Amazon Eyes Future with Print-on-Demand Publisher Buy

Placing a bet that the book-making industry will move away from traditional publishing methods to embrace the efficiencies of the Web, Amazon.com (Nasdaq: AMZN) said it has purchased a privately held print-on-demand publisher.

Amazon paid an undisclosed sum to acquire BookSurge, a Charleston, S.C.-based firm that already sells many of its books through Amazon.

BookSurge uses a print-on-demand approach, which uses digital technology to print paper-bound books only when ordered by consumers.

Small-Quantity Printing

The technique targets one of the major expenses -- and historical inefficiencies -- of the publishing industry. Traditionally, books have been printed in runs of several thousand copies, which often leads to large quantities of unsold books being sold at a discount or destroyed to take them off the secondary market.

It also makes it difficult for publishers to produce books for targeted audiences that are not sizeable enough to at least offer the chance of selling out an entire print run of several thousand copies.

"Print-on-demand has changed the economics of small-quantity printing, making it possible for books with low and uncertain demand to be profitably produced," Greg Greeley, vice president of media products for Amazon.com, said. "BookSurge makes it possible to print books that appeal to targeted audiences, whether it's one copy or one thousand."

However, print-on-demand has yet to be embraced by many major publishers for first-run titles, meaning that the most widely read authors' books are still available mainly through traditional means. Amazon might feel it can change that equation by lending its brand name to the print-on-demand arena.

At the Core

Some publishers have used print-on-demand to reach target audiences. For instance, BookSure titles already on Amazon include The Da Vinci Code translated into Arabic and other foreign-language titles.

BookSurge CEO Robert Holt said linking with Amazon will create "better opportunities for authors and publisher."

The move is seen as a way for Amazon to capture more revenue. Analysts noted that Amazon has long known how many books the smaller company sells since much of its revenue comes directly through the e-tail site. The purchase means Amazon no longer has to share the revenue and profits from future sales.

It's also a return to Amazon's original and core products of books, a foundation that has since been used to support a sprawling retail empire, albeit one that has suffered some growing pains, and attempting to leverage its reputation for strong technology and being at the forefront of trends.

Piper Jaffray analyst Safa Raschtchy told the E-Commerce Times that Amazon has only recently begun to respond to the competitive pressures it's facing. With success in e-commerce no longer considered a secret formula, but rather an easily copied model of strong customer service and competitive pricing, sites such as Overstock.com and eBay (Nasdaq: EBAY) have pressured Amazon's profits.

"The barriers to competing against Amazon have gotten lower," the analyst said. That's particularly true, he added, in the books, music and movies category where Amazon was once seen as the only place to turn online. "They need to do more to stay ahead."

(Not) E-Books

In some ways, the print-on-demand push might be the answer to what is largely seen as a failed effort to convince customers to buy fully digital electronic books, or e-books. Amazon and others had once had high hopes that digital book readers and other technology would catch on, since the Web is the perfect medium for delivering such digital content, since it completely eliminates the need to stock, store and ship such items.

Printing on demand eliminates the need to have warehouses full of books, since those ordered can go directly to the consumer from the printing press. However, it can't shake the need for shipping, which has been a sore spot for Amazon.

The e-tailer has said it's lost millions offering free shipping to customers in recent years but is seen as unable to end the experiment without causing shoppers to return to retail stores.