Ready for the Revolution

Features

Ready for the Revolution Paul Hilts -- 1/1/01 *Printers are finding new roles--and they have a plan to help publishers and retailers adjust, too* Last month, Vista Computer Services executive v-p John Wicker made some bold predictions about the future of publishing. Perhaps the scariest of all, he said, was that within 10 years, 50% of all published products will be available only electronically. If this comes to pass, the industry as a whole is in for more massive changes, like those faced this last decade. In 1991, chain superstores overturned the century-old small, independent retail model of the industry. In 1995, Amazon.com demonstrated that having any inventory was a bad idea; and in 1998, electronic books overthrew the notion that books had to be distributed physically at all. What other industry has been confronted with such sweeping changes three times in 10 years? The book business as a whole will no doubt adjust, as new roles and new products for readers develop. But at particular risk are the book printers. What is the printer's role in a digital world? To help answer that question, Printing Industries of America, the printers' trade association, commissioned Standard & Poor's DRI to study the printing industry and report on the outlook through 2006. Its previous two outlook reports, 1990's Printing 2000 and 1994's Bridging to a Digital Future, helped printers prepare for business challenges unlike any they'd known. Vision 21: The Printing Industry Redefined for the 21st Century was released last month to an anxious industry. To quote the new study, "The evolutionary changes of the past are being eclipsed by a metamorphosis that is redefining the industry's role as an integral player in a multimedia digital world." DRI expects the U.S. economy to continue growing over the next six years, though at a slower pace than that of the previous six; print sales, however, will grow at a slower rate than the GDP, as they have since 1991. "E-books will become an increasing threat to traditional books as e-book devices improve and decline in price," the report states, noting that digitization will free book content for other uses. Successful printers will look for opportunities to be a part of this process, becoming "publishing partners, not just printers." The need to reduce the cost of returns will drive retailers and publishers to new methods of distribution, including print-on-demand, the study says; and small and medium-size printers might profit most from POD. Integration, Not Better Bits Brian Kullman, v-p, supply-chain strategy, for R.R. Donnelley & Sons, the biggest book producer in the U.S., delivered a commentary at the conference where the report was released, suggesting a method to put Vision 21 to work. Printers must integrate their businesses, he maintained, polling their suppliers and their clients to learn which new technologies and processes really help in their businesses, and then make sure that what the printer d s for them is "reliev[e] our customers of the need to be both a publisher and a supply-chain manager." Kullman explained that seeing the whole industry as a partnership is the best way to protect the value added by printers. "More integration... results in less waste, shorter cycle times, greater productivity, more flexibility and the kind of innovation that can... relieve pressure on profitability for all of us, even in a slower-than-GDP growth environment. We see Vision 21 as a call to action," he continued, "for us to integrate the manufacturing process; to understand the print buyer's needs; to master the print economics of reducing job turnaround times, shortening press makeready and cutting down on waste." John Conley, Donnelley's v-p of strategy and new business development, described ways that the company is carrying out Kullman's and Vision 21's prescriptions. "The first thing is to be not print-centric, but service-centric," he noted. "The idea that is talked about all over the industry is ˜cross-media publishing'--creating material that can be expressed in many ways: print, Web pages, electronic books. Publishers looking at cross-media products need media-neutral storage and production... that can be made into whatever products bring revenue, and we want to make it as easy as we can," Conley said. "The focus for trade publishers is still print--we don't see that going away soon. El-hi is going electronic, with teachers' guides and other ancillary products, but will take a while yet. College texts is where you see the biggest change. The base product is still the textbook, but coursepacks and other alternative products have had double-digit growth rates for several years," he pointed out. "This changes the whole business for both the author and the publisher. What level of granularity should a text be written at, so the pieces can be taken out or added to? And the publisher has to consider that there'll be a number of models for the different disciplines, because people learn chemistry one way, and English another. They've got to develop a whole curriculum based on what helps students learn better," Conley said. Craig Bauer at Donnelley's Allentown, Pa., digital print center has been doing just that. For more than a year, Bauer has worked with Thomson Learning on a custom-publishing program that opens up all of Thomson's texts for reshaping into individualized coursepack/books. Each professor selects chapters from any of Thomson's products, and the Allentown plant organizes, digitally prints, binds and delivers the text specific to the teacher's syllabus. "It's also been no small deal to get everyone to standardize the metadata form for tracking all the different parts and products," Conley notes. The ONIX [online information exchange] system has been a boon for unifying the entire publishing world, rapidly gaining support from publishers, manufacturers, distributors, and retailers. The Short-Run Future If all printers are endangered by the digital world, short-run printers are most at risk. POD may not touch the million-book-per-day mass market printer, but it g s right to the heart of the business that averages runs of 2,000 to 5,000. Malloy Lithographing Inc., one of a cluster of short-run printers gathered around Ann Arbor, Mich., this past summer considered the digital threat to its business and contacted a nonprofit consulting group called Future Search to seek out solutions. The program Future Search ran at Malloy so closely foreshadowed the Vision 21 message that it now seems almost prescient; it could well be a model for how other printers can put the vision in Vision 21 into practice. Although Malloy is a family business (with paterfamilias Herb Upton serving as chairman, eldest son Bill as president and another son, J , in the sales department), it's no slouch technically. The production department is all digital CTP; early this year, the company got rid of its last prepress camera, and the prepress "proofs" are actually POD books with a simple tape-and-glue binding. Bill reports that about 55% of company output is trade books, 40% is college and elhi texts, and about 5% scholarly and "other." Press runs average about 4,500, about 50% higher than most of the Ann Arbor short-run group. The Future Search plan invited 30 business partners and clients, including publishers, distributors, retailers, prepress houses, paper and press manufacturers, and technology experts, to discuss the printing business and suggest programs that Malloy might use in the digital world. Most interestingly, the advisers included competitors John Edwards, president of Edwards Bros., the original Ann Arbor short-run printer, and still largest of the group, and Chuck Nason, president of Worzalla Publishing Company of Stevens Point, Wisc. Bill Malloy reports that he started with eight proposals for the Future Search group to examine and suggest actions for. They were, first, to investigate ultrashort-run (USR) and on-demand printing, with a view to adopting some of the machines and practices; next, to look into delivering content in multiple formats, including electronic books; to find new ways "to delight the customer," both with new output formats and with customer-education seminars; next, to improve cycle time and communication with customers; to improve training, which will improve quality of products and services; to improve the work environment to help retain skilled employees; to look into redefining partnerships with suppliers and customers; and, finally, to change the name of the company, dropping "Lithographing" to reflect the company's changing services. The company defined the people most affected by those changes as "stakeholders" in the Future Search process, and broke down the attendees into discussion groups by stakeholder interest. After three days of discussions, the stakeholders set up working groups to continue the process in the most fruitful areas. These working groups now hold monthly meetings, with communications by e-mail for out-of-towners. The group on ultrashort-run printing has been very active, and has suggested an area for developing new partnerships. "We sent a survey on USR to 72 publishing customers," Upton reports. "So far, 38 have responded--a pretty fair rate. More than 90% indicated they saw it as a plus if their traditional printer also offered USR. What's interesting is the breakdown of the print runs they are looking for. Those respondents together publish more than a quarter of a billion pages using ultrashort run--but three-quarters of that is done in runs of 200 to 500. Altogether, that supports what we'd been leaning toward from the beginning--that we're better off defining our minimum not as run-length of one, or even 20 copies, but to start at close to 200." Karl Pohrt, owner of Shaman Drum Bookshop in Ann Arbor, was a Future Search participant. Pohrt, who 25 years ago owned a publishing company called Bear Claw Press, believes that many niche titles go unpublished, and textbooks go unsold, because of a lack of communication from publisher to printer to retailer about consumer interest and title availability. He thought about going back into business in a limited way as a publisher of these niche titles, Upton says. "Karl sees the opportunity to work with Malloy to keep these titles and the temporarily out-of-stock textbooks available through ultrashort-run printing. They would like to work with us to develop a business model/relationship. We hope to get something going in this direction by spring." The training working group is moving ahead as well. Chuck Nason sent his process manager for continuous quality improvement, Ron Blaha, to consult with Malloy. "Worzalla has used the ISO 9000 method to see where training will improve quality," Upton says. "You look at what kind of mistakes you make most often, or places where you've had injuries, then target those areas for training efforts." The point of the Future Search conference was not merely to make a single report, Upton concludes, or to begin an unending soul-searching process, but a combination of the two, suggesting creative means to reshape Malloy for the new digital world. "The publishers aren't all doing these new products yet, but they are looking at them; they want to be ready when the time is right for them. After Future Search, we have a mandate. We know what we must do over the next several years to help publishers get ready."