, costs tend to be high.

In most cases, printers will be a one-stop shop for 4/c finished covers, 1/c and 4/c text, binding, paper, cartons, prep services and file archival. Publishers will push for a greater variety of stocks, bind styles, cover finishes and distribution capabilities. Some printers may not have all bind styles or the correct digital print engines for the publisher’s specific needs. If print vendors cannot provide the services inhouse, they can go to third-party vendors, but this is unusual and usually not cost effective.

There are enough digital print vendors for a publisher to find a good match in terms of product, quality, price and service.

Successful agreements depend on more than price

Price per page is the obvious big driver, but other things like location, quality, service, experience, electronic communication, capacity and financial stability also are in play. Location is straightforward because it affects delivery times and costs. Quality varies machine to machine, so some time ago, we said digital print has to be offset substitutable in terms of durability, quality and price. This requirement involved significant changes by paper suppliers, and is also impacted by equipment and printer experience, which can be gauged by length of time in this part of the business. Service means the printer has the right capacity and understands the flow of materials and requirements to put finished products into inventory.

For example, at 1,000 orders a month and 50 to 100 books per order, a manual process is cost prohibitive as well as inefficient. The entire process must be automatic…

Electronic communication and automation are essential. Monthly digital print orders are very different from typical offset orders. For example, at 1,000 orders a month and 50 to 100 books per order, a manual process is cost prohibitive as well as inefficient. The entire process must be automatic—the inventory system sees the reorder point, sends the PO to the book printer, pulls the file from archive, queues it up, and off it goes. Insert hands, and the process becomes too slow, too expensive, and mistakes happen. Ultimately, consumer orders also need to be tied in so they flow directly to the printer. Communicating electronically requires a publisher and printer to use the necessary interfaces, and to be more closely aligned than ever before. This is not optional!

Capacity is not just what’s available on the floor but how much is actually open. A printer can’t help me if capacity is booked up. There can be monthly and annual spikes on both sides, so an average volume per month isn’t useful. Printing books isn’t like printing bank statements,  where you print the same quantity during the same week of every month.

Financial stability is important because it takes time to ramp up. A print agreement of two to three years is better than one year, but if new technology comes along, printers have to be prepared to step up.

We’re seeing larger book printers adopt inkjet because they want to print from one to one million. Inkjet also provides the option to customize and/or personalize some or all products.

We’re not asking for a lot of customization right now, but we may in the future. For example, our salespeople could give their buyers bound galleys with the buyers’ names on them along with a personal message.

The conversations take time

Given all that goes into a digital print agreement, I recommend a slow start-up. It takes time to work out the details. My advice for both publishers and printers is to be honest and up front and share information, including long-range marketing plans.