Industry report after industry report tells us that printers of all sizes want to become photo book printers. Frank Romano and his students at RIT authored a report commissioned by Canon, The Insight Report: Digital Printing Directions (PDF Link), which indicated photo book printing is a key application for digital printers.

When asked, "Where do you expect to derive revenue in digital printing?" more than 88% of the respondents in North America said "photo books."

[caption id="attachment_1107" align="alignleft" width="139" caption="John Perez, CEO, RPI"][/caption]

Today John Perez, CEO of RPI, fills us in on his path to becoming a "photo book printer" and talks about the manufacturing workflow needed to deliver millions of books on demand. Tomorrow, in Part 2, John will talk about how he is differentiating RPI from other digital printing companies offering print on demand.

While nearly every digital printer is looking to photo books for revenue, it's not an easy business to be in. RPI, located near Seattle's SeaTac airport, has perfected the process and will make more than $28 million this year selling 1.3 million photo books and more than 1 million units of stationery and greeting cards.

A visit to RPI opened my eyes to some of the most beautiful printing I've seen in a long time! I've been in plants that produce tremendous images; florals, jewelry, and scenery for catalogs and promotions.

This is the first time I've seen a flow of products - nearly each different from the next - where the contents were so varied and so personal. And where the layout template designers, the pressmen and women, and the bindery staff labor anonymously to deliver very special works of art.

WTT: Your background is software and you've been involved in a number of software startups here in Seattle. What made you decide to make a move into the printing industry? There is still the perception that printing is NOT a high tech industry.

JP: It's true; you can still go into print shops and see an old world kind of craftsmanship. We have a digital printing partner that is also in the bookbinding business, actually the book repair business. They take old textbooks with worn out bindings and rebuild them.

There you see the craftsmanship that you would expect in a print shop that makes books. There's even an old fellow with a white beard sitting in a corner who repairs expensive antique books. It looks like things haven't changed in 150 years.

And yes, I had that picture of printing in my mind when I came here.

But in the world of digital printing, everything's computerized and automated from the time that Suzy Q in Oshkosh clicks her mouse on the SnapFish or Blurb website to order her photo book, until the last page of the book block rolls off the press, no human hand touches it. We have the ability to interface in real time with our partners' websites so we can transfer orders, preflight, and prep the files automatically, and send them directly to our press queue.

[caption id="attachment_1102" align="alignleft" width="180" caption="Kenny Jordan, Saba Ali, and Adrian McAdory"][/caption]

In our shop, our workflow is built on a proprietary publishing platform, PrintFlo, which we developed internally. There are about 14 steps in the manufacturing process and computers monitor every step.
Every element of every book is barcoded and we track each product through each step of the process to ensure that the item is manufactured correctly and to our quality requirements.

In the end, the finished package has its own barcode and the shipping label is automatically generated; we're done.

We couldn't do our business without such a high degree of automation and we've dedicated resources to make that happen. Ten percent of our staff are software/hardware people that are managing day to day operations and constantly enhancing our platform. To move to an even higher degree of automation we're talking with a European company about building a robotic factory.

WTT: There is another company that we could describe as "a leader in automated, mass-customized manufacturing and fulfillment," and that's VistaPrint. How is RPI similar to and different from VistaPrint?

JP: We're very similar from the manufacturing perspective. We are both highly automated print-on-demand manufacturers that make customized products.

[caption id="attachment_1106" align="alignleft" width="118" caption="Jamal Harris, Bindery"][/caption]

Where we are certainly different, is that you will not see an RPI branded website out there. We are, and continue to be, a B-to-B company. On the other side of that equation is our B-to-C partner. Another difference between us is that VistaPrint primarily sells to small businesses, though I'm sure they sell to some consumers too.

In the broader view, we're very similar to VistaPrint. We didn't wait for someone else to have a good idea; we took an idea and ran with it. We used to be the kind of printer who waited for someone to have a good idea and get something going. Then we would sidle up to them and say, "Can we print for you?"

We are both working to grow a new market and to do that RPI has moved beyond simply being a reliable backend printer to providing complete end-to-end solutions for our partners. Our solution offering includes product designs, marketing and software in addition to our fulfillment and logistics services.

WTT: Your website describes your company in a most unusual way. It's not often that words like "high tech digital," and "Internet-based social expression and personal publishing services" are used to describe a company that is a printer at heart. Your thoughts?

JP: Rather than just looking for customers to provide printing services, we say, "What is going on in this market? How many places could our core skill as a manufacturer be of use?" And then, to pursue specific opportunities, we wrap our product design, marketing services and software capabilities around that core skill of manufacturing to enable new partners to sell into this market.

[caption id="attachment_1100" align="alignleft" width="160" caption="Olga Sirotinsky, Quality Control"][/caption]

We partner with companies like ArcSoft and MediaClip, who have product creation software because that is part of an overall solution that we are now able to offer to new partners. Instead of waiting for someone to build their own B-to-C website - another Snapfish to appear - we have developed a broad enough view of the market and where it's going that we can create a partner who is in an attractive segment of the market.

For example, we recently signed with one of the world's largest social networking sites. The site targets the 35-and-older audience and the site's 9 million members upload more than 2 million photos every day.

We approached them about converting those photos into printed products, and have now completely rolled out that capability for them. We're providing the product designs, the production, and the distribution.

This is an example of the type of market we are targeting, and the range of services that we are now able to offer a partner. We are no longer passive; we are not waiting for a partner to come to us.

At the end of the day, it all comes down to the fact that I want to have my presses running 24/7, all the time. The business challenge is: how do I get there? This is a very seasonal business; 50% of our revenues come in the fourth quarter. Our factory runs below capacity nine months of the year, then we have this incredibly stressful period where everything must work perfectly.

It's a crazy business from that standpoint. That's one of the reasons that we're looking at new markets that are less seasonal. We are trying to look at people's "life events." Wedding books are more of a summertime thing. Social networking happens year ‘round. Scrapbooking has no season.

The fourth area of focus we call affiliates; organizations that have an affiliated membership or subscriber base like NASCAR fans, Disney vacationers, or gardeners. These are folks that share a common interest around which pictures are taken.

We offer an end-to-end solution and can help organizations get to market quickly with a really good product. The solution is branded for them and it creates new revenue streams for both of us.

WTT: Join us tomorrow, in Part 2, when John will talk about how he is differentiating RPI from other digital printing companies offering print on demand.