Ingram has long been thought of as the book industry's quintessential middleman, distributing publishers' books and other products to thousands of accounts. But over the past five to 10 years, the company has invested tens of millions of dollars to become what Skip Prichard, president and CEO of the Ingram Content Group, called the "centerspoke" of an industry in transition. To meet its mission statement of "helping content reach its destination," Ingram's strategy is to offer publishers whatever services they need to operate more efficiently.
The switch in operating philosophy "is more nuanced than simply moving from print to digital," Prichard said. While digital is growing rapidly, Ingram continues to invest in print technology to maintain its leadership position in a segment it all but invented: print-on-demand. Its Lightning Source division now has 4.4 million titles and has added more titles this year than at any time in its history. "We've seen an explosion of titles," Prichard said, attributing that to a number of factors: traditional publishers doing shorter first printings and reprinting using POD; the growth of aggregators that print public domain titles; more self-publishing; and greater use of POD by academic presses. Lightning's La Vergne, Tenn., facility has 11 printers with two more on order, and Lightning has plants in Allentown, Pa.; Milton Keynes, in the U.K.; and a joint venture with Hachette in France. Late last week, Ingram announced plans to open a new Lightning plant in Australia in June to serve the Asian-Pacific market.
Lightning's proven ability to do short-run printing was an important factor in Ingram's new agreement with Macmillan last week, under which Macmillan will use Ingram's print-on-demand and distribution infrastructure to manage the publisher's traditional inventory and POD needs for long-tail titles. Macmillan senior v-p and COO Peter Garabedian acknowledged that Ingram does short-run printing and fulfillment better than his company and believes the agreement eliminates any physical constraints to Macmillan's publishing program as digital publishing becomes more important to the industry.
Prichard is very excited about the Macmillan deal and believes it will be the first of many with traditional print publishers as they look for ways to contain costs as they operate both print and digital businesses. "We expect to take over more publishers' back-end operations as they move from print to digital, and business models change like never before," Prichard said. As digital publishing commands more resources, publishers will want to move the management of slow-moving titles to Ingram, freeing warehouse space and "turning fixed costs into variable costs," Prichard believes. Serving as the back end for publishers as well as Ingram's still rapidly growing direct-to-consumer business centered around fulfilling Internet book orders is why Prichard predicted that Ingram's print sales will increase in the years ahead.
Still, the print business is a mature market, while digital publishing offers more opportunities for growth. Ingram has recently completed an overhaul of CoreSource, its digital management and distribution system that now houses 1.5 million digital assets. About 50 publishers (including Penguin and Macmillan) are using CoreSource to help manage the digital distribution of e-books. Among CoreSource's attributes is its ability to keep track of pricing questions (including agency vs. wholesale accounts) and rights plus metadata changes. In the academic market, Ingram is planning a more aggressive push for VitalSource, which now has 3,000 e-textbooks and approximately one million registered users in the U.S. VitalSource also powers a number of digital textbook platforms, including CourseSmart and Dynamic Books.
Blending Ingram's print and digital capabilities was one reason Prichard led the reorganization of the company 15 months ago, a process that combined three businesses—Ingram Book Company, Ingram Digital, and Lightning Source—into the Ingram Content Group. The move centralized all of the departments of the three separate businesses and has made it easier for customers to work with Ingram, whether for print, digital, or a mix of services. "This has been a transforming time at Ingram," Prichard said, "but we are having better results, and they are pointing us to where the future is going."