As part of our new report, Digital Platforms and Technologies for Publishers: Implementations Beyond “eBook,” we interviewed a number of industry visionaries. The following is a summary of a discussion between Lulu’s Bob Young and Gilbane’s Steve Paxhia.
Bob Young: Lulu—Next Steps
Bob Young is the founder and CEO of Lulu.com, a premier international marketplace for new digital content on the Internet, with more than 1.1 million recently published titles and more than 15,000 new creators from 80 different countries joining each week. Founded in 2002, Lulu.com is Young’s most recent endeavor. The success of this company has earned Young notable recognition; he was named one of the “Top 50 Agenda-Setters in the Technology Industry in 2006” and was ranked as the fourth “Top Entrepreneur for 2006,” both by Silicon.com. In 1993, Young co-founded Red Hat, the open source software company that gives hardware and software vendors a standard platform on which to certify their technology. Red Hat has evolved into a Fortune 500 company and chief rival to Microsoft and Sun. His success at Red Hat won him industry accolades, including nomination as one of Business Week’s “Top Entrepreneurs” in 1999. Before founding Red Hat, Young spent 20 years at the helm of two computer leasing companies that he founded. His experiences as a high-tech entrepreneur combined with his innate marketing savvy led to Red Hat’s success. His book, “Under the Radar,” chronicles how Red Hat’s open-source strategy successfully won industry wide acceptance in a market previously dominated by proprietary binary-only systems. Young has also imparted the lessons learned from his entrepreneurial experiences through his contributions to the books “You’ve GOT to Read This Book!” and “Chicken Soup for the Entrepreneur’s Soul.
For many years, authors who were unsuccessful in getting their books published by a commercial publishing company could underwrite the costs of publishing their books and sell them through “vanity presses.” It was rare that books published in this manner ever recouped the author’s investment and earned a profit.
Bob Young admits that when he was in college that he never fully appreciated the writings of philosopher Jean Paul Sartre. However, one of Sartre’s teachings—“We see the world the way that we expect to see it”—stuck with him. This passage helps explain how established practices and entities become so entrenched. Yet in 2002, Bob Young had an idea that would attack the established policies and practices of the book publishing industry. The industry had consolidated tremendously in the previous decade, and the distribution and retail networks changed dramatically. These changes have had a profound impact on potential authors. The reduction in the number of publishing entities has resulted in it becoming more difficult for authors to get their works published. The publishing company may already have a similar title or be unwilling to take a chance on an unpublished author. Sometimes, a book is written by a prominent author but the market niche is too small for traditional publishers to serve. These phenomena leave a significant number of high quality books without a publisher.
The publishing industry and its distribution network were becoming more digital. Another of Young’s favorite philosophers points out that when new media take prominence leaders in the previous medium often fail to succeed. Digital technologies are now used to create all types of content and the move towards digital distribution networks, as demonstrated by the popularity of Amazon.com and its peers, opening up markets for these books.
With the goal of allowing every author to have access to a professional publishing platform an extensive sales and distribution platform, Young’s idea became a company named “Lulu” and has evolved and thrived during the past six years. The company now has three main product lines:
- Print—books, brochures, manuals and materials for business solutions
- Photo Creations—calendars, photo books, art and images
- Social Networking–marketing, commerce and exposure via weRead, the most popular social book discovery application, allowing readers to catalogue, rate and review books.
The value proposition is very simple and appealing to authors. Lulu.com presents authors with total editorial and copyright control with additional protection provided from the Lulu.com backend. They make money on their projects with an 80/20 revenue split (80% for the authors) and by Lulu.com providing a unique on-line sales and distribution system, a viable business model for the current economy and beyond.
Powerful search engines and social community applications help match willing readers with niche titles. Content on Lulu.com is easily accessible—perfect for niche communities searching for specific topics. Lulu.com is home to a new economy, a digital marketplace of buyers and sellers, where sellers are selling “intellectual property” and buyers buy the intellectual property in either a physical or digital format. Lulu.com allows for personalization and customization for individual or business needs.
During the 2009 O’Reilly TOC Conference, Jason Fried of 37signals described the book that he and his colleagues had written based on lessons learned from creating and servicing their successful project management and collaboration product named Basecamp. They published their book with Lulu.com and report sales of almost $500,000 in the last several years. This enabled them to reach number three on the Lulu best seller list at one point. Ideally, this story would have a happy ending and they would publish their next book with Lulu.com. Alas, the success of their previous book motivated a traditional publisher to offer them a significant advance for their second book. The offer was too tempting to refuse. They now have to hope that the traditional economic model with 10-20% royalties will generate more than Lulu.com’s 80-20 split. In essence, they are wagering that the traditional publisher will be able to sell at least four times the number of books that Lulu.com would have sold.
When asked about this, Young was nonplussed. He simply stated that it was his goal to publish their third book and to make them loyal authors in the future. It is his number one goal to help his authors become successful. He believes that discoverability is the key to helping his authors sell more books. Hence, he acquired weRead, the most popular community of readers. This technology helps readers find, read and rate new books on topics of interest to them no matter what the genre or how small the niche. The connection between weRead and e-tailers such as Amazon forms a powerful combination of capabilities that erode the advantages once monopolized by traditional publishers and bookstores. For many books, Lulu.com’s print on demand publishing and distribution model is faster, cheaper, and more efficient than the traditional publishing model, and is much less risky.
Lulu also offers authors publishing templates and a set of tools to create Websites, storefronts, widgets and blogs for their books. While these are self-service offerings, they further erode the service advantages provided by traditional publishers. The service has been so successful that new small publishers are using Lulu.com as a platform for their own publishing companies. Other publishing companies are using Lulu to keep books in print once the current print run has been exhausted.
Young believes that there are many books available at Lulu.com that are superior to those published by traditional publishers. The key is to help each book become discovered. He concludes “we’re not in the business of choosing the best books to be published, we give authors the technologies and services to be successful and let the market decide which books are the best.” The type of content that Lulu supports is continuing to expand. Lulu just announced the acquisition of Poetry.com and has rebranded it to Lulu Poetry.
This is a very disruptive approach to publishing. The change to digital development and the increasing popularity of eBooks combined with the increasing market share enjoyed by e-tailers makes Lulu.com’s strategy very powerful. We expect to see this model gain greater acceptance as economies offered by print on demand drive up the cost threshold versus long run printing. Lulu is the established leader in this segment which, according to Sartre, bodes well for the company’s future.