Turning Bad Books into Big Bucks

"We publish a huge number of really bad books,” admitted Bob Young, the Canadian entrepreneur who founded the digital book publisher Lulu.com in 2002. But that's in keeping with Young's original vision for Lulu, which he sees as democratizing the publishing process. Rather than publish hundreds of thousands of copies of a few books, Lulu's mission is to publish 100 copies of 100,000 books.

The formula appears to be working. After posting sales of $1 million in 2004, Lulu is heading toward revenue of $30 million this year, according to Young, and the company is adding staff and publishing partners at a rapid pace. By the end of 2007, Young expects to have a worldwide staff of about 110 and offices in 12 countries. In addition, Lulu expects to sign printing agreements with companies in at least two countries. “International expansion is a key to our growth plan,” said Andrew Pate, v-p of global fulfillment at Lulu. Already, about half of the visitors to the lulu.com Web site are from outside the U.S.

Lulu's business differs from other online self-publishers in that there is no up-front fee for customers who simply want to print a book and can provide the company with a digital file. Lulu, which embraces a true print-on-demand model, generates its revenue by taking a 20% cut of the list price of a book after all production costs have been deducted. To help authors determine a minimum price, Lulu provides an online calculator, but authors are free to price a book as expensively as they want. Like other online self-publishers, Lulu offers additional services for a fee. One of its most popular options is the Published by You program, through which Lulu charges $50 for authors to obtain an ISBN.

The vast majority of Lulu's sales come through lulu.com. “Retail is still a low percentage of sales,” said Pate. About one million people have signed on as members, with about 60% of those buying an item from the site and 40% using the site to create a product. Pate said 80% of its orders are for one copy of a book. Subject areas that sell the best are education and niche topics. Instructors at a number of community and junior colleges have used Lulu to create their own texts, Pate said, while a book on starting an online store, E-Start Your Web Store with Zen Cart, was the overall top seller last week. Although Lulu creators have sold more than 1.2 million books since the company launched, Young doesn't see his company as a threat to traditional publishers. “We're not trying to get books to a mass market,” Young said. “We're trying to give aspiring writers a chance for their books to be seen.”