If you travel on trains and buses packed with commuters staring at mobile devices rather than books, or look at the high streets with very few bookshops, you might think the book publishing and printing industry was in a sorry state. Certainly this market is in a period of transition, but there is still life left yet and in particular a massive opportunity for digitally printed books.
Predictions from Nielsen research had e-books overtaking sales of printed books in 2014, with total sales expected to rise to 47 million units. This would put total e-book sales 300,000 ahead of their print equivalents and mean that electronic books accounted for 48% of the overall fiction market. However predictions based on historic data show a more mixed picture for publishers. Sales of e-books fell for the third consecutive month in April 2013, so it appears that the days of double or even triple digit growth for the market might now be gone, with e-book sales growing by only 5% to $393.6 million in the first quarter of 2013. E-book sales look set to take just under half of the total fiction market in the UK and more than a fifth (22%) of the overall UK book market, according to recent Bowker Market Research.
How is the digital revolution affecting the printed book market?
The Publishers’ Association annual statistical digest seems to paint a different picture. The industry had a record year for sales in 2013 up 4% to £3.3bn. The physical printed book is under threat from all those Kindles, Kobos and Nooks, but reports of its demise may be premature. A total of £1.416bn was spent on paperbacks and hardbacks in the 52-week period up to 28 December, according to Nielsen BookScan data, however the total number of printed books sold dropped – falling 9.8% to 183.9 million.
Despite the overall market slump, Nielsen data showed that the average selling price of a book reached a nine-year high, rising 21p to £7.70. In some genres, notably children’s books, sales actually rose. The figures also show that the pace at which we’re switching from physical to digital books varies according to the type of title. Apparently, 26% of fiction sales are digital, whereas for non-fiction books the figure is just 5%, and for children’s titles, 3%.
Why? Well perhaps for fiction it is only the words that matter, and they can be rendered as well or better in digital form, whereas for something like a glossy cookery book or an illustrated children’s book, the physical object still delivers a much better and more practical experience.
The continued growth of the digital e-book market is in part responsible for the large drop in printed book sales. Recent consumer data figures showed more than two million UK users joined the digital book market in the first nine months of 2013. However, the Bookseller said the fall in value of the book market was also due to the slowdown in sales of EL James’s Fifty Shades novels. In 2012, the author’s trilogy sold in record-breaking numbers. At its peak, the series accounted for almost half of all novels bought in the UK. James’s sales for 2013 totaling £1.4m, compared to £47.3m in 2012, when the trilogy sold 10.5 million copies. This demonstrates how overall statistics can be misleading and how important runaway success titles are to a publishers bottom line. In the rapid shift to e-readers, publishing seems to be weathering the digital climate change better than some other media industries.
As for authors each digital sale earns them a few pennies more than the royalty from a physical book sale purchase. Still, neither publishers nor authors seem to have seen their incomes damaged significantly by either piracy or the wider digital revolution.
For bookshops the news is not so good. Independent Book Shops, continue to close as readers turn to online giants like Amazon for both physical and digital books. Meanwhile, UK supermarket chain Sainsbury’s has announced it is to stop selling printed books online, they see the future online opportunity in digital products only, with physical music, books, games and films sold only in stores. Because of this trend, readers, have a wider choice, and perhaps the prospect of lower priced books.
Trends in Self-publishing are creating new printing opportunities
The number of self-published books produced annually in the U.S. has nearly tripled, growing 287% since 2006, with 235,625 print and e titles released in 2011, according to analysis of data from Bowker. The research found that while production increases are occurring in both print and e-book formats, the latter is driving the greatest percentage gains. It also shows that while self-publishing may seem like a cottage industry, it is dominated by large firms that offer publishing services to individual authors. According to Bowker in 2011 self-published printed books represented about 43% of that year’s total traditional print output. While print accounts for 63% of self-published books, e-books are gaining fast. E-book production in 2011 was 87,201, up 129% over 2006, compared to print, which only grew 33% in the same period.
While self-publishing is a DIY model, its infrastructure is made up of a handful of large players like CreateSpace, Lulu, Author Solutions and Smashwords. However the category for publishers who have produced 10 or fewer books accounted for 34,107 self-published titles of which only 21,256 were printed. Printed copies in this category grew by 74% between 2006 and 2012.
Self-published authors can sell their e-books on Amazon’s international sites when they use KDP (Kindle Direct Publishing). When authors upload those books to Amazon’s free print publishing tool, CreateSpace, Amazon will distribute the books to Amazon.co.uk, Amazon.de, Amazon.fr, Amazon.es and Amazon.it. When consumers in those countries (or in the U.S.) order a CreateSpace book, Amazon prints it on demand and the books are available for same-day shipping. Using CreateSpace is free, but an author’s royalty payment depends on factors like page count and color.
How is digital print adapting to changes in book publishing?
The ability to self-publish and digitally print on demand via web to print systems and digital storefronts has opened up a new world of opportunity to the SME commercial printer
The ability to self-publish and digitally print on demand via web to print systems and digital storefronts has opened up a new world of opportunity to the SME commercial printer. Social media platforms and viral marketing have enabled printers to find new audiences in B2B and B2C markets, allowing them to sell new services like personalised books. Linking this opportunity to new sales and marketing activities is creating big opportunities in previously untapped markets like corporate events, special interest niches, hobbies and local audiences like cat and dog shows, Women’s Institute groups and sports clubs.
For print providers the book market is expected to show the biggest gain in page share, experiencing a compound annual growth rate of 14.2% between 2010 and 2015, accounting for over 45 billion pages in 2015. Due to the inventory cost and waste associated with traditional offset production for books, digital has now become a major force in publishing. If we consider the Digital Value v Volume Proposition we can see that compared to digital other traditional printing processes have become much more commoditized.
||Page Volume compared to digital
||Value compared to digital
Smithers Pira Projections to 2015 based on pages produced and value generated.
Looking at the total print area of book pages printed, we can see that 63% of the market relates to production runs of over 5,000 which will be most economically produced by offset. If we compare this to the actual number of jobs produced, we can see that 79% of jobs fall into a category of production volumes under 5,000, which is better suited to digital production. When we factor in the advantages of printing on demand, it is apparent why there is such growth potential for digital in the future.
Both Inkjet and toner digital printing have already begun to displace offset printing of books, and this change will surely accelerate. The rationale is simple. More efficient technology and comparative quality will be the drivers for rapid growth. These days it is almost impossible to tell whether a book has been printed on an offset machine or a digital one. However the main driver for change is all about economics. Estimating the demand for books, and therefore the print run required has always been a guessing game, which has meant the publishing supply chain has been exceedingly wasteful, with at least 30% of books returned to the publisher as unsold.
Publishers and authors are responding to digital printing
In the face of uncertainty, publishers are beginning to embrace digital because it enables shorter runs. Shorter runs reduce the amount of unsold books, reduce storage costs, allow reprinting in smaller batches, and offer the opportunity to print specialty books for niche markets, including self-published books. There is much confusion about how consumers want their content delivered, but digital printing offers a flexible solution to provide what the publisher needs, when they need it, where they need it, and in the quantity required. Publishers now understand the digital value proposition, and the returns that can be generated.
Digital printing technology offers publishers:
- Risk reduction: demand is difficult to forecast, but high-speed inkjet and electrophotographic technologies enable the economical production of books in small quantities. Publishers can monitor the demand and order only what is required to eliminate warehousing and return costs.
- Cycle time for on demand: a number of highly sophisticated on-demand printers are able to turn orders around within 24 hours. Publishers can quickly react to market demands for printed books.
- Specialty books and fresh content: everyone has a story to tell. Digital printing eliminates the minimum quantity requirements and enables the printing of books in very low quantities. Furthermore, every page that is digitally printed can be unique.
- Digital printing opens up creative opportunities for in-line customisation, personalisation, and real-time marketing activities such as cross-selling or promotional material inclusion.
- Bottom line business results: by following the demand curve more closely and minimizing warehousing and returns costs, publishers can have greater inventory turnover and improved profitability.
Digital Printers are adding value with:
- Fast track order management: taking a customer’s order with a print file and seamlessly processing it, this usually requires integration with the Internet for speed and 24/7 accessibility.
- Exponential increase in SKUs : printing digitally on demand and leveraging the long tail creates enormous volumes of low run products.
- Real-time scheduling and customer updates: in order to provide world class customer service scheduling and information must be instant and transparent.
- Same day assembly of components: turnaround expectations from internet purchases are on average 48 hours, which means that print production and finishing usually has to be completed within 24 hours.
- Direct shipping to last-minute destinations : as the print provider is now dealing direct with the end user it is essential that he provides a service for packing and distribution. This is a critical area for focus as this part of the business can be more time consuming and costly than the production of the book itself.
- Rethink: equipment, process flow, shopfloor management, systems, performance metrics – Compared to a standard print production environment, the workflow and management systems have to be totally automated and provide real time feedback on scheduling and performance metrics.
We are always hearing about the demise of printed books in favour of electronic copies and the sustainability arguments about print being harmful to the environment due to deforestation balanced against the negativity of energy consumption from electronic devices. Today’s reality is that consumers can now choose how they want to be communicated with and can decide on the most convenient channel and medium, which is often a combination of both hard copy and a digital file.
Neil Falconer -Print Industry Strategy Consultant and MD of Printfuture.com
The consequence of choice and multi-channel consumption is that printed books will co-exist with their electronic counterparts for many decades to come. Ultimately it is the responsibility of the retailers, publishers and printers to make sure that books are manufactured and sold through the most environmentally sustainable supply chain possible and that is inevitably going to include, offset printing, digital printing and electronic formats.
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