The Business of Bookselling: A Report on the 1998 Book Expo of America (BEA)

Technology trends and landmark lawsuits mark 1998 Book Expo of America.

Before delving into the types of books that were displayed, the ambiance of the show floor, announcements from the American Booksellers Association, and so forth, let's start with an in-depth look at the biggest news: a development that could completely change the face of publishing and bookselling, at least in the US and perhaps world wide.

Lightning Print

The show-stopper was Ingram's Lightning Print. Ingram is the largest US book wholesaler, with the finger in many other pies (for example, software distribution). Their entry into book printing will be greeted with fear by traditional printers, and their ability to vertically integrate book printing, warehousing, and bookstore distribution raises many publisher eyebrows. While the technology is extremely exciting, many publishers expressed concerns about the safety of their intellectual property; once it's in the system, what's to prevent Lightning Print from running an extra thousand copies or so and quietly passing them into the distribution channel with no tracking or revenue for the publisher? Also, since Ingram has been cited for poor service and unreasonable business practices by many independent publishers, concerns were raised about whether publishers would want control of the production and distribution processes to be under that same umbrella. Also, publishers wanted assurances that Ingram would be willing to pass books on to other wholesalers and distributors, and so far, Ingram has been reluctant to promise that.

Still, the excitement at the demonstration area, and at a seminar preceding the show, was palpable. Publishing consultant Gene Schwartz privately called the system "the Industry A-Bomb," and predicted significant impact on traditional printers, wholesalers, and others in the industry.

My notes on the Lightning Print system come from a seminar on the Future of Publishing, held the day before BEA by Publishers Marketing Association, as well as a visit to the demonstration booth:

Larry Brewster from Ingram explained that this Print-On-Demand (P-O-D) system uses toner, not ink (similar to a photocopier). Though P-O-D has been around for a while, three things combine to make it take off now:

1] Technological strides and price reductions: 4-color covers, "real book" feel, quality improvements.

2] Ability to search for any title on the Internet; stores' inventory is now unlimited.

3] Industry turmoil.

"This is not just doing an old process better; it's really a new way to make books, just as ATM machines were a new way to do banking. We're going to print and distribute in the same step. An order is received, it prints the next day and ships. There's no inventory carrying cost, no shipping to the warehouse--it's a new model."

While there is a set-up cost, Ingram will recoup it out of revenues--so there's no up-front cost to the publisher. "Once the costs are recouped, we send a check back based on units sold." Set up charges are affordable: $50 for a digitally-supplied cover, then .15/page. A bit higher if they have to scan it. Printing charges are .90 per unit, plus .13 to .15/page--so at the low end, a 300-page book costs $4.80 each. By contrast, a 5,000-copy print run of a book without color on the text pages might run about $2 per copy, give or take--but storage and shipping charges, as well as the need to tie up a lot of capital in inventory, make the Ingram system more appealing than it looks at first glance.

A publisher can order as little as 25 copies at a time, or as many as several thousand; the technology can produce even single copies of a book.

According to Brewster, publishers can use the system to:

  • Try out new titles and get them into Ingram's database automatically (thus making them easily available to bookstores)
  • Produce galleys for advance publicity, book club sales, and other pre-publication opportunities.
  • Engage in Just-In-Time inventory management by printing in units of 25+
  • Run small print orders of backlist (older releases)
  • Reprint books that have gone out of print, or would be about to go out of print if they had to be reproduced traditionally
  • Keep frequently revised titles current by producing no more than could be sold between revisions

    This process can be built into the lifecycle: A publisher can print galleys at Lightning, do a traditional print run, and then flip back to digital printing as the run is almost sold out.

    However, Brewster pointed out that some books couldn't work this way at all. Right now, for instance, the technology supports color only on covers, though analysts expect that to change within a few years.

    P-0-D is not new. Xerox Docutech and other similar print-on-demand systems have enabled a publisher to order minute quantities at a time for a few years now. However, as recently as two years ago, the quality was not comparable to traditional printing, and costs were prohibitive for most trade books. In the past, Xerox sold or leased its Docutech machines to printers and copy shops, but Xerox used the show to announce a similar in-house integrated system--though without the tie in to the distribution channel. In other words, Xerox, for the first time, is looking to actually produce the books for its customers. Ingram's system seems to be cheaper than many of its competitors, and is significantly less than the Xerox alternative. This vertical integration at both Ingram and Xerox, together with big strides in quality/price ratios, is the real story.

    Industry analyst Aron Trauring, a multimedia publisher and board member of Publishers Marketing Association, predicted on the PMA discussion group that the technology will rapidly spread out from Ingram and Xerox, to print shops with integrated databases and tight controls on the intellectual property entrusted to them. Eventually, these will be in corner copy shops.

    Another publisher, Peter St. James, predicts that as this technology spreads and as freight costs rise, book printing will be distributed across several sites. A publisher may do 1,000 copies in five different locations (perhaps in several different countries)--all with the same push of a button--rather than print 5,000 in one place and then ship them around the world. USA Today and other national newspapers already use this model.

    As if this wasn't enough to chew on, Paul Nelson, Publisher's Weekly Technology editor, believes the future of books may not even involve paper, ink, and printing. Book publishing, he says, is rapidly evolving toward the true digital age. ""I want to read a book on screen--not now, but the way it's going to be in 20 years." At that point, it will be as comfortable and portable as a book, and a good deal more flexible; data for many books could fit in a chipset--100 books in the size of a paperback--or you could even purchase a few chapters at a time and have it encoded in your unit. This technology is already here, called "smart ink." Reference books really work better electronically already. This will be great for publishers, who already control the licenses to the intellectual property.

    In the meantime, other technologies are already with us. For example, a chemical publisher could use the World Wide Web to show chemical reactions over time, something that isn't possible in traditional publishing. "Macmillan went digital and cut production time from 9 months to 11 days! They've refreshed their travel guides. Instead of updating every two years, now they update twice a year. Every word Macmillan publishes is on the Web, for free. People look it up and then they buy the book."

    Nelson bolstered his theories with a bit of history: "The modern book has had 500 years of development, and bears little resemblance to Gutenberg's product. Gutenberg's were 50 pounds, chained to a table, and used only by a church bishop. Making a book usable came later, with Aldus Minutius, the Venice-based printer (for whom Aldus software is named). In 1470, Aldus created readable type and a convenient size. The first novel took another century, until Cervantes...Before 1960, no one took paperbacks seriously as literature. In that year, Paperback Booksmith was founded and begin bringing classic titles to paperback. In 1997, they did over $2 million."

    Book Trends

    Walking the show floor, several trends were obvious. This must be the Year of the Atlas--several major ones are out from Hammond, National Geographic, and other publishers, and various map sellers were very much in evidence. The big New York publishers were present, and many of them had fairly large booths. Yet, even these booths were mostly low-key, with quiet, intensive meetings far outnumbering carnival barkers. The New York and Boston giants are pushing lots of fiction--and surprisingly few business books.

    Most of the business books I saw were from very small publishers, whereas last year, business books were featured all over the show. Political books were very much in evidence, but again, primarily from small houses.

    It's also a good year for sex. The show featured a surprisingly large number of sex books, ranging from a book called "The Best Sex on the Internet" to one on anal sex (even featuring an official BEA author signing). Titles of gay/lesbian/genderbender interest were all over the place, including fiction, erotica, personal reminiscences, and scholarly works.

    Multiculturalism may be a dying trend, at least where people of color are concerned. Books on ethnic identity were dominated by those slanted toward Eastern Europe; I saw much less about Latino and African-American culture, though there were definitely a number titles in each genre.

    There were hundreds of books I'd love to own and read, books that sing out "quality." But there were also a few hundred that made me wonder why anyone would sacrifice trees to print them. Lots of attempts to capitalize on fads: from Beanie Babies to Seinfeld to Princess Diana, none of which is likely to be remembered in five years.

    Cover art and design continue to evolve--though many of the UK and European titles still use very bland covers.

    There seemed to be a lot fewer foreign publishers, and only one from Japan (not even in the foreign publishing area, but way out in the boonies with the religion publishers). In the foreign area, it was harder to sit down and discuss a rights deal without an appointment, especially in the foreign section. China was there, but only to sell,, not to buy. Many publishers from various nations did not attend, and left the country coordinators to network for them. Coordinators varied in their affiliation: from Germany, Frankfurt Book Fair. Others, either a private publishers association or someone from a government trade office. This year, many more foreign publishers have e-mail contacts on their business cards--a very welcome trend!

    News From ABA: Two Crucial Legal Actions

    The American Booksellers Association, who used to run the show before turning it over to Reed Expo a few years back, made some important announcements as well.

    On the heels of a successful 1994 lawsuit (settled in 1997) against the largest publishers for favoring chain bookstores over independents, the ABA--and more than 20 member bookstores from 16 states, including such literary landmarks as Denver's Tattered Cover--have filed suit against Barnes & Noble & Borders (including B. Dalton and Waldenbooks) in U.S. District Court.

    The suit alleges a host of unfair trade practices that provide favorable terms to the two chains--who, combined, own more than 2000 stores in the US. Specifically, the chains are accused of securing extra discounts, special terms for new stores and expansions, unfair subsidies, a more privileged set of co-op advertising terms, and better credit terms than those available to independents. Furthermore, the suit addresses the social costs of concentrating so many of American's book-buying channels in the hands of a tiny group of wholesale book buyers--a narrowness that "threatens to undermine the diversity of book retailing and to narrow the choices ultimately available to consumers...An increasingly dominant chain presence will reduce price competition," as well.

    In another landmark legal action, ABA has also filed an amicus brief in support of bookstore First Amendment and privacy rights. Kramerbooks, a Washington, DC independent bookstore, was subpoenaed by Whitewater prosecutor Kenneth Starr, who requested a list of books purchased by Monica Lewinsky. ABA, along with eight other national associations, including the Association of American Publishers, the American Library Association and the Freedom to Read Foundation, joined the motion to quash the Starr subpoena. The American Civil Liberties Union and the American Civil Liberties Union of the National Capitol Area filed a separate amicus brief. ABA has also been raising funds in support of Kramerbooks.

    Shel Horowitz is the Editor of Down to Business, Global Arts Review, and Global Travel Review magazines at http://www.frugalfun.com. A writer and marketing consultant, he is the author and publisher of Marketing Without Megabucks: How to Sell Anything on a Shoestring and The Penny-Pinching Hedonist: How to Live Like Royalty with a Peasant's Pocketbook. To read his report on the 1997 BEA, please click here.


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