The future is coming early to college bookstores

The trend toward print-on-demand books in college bookstores is gathering momentum. Last month, I wrote about the Espresso Book Machine, and now Hewlett Packard is getting into the act. Both Arizona State University and the University of Arizona have installed print-on-demand systems in their university-owned and operated bookstores. ASU is using the new HP system, while U of A has used an Espresso Book Machine for a year. (Portland State and the University of Kansas are also testing the HP system in their bookstores.)

The biggest goal of both universities is to drive down the cost of college textbooks. In the three largest Arizona universities, students will spend an average of $3,200 for textbooks and supplies over four years. Nationally, the average price of new textbooks went up 12% in 2009, far faster than inflation. Only a small selection of titles are available for print-on-demand at the two universities, but according to Dennis Mekelburg, the associate director of ASU Bookstores, if his school can replace conventional printed textbooks and materials with print-on-demand for 5% of its courses, students would save $500,000 per semester.

McGraw-Hill, John Wiley & Sons and Cengage Learning are supplying a small selection of their titles to ASU for print-on-demand, and the savings can be significant. One Marketing instructor at ASU switched from a conventionally-printed textbook and workbook that sold last year for $250 new to a softcover version of the same textbook and a workbook printed on demand, together priced at about $62.

In the long run, I believe that the most textbooks will be sold as electronic versions, and print-on-demand will be used to provide paper copies for special situations. The sophistication of eTextbooks and the devices used to read them is increasing so quickly that paper textbooks will soon be considered relics.

One big question is what the impact of these changes will be on the bookstores themselves. To date, the print-on-demand phenomenon seems to be limited to schools that own and operate their own bookstores. Publishers are demonstrating a willingness to negotiate better deals directly with colleges and universities, and some schools are in turn showing a willingness to cut the private operators of their bookstores out of the channel in order to lower the prices that their students pay for textbooks and materials. (In the U.S., the largest private college bookstore operators are Barnes & Noble and Follett.) If the college bookstores no longer sell textbooks, or no longer make any money selling them, what will be the role of the private operators? Probably not much. In fact, I wouldn't at all be surprised to see general retailers, anyone from 7-11 to Wal-Mart, compete for the contracts to run these "bookstores". They're likely much better positioned to sell general merchandise than the existing private bookstore operators.

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.