By Cary Sherburne, Senior WTT Editor February 22, 2007 -- ... more recently, Lightning Source announced that it would be opening a second manufacturing facility in the United States. WhatTheyThink checked in with Lightning Source CEO Kirby Best to get the scoop behind all of this activity and an update on Lightning Source's strategic vision for this exciting market segment.
WTT: Kirby, as always it is a pleasure to speak with you. The last time we spoke, you indicated Lightning Source was producing about a million books a month. What type of volume are you producing these days?
KB: Our volumes haven't changed that much. When we spoke at the end of last year, we were ramping up for the Christmas season. But volumes haven't dropped off, either. What we are really seeing now is phenomenal growth in the number of titles coming into our digital database from the larger publishers?titles that we know have a certain velocity already. That is the real growth story. Ultimately, titles will drive how much volume we do in the next little while, especially the titles with better historical velocity.
WTT: How many titles would you say you have in your digital library at this point?
KB: It is a moving target, but there are about a half million titles in our library at the present time.
WTT: And how many publishers do you have on board these days?
KB: About 4,500.
WTT: When new titles come in, where are they in the life cycle?
KB: That is the fun part. It is a great mixture of frontlist and backlist titles, and a better mixture all the time from traditional and non-traditional publishers. We are currently at 63% traditional and 37% author services in terms of the books that are actually printed. The bottom line is we have now gotten over the hump and publishers now understand the value of on-demand printing and where it can fit in their business model. We don't need to spend a lot of time explaining it anymore.
{snipped}KB: Customers were demanding better halftones in the black & white work, and we carefully watched the development of all of the printers on the market. In the end, it came down to IBM and Océ, and Océ, quite frankly, was developing a better product. It was a tough decision. We had been with IBM for nine years, and the decision to move to Océ was not taken lightly. The fact of the matter is that our analysis showed that the Océ presses print a better halftone. We will leap to an even better halftone with the next upgrade in March. We still have some of the IBMs and will be replacing them as needed. So the acquisition of the Océ presses is a combination of adding capacity and retiring IBMs.
WTT: What about color?
KB: The Océ presses are constructed to eventually print in four color, but Océ is not there yet and their work continues. . While we are not currently using the Océ machines for color, we see the 9000 producing a high grade ?business? color in the future, which was another feather in Océ's cap that helped us make the decision. In terms of color, we expect to put 10 web-fed color presses and five sheetfed color presses in the new plant.
WTT: Are you seeing new applications for color, then?
KB: Absolutely. We have entered into the color book and photo book markets, and we feel they are going to explode twice as fast as the black & white book market did. Color books are very difficult for a publisher to produce in short runs cost effectively, and our short-run capability opens tremendous new opportunity for them. In terms of photo books, this is a new product area that allows consumers a new way of showcasing and sharing their photos. Instead of having your photographs printed at Wal-Mart or Walgreens, or producing them at home on a photo printer, you can incorporate them into a beautiful hardcover book, commemorating soccer teams, birthdays, anniversaries, family reunions, all sorts of important life events. And you can have a beautiful, sewn hardcover book for about $30.
WTT: How does Lightning Source fit in?
KB: We divide the industry into three buckets. The first is the traditional big boxes?Walgreens, Sears, Wal-Mart?where you might take photos for processing. In the second bucket, are companies who have written software that allows photographs to be imposed into a product. A lot of these are online. And in the third bucket, are companies that actually make the products, such as a mug, mouse pad or photo book. Shutterfly, as an example, operates in all three areas. We only want to operate in the final bucket, and we are working with software providers to incorporate a ?powered by Lightning Source? logo into their software, making us the default producer of these books. One provider in Europe is producing more than 6,000 photo books a day, and these companies need the scalability of Lightning Source.
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