eBooks and on-demand--the new publishing economy?

The Wall Street Journal ran an article today about on-demand publishing. Like eBooks, on-demand has been the "next big thing" for many years, but it looks like it's finally finding a viable niche. On Demand Books, which makes the Espresso Book Machine, has sold 51 machines in 50 locations. They supply a $97,500 computer and automated binding and trimming machine that interfaces with a variety of printers.

The Espresso can be used to make available out-of-print and low-demand titles that would otherwise be unavailable. The cost of the Espresso, which is designed to be installed in bookstores, has been a big impediment to its success. It's been extremely difficult for bookstores to justify the cost of the Espresso based on the demand for low-volume titles. However, it's found a niche in college bookstores, where the prices of the books and other materials are much higher than in conventional bookstores, and it's possible to justify a $100K+ investment.

The rapid rise of eBooks may open up an unintended opportunity for devices like the Espresso. As demand for eBooks increases, print runs will get smaller, since publishers won't want to be stuck with large numbers of unsold copies of books. The fixed costs per print run won't change, so the delivered cost of the books produced per run will increase, which will drive even more buyers to eBooks. However, there will be some demand for printed versions of books for decades, so the ability to economically produce individual printed books as needed will be critical.

Publishers and even distributors will inevitably replace their existing printing and binding systems with "just-in-time" systems that can produce a few copies of a title as needed. Retail chains like Barnes & Noble and Borders could be reduced to little more than kiosks offering instant download of eBook titles and same-day delivery of on-demand print versions.

These new on-demand books may not be any more expensive than today's print books, since there will be no need to allow for returns. By and large, nothing will get printed that isn't already sold to a customer. The days of remainder tables, "stripping" (removing and returning the covers of unsold paperbacks for credit) and pulping books will be a thing of the past. We're still years from the "tipping point" where decreased print book volume makes on-demand printing more economical than large print runs, but the crossover is inevitable. Paradoxically, it will be eBooks that drive the market for on-demand printing.