Content Crossroads & Distribution Junction

If we see another large spike in fuel and paper costs in the coming year, publishers may want to look further into digital distribution and print-on-demand distribution to offset costs. According to Smith, the majority of manufacturers are absorbing rising fuel costs. “In rare cases are they are able to pass these costs on to their customers,” he says. However, when it comes to increased paper costs, most of the paper used by book manufacturers is customer furnished and owned.

“So it is a publisher cost factor,” Smith says. “This does, however, lead the publisher to push to offset their rising paper costs by obtaining lower manufacturing prices from the manufacturer.”

Gaynor claims that many publishers are turning to offshore printing as a solution to combat rising fuel and paper costs. “Outsourcing, outsourcing, outsourcing. I don’t know a publisher who is not at least exploring offshore printing and production as a means of reducing cost,” she says. “Also publishers are converting to XML-type production processes at a much quicker rate in order to realize the efficiencies and repurposing opportunities.”

Declining Bookshelf Space

Declining shelf space for books in stores resulting from situations such as Waldenbooks closing down several of its stores will lead publishers to investigate alternate forms of distribution in 2007. Borders Group Inc. executives talked about closing underperforming Waldenbooks stores in 2007 during the Q3 2006 Borders Group Earnings Conference Call. “In the past 20 or 30 years, including us and Barnes & Noble and others, having superstores out there definitely changes the role that a mall bookstore would play. You’ve had the Internet, Amazon, people like that, but yet the mall stores have not changed very much … In my mind, it’s just not logical that would still be exactly the right mix and format to take advantage of that space,” said George Jones President/CEO of Borders Group. “So we are going to be more aggressive with closing underperforming locations going forward.”