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Books on Demand in Germany: What’s Holding Them Back?

BY ANDREAS WEBER

The European market is tradition-minded and hasn’t accepted paperback books for serious titles. Technical solutions for making hardbacks are still costly, so the adoption of on-demand production requires clever ideas and new business models.

"My God, that looks just like a real book!"

exclaimed a well-known German publisher four years ago at the Frankfurt Book Fair. He was observing a complete digital book production system from IBM. From the time the operator clicked on "Print," printing and delivery of a finished hardcover book required barely two minutes. That was a milestone, since book publishers had dismissed digital printing up until then as suitable only for "documents."

It is true that Xerox, which had exhibited at the Frankfurt Fair since the mid-1990s, was the pioneer in the field of printing books on demand. But at the time, "the document company" could produce only saddlestitched and perfect-bound literature – certainly valuable as so-called corporate literature and inexpensive paperbacks, but not competitive with hardcover books (which is what most Europeans, including Germans, still think of as "real" books). The Siemens Digital Printing Division in Poing, Germany (now Océ Printing Systems) had shown its high-performance system for book production as early as Drupa 1986. At subsequent book-industry events, Océ garnered the enthusiasm of many production managers, but not the publishers. Only book blocks were produced at these shows, not finished books.

Then, in 1998, IBM’s innovative approach to publishing figuratively "broke the sound barrier." IBM recognized that a proper understanding of the market was essential for digital book production. Publishers and readers didn’t want to give up the familiar casebound form of a book. They didn’t want to compromise on that, even if digital printing systems opened up new opportunities for keeping books up to date and personalizing their content.

One strength of digital printing lies in its speed, achieved by integrating multiple production steps, particularly in the bindery. With paperbacks, near-perfect inline production has been achieved. But there are still limitations in the production of hardbacks. Even the innovative Bookmaster 360 system from Bielomatik, just arriving on the market, breaks printing and binding into two separate processing steps (although it can still produce case-bound books at the rate of one every 10 seconds, each one with different dimensions and a different cover).

Still obstacles for digital book printing?

On the surface, it would appear that no obstacles remain to the implementation of digital book production. In spite of this, 94.5 percent of those responding to a recent poll about trends on the German-language DigitaldruckForum said that digital printing would not replace the classic (offset) book production process. More than 83 percent of these experts consider today’s digital printing technology for books on demand to be immature. Almost without exception (97 percent), they think that the finishing processes could be improved. (Data source: Questionnaire to the online community at Digitaldruck-Forum.org in October 2002. Total responses: 84, from publishing houses and production facilities.)

One particularly interesting result from the questionnaire was the response to the question "Has the marketing potential of books on demand been fully exploited?" Nearly all (99.5 percent) of the respondents answered "No." This answer makes it clear why the innovative on-demand approach to book production, in spite of its many advantages, is not making much headway: Digital printing requires new business models, for both the book printer and the publishing house.

The answers to the questionnaire must be seen in the proper context: In Europe, and particularly in Germany (the home of book printing), the majority of books are published as hardcovers. This is unlike the situation in the U.S. The trade association for the German bookselling industry, der Deutsche Börsenverein in Frankfurt, gave the following statistics for 2001: 10.4 percent of titles, comprising 11 percent of overall sales, were paperbacks. That means hardcover production had almost a 90-percent share of both titles and sales. The share of paperbacks has increased only slightly (about 2 percent) over the last five years. Clearly, books are considered premium products in Europe (and Germany), with an enduring value that causes people to take good care of them and collect them. This mandates that the highest production standards be maintained.

Another factor: The German book market is strictly regulated. List prices are enforced and discounting is prohibited. New hardcovers (text-oriented books such as novels and non-fiction) are mostly in the $20 dollar (or 20-euro) price range. Paperbacks ($7 to $12) appear only in cases where demand is strong, and even then, no sooner than two years after the hardcover edition. With professional books, which command higher prices, there isn’t much price difference: Whether paperback or hardcover, they cost $30 to $45 because the small editions (around 1,000 to 3,000 copies) keep unit costs high.

Given this background, it makes sense that people in the book-publishing industry should place such a high value on offset printing and hardcover binding. Digital printing undoubtedly has a role to play in the paperback market, where adhesive-based perfect binding is sufficient. But hardcovers require other binding approaches, such as sewn signatures. Equipment to do this kind of binding, online with digital printing, is just not available in a form that is competitive (in cost and in capability) with traditional binding equipment for offset.

What does it mean to say that marketing models for book-on-demand printing are lacking? In following up on this question, it becomes clear that:

1. The book market is not driven by technological innovation. Most publishers don’t look at technology as a strategic tool for creating a fundamentally new business model.
2. Production is viewed as a cost factor that must always be minimized, since marketing and distribution costs account for more than 60 percent of the overall costs. This is related to the fact that publishers do not sell directly in Germany. The publisher sells to the distributor, who then sells to the bookstores, who, in turn, sell to the final customer. In Germany, the bookstore gets 30–40 percent of the sale price; the distributor gets about 20 percent.
3. Until the quality expectations of the consumer change (that is, until a book is viewed as a fastmoving consumer good or even the information equivalent of fast food), digital printing will not be widely accepted.
4. The business models of the publishers are based on keeping the retail purchase price as high as possible. Today, high prices are always associated with the highest printing and production quality.

Innovative digital-printing service providers have adjusted to this situation. The company Digital PS

Druck AG (www.dd-ag.de), located near Bamberg in central Germany, offers complex homegrown software solutions that permit comprehensive analysis and production-management activities. The software provides, for example, an up-front determination of whether digital production and a print-on-demand workflow will be profitable for a given customer. The profitability depends on the print volume that can be achieved.

It is interesting to note that Digital PS Druck AG offers various book-production options (digital or offset printing, hardcover or paperback). The company’s software includes an online job-costing package that is available to clients in a password-protected section of the Web site. The job-costing package includes a job specification checklist. Using a Web browser, the client can specify production requirements down to the smallest detail (e.g., cover measurements for the hardcover binding). Using data such as format, page count, cover material and interior paper, the software calculates the total price and a number of other parameters (such as weight and binding strength) and provides the user with a visual image of the selected cover format as a trimming guide. For all parties – publisher, designer and printer – this provides an ironclad job description as the basis for production. Once the job has been configured and calculated, all that remains is for the checklist of user information to be completed. The order can then be printed out, signed, and mailed or faxed to the printer. Online transactions are not yet available, since the legal issues surrounding them are still unclear in Germany, and there are, as yet, no laws governing digital signatures.

Taking refuge: lucrative niches fordigital book printing

Innovative business models, like that which Digital PS Druck is successfully using, are isolated examples. As we noted above, the publishing industry is still wedded to its traditional ways. But even among the old guard, there are exceptions. A good example is C.H. Beck, a well-known German publisher with an integrated, state-of-the-art printing operation. It is one of the pioneers of short-run book production; an end-toend book-on-demand process has been set up that makes both business and technical sense. The emphasis is on producing book blocks on lightweight paper stocks. Digital printing is without competition when there is a requirement for frequent updates, and nearly 60 percent of C.H. Beck’s production is of books that are frequently updated. In addition to time savings, there are cost savings as well. Areas with costsaving potential include stocking costs, the cost of capital tied up in printed books, warehousing costs, and the disposal costs for excess copies. But to be successful overall, you need not only the right production technology, but also an optimally organized workflow: a common system for inventory organization and storage, clear guidelines concerning inventory minimums, a delivery process that includes confirmation, as well as the ability to do periodic cumulative billing for multiple jobs.

As before, problems remain in the overall reliability of book-on-demand installations as well as in specific bindery areas. In addition, the following limitations need to be noted:

• One bad sheet makes the entire book block unusable.
• Printing errors can raise costs substantially, and so can printing copies as proofs—a strategy which can only succeed if you charge for it. (In the ondemand business, it has not been customary to give the buyer a proof of any kind.)

Another recent development is the production of single copies in response to individual customer orders. The German book distributor Libri (which supplies about 3,000 bookstores in Germany, about 40 percent of the market) began its successful bookon- demand project in the "business-to-consumer" segment (publishers selling direct to their readers) years ago. The concept: Publishers and self-publishers can have their books produced in response to online orders. The books, which have been produced on Xerox equipment from the start, are delivered in a maximum of three days and are available almost anywhere in the world. For those who are interested, Libri offers an online calculation tool that helps the publisher calculate costs and potential revenues. Libri designed the system for mass-market publishing. These are not expensive art books and coffee-table books with lots of color. Rather, they tend to be higher- volume books like paperbacks, professional books and texts.

One also finds books on demand being produced in a hybrid approach. For example, a direct-imaging press can be used to produce covers in advance, at low cost but with high quality. Various finishing options can be applied, such as embossing and varnish. The book blocks can still be produced one at a time or in small batches on equipment such as the Xerox DocuTech or the Digimaster 9110.

The book-on-demand approach offers the opportunity for new services to establish themselves on the market. Book-on-demand GmbH (a Libri subsidiary) has already published over 6,000 titles in Germany and Switzerland via its Web site, www.bod.de. Authors, publishing companies, institutions and corporations make use of this service, increasingly in color as well as monochrome. Others, such as the Rhombos Press in Berlin (www.rhombos.de), have followed suit.

Recently, the Bertelsmann subsidiary Arvato AG Book-und-Print-on-demand has launched an ad campaign in the business and communications trade press. Its theme is "Individualized production using innovative printing methods." The printing and reproduction options are just part of a package that can include delivery, customer service, marketing, financing and IT services. Arvato is a $3.9 billion company, with 28,000 employees in 26 countries around the world.

Conclusion

The traditional book-printing business in Germany and in Europe can profit only marginally from digital printing. But digital printing can be profitable in nontraditional applications using new marketing approaches, embodying new publishing strategies that take advantage of new technology. These include:

1. Better production methods: The producers (publishing houses, corporations and production services) must find new, stable, high-quality production methods for the book as a medium.
2. Books as a corporate marketing tool: New, forward- looking marketing approaches for books on demand must be developed. That means devising creative approaches that utilize books, not just as the products of a publishing process, but as instruments of corporate communication. Company histories, non-fiction books about current events and the like are certainly attractive areas for opening up new markets.
3. Fast turn-around paperback publishing: The combination of Web and print could help writers, corporate publishers and publishing houses to find new customers. This would not be satisfactory to those who insist on the classical appearance of a hardcover book, but there are customers who are a bit more flexible. What they really want is information in a suitable format: well-structured content and "good-enough" production quality, at a reasonable price. TSR

About the Author
Andreas Weber is internationally active as a journalist, book author and communications expert. His company, @ndreas WEBer Global Communication GmbH, is located in Gutenberg’s home city of Mainz. He is also the founder and spokesperson for an online digital-printing forum, Digitaldruck-Forum.org. This forum concerns itself with the key topics and initiatives involving digital printing as a marketing tool.

Volume 2, Number 20 • The Seybold Report • Analyzing Publishing Technologies 15

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