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.

[caption id="attachment_1121" align="aligncenter" width="300" caption="Gail Nickel-Kailing and John Perez, CEO, RPI"][/caption]

Yesterday in Part 1 of this interview, John Perez, CEO of RPI, filled us in on his path to becoming a "photo book printer" and talked about the manufacturing workflows needed to deliver millions of books on demand. Today John talks about how he is differentiating RPI from other digital printing companies offering print on demand.

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, which indicated photo book printing is a key application for digital printers.

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: According to Digital Printing Directions, everybody wants to print photo books. Students from RIT conducted interviews with 619 graphic arts companies around the world. Of the 160 in North America, 88.2% expect to derive revenue from photo books in the foreseeable future. How are you differentiating RPI from the "rest of the pack?"

JP: Yes, everyone wants to get into photo books; after all it's the fastest growing segment in the market. This year we will produce 1.3 million photo books in our factory.

[caption id="attachment_1103" align="alignleft" width="158" caption="Towela Nyirenda, Bindery"][/caption]

There are number of barriers to entry; making books is a lot different than making commercial print products. RPI had a history of nearly 30 years in the print world; even with that background we were challenged early on to make books to a certain standard.

It's a different process and technology; for example, there are issues of inks, color management, substrates, binding methods, gluing, and laminating. All of these things have to be well understood and managed, and you have to be able to control the manufacturing process so that you get the same result every single time.

Anybody can make a great product in a quantity of one if you focus all your energies on it. But make a million - and make them well - and it's a whole different issue. I'm not saying it's not something anybody with enough time or money can't master, but we've been doing it now for nine years.

The manufacturing process is radically different from the standard print process. You get a request for 3000 of the same book; you quote the job, make your bid, schedule the work on the presses, get the materials, and it'll be done next Tuesday. That is classic flow "print-ship" job manufacturing.

We don't know from minute to minute, hour to hour, day to day, what products are going to flow in over the Internet and our manufacturing processes and systems are tuned to optimize our performance, given that reality.

[caption id="attachment_1101" align="alignleft" width="210" caption="Trang Nguyen and Trieu Nguyen, Materials Matching"][/caption]

Early on we decided that we don't have customers, we have partners and we become part of their value chain. It's up to us to interact, integrate and operate with each of our partners as though we were just simply an extension of their company. We just happen to be here in Seattle.

As a result, we're engaged at a much more intimate level with each of our partners, we're involved with their organizations at all levels. My CTO has a relationship with their CTO. My ops guy has a relationship with their ops guy. My product marketing person has a relationship with their product marketing person. We integrate at an organizational level with each one and we have a constant dialogue going on with them. We tell them about our product roadmaps in terms of what our capabilities are, and we tie into their product roadmap.

And as a manufacturer and as a participant in the market, we are looking at what sort of products need to be brought to market. Who can we partner with to begin making a business in these new or existing market segments?

WTT: Putting on your futurist's hat, where do you see printing and social media going? Taking away print, adding print? Where is it all going?

JP: The first thing is that I fear for the current of online photo printing sites. The social networking sites like Facebook and Flikr all host a variety of digital media. People would rather spend their time on those sites and have access to things they want to do that might be photo-related, rather than going to Shutterfly.

[caption id="attachment_1105" align="alignleft" width="146" caption="Faile Kula, Bindery"][/caption]

We think that the social sites - because people are spending more time on them - will take traffic away from specialized photo sites. It's not to say that Shutterfly or Kodak will go away. However, they've been on a big growth trajectory and that may not continue.

That's why we are looking at the affinity market. People self-select; "I'm a NASCAR dad. I'd like to have a photo book with a NASCAR racecar branded on it." Something interesting about NASCAR that I recently found out is that most of the NASCAR-related memorabilia is bought by women.

We think social marketing is a very fertile market for people to begin exploring. For example, I don't think anyone has really cracked Facebook. Just because Facebook provides an application hosting environment, people are taking whatever applications they currently and putting them in there.

Think about it; who is the Facebook audience? It is the 17 to 29 age group. Are those people really into memory books? They're into what we call "snack food" products. I was recently at Zazzle; they are entirely youth-oriented.

And yet, they were talking about a coffee table book that they got. A coffee table book for kids?!? It was graffiti. It was great!

[caption id="attachment_1104" align="alignleft" width="129" caption="Gail Nickel-Kailing and John Perez"][/caption]

That is the Facebook market; who in the current space is bringing out products for the people who are actually on the site?

We are; and it's a very exciting place to be.

WTT: Thanks, John, for the tour and the discussion. You've got an amazing operation here; both the variety of products you produce and the dedication of your staff.