Lulu.com business model and competitive advantages

Posted: September 25, 2013 in BUSI 3810 Course
Tags: , , , , ,

The transformation of the book publishing industry.  

Traditional publishers are most interested in books they can print in quantity for sale to large audiences.  However, like in so many other industries, the business model of the traditional book publishing industry has really evolved recently. Take for instance Lulu.com, a company launched in 2002 and  offering self-publishing, printing, and distribution services, and headquartered in Raleigh, North Carolina.  Its business model has enabled anyone to publish.

Lulu.com has a unique business model.  Innovation in business models does create value, and is generally cheaper than product and technology innovations.   Countless companies  such as IKEA, Dell and Zipcar are highly successful due to innovative business models.

Questions (2nd individual reflection for my 3810 students but open to all to comment):

  1. What is unique about Lulu.com’s business model compared to more traditional book publishers?
  2. How does Lulu.com create value to customers?
  3. What do you consider Lulu.com’s competitive advantages to be?
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Comments
  1. Matthew Brown says:

    1.) Lulu’s business model follows a print on demand (POD) model . A version of the printed copy is only printed when a customer orders a copy. Conventional publishing companies print multiple copies at once, and leads to authors and publishers buying many copies and later having to sell them at a discount. With lulu.com, a user simply creates a user account, follows the prompt menus, uploads their work they wish to have published and select printing options. It is then stored in databases until there is a need to print-which is contracted out. A conventional publishing company seeks to find and nurture talent, fund the author’s writing process, distribute and sell the book to the widest possible audience and build author brands and protect copyrights . Lulu.com’s product mix and POD separates it from the traditional publishing companies at it lowers their inventory and does not need to make a physical presence. I consider the unique advantage of lulu similar to a cross between Dell and Netflix. Dell prospered on serving customers on a per order basis, where netflix toppled Blockbuster by serving many quality movies, having no physical location and riding a the longtail.
    2.) Lulu.com creates value for the customer by differentiating itself from conventional publishers. Publishing is customizable and lets you publish in paperback, hardcover or ebooks. It puts your published pieces online via Amazon, Barnes&Noble, iBooks and of course Lulu.com. It allows authors to print only when needed which means zero inventory and volume discounts starting at 15 copies. It also allows you to be in control of your own content and set your own price of the book. It puts the power into the hands of the customer (author) and diverts it away from other publishing companies. It becomes more cost efficient and is a direct method to have you book published and selling.
    3.) I believe that lulu.com has an operational competitive advantage. As they are certainly note first movers in the publishing industry, but they have figured out a way to become more efficient than their competitors. I think they have determined a way to create more value for the customer in becoming more customer friendly. They allow the customer to be in charge of their own product, reduce cost and is more convenient to the end user (i.e. they can publish a book and never leave their own house). I like to think of lulu’s competitive advantage to be similar to the sense of Netflix over Blockbuster where Netflix carried an operation competitive advantage over Blockbuster.

    ______
    1. Thomas Pack, “‘Craft’ a Book Using Self-Publishing Venues.,” Information Today, 27, no. 8 (2010): 38-39, http://web.ebscohost.com.proxy.library.carleton.ca/bsi/detail?vid=13&sid=83d65a0d-f461-443c-92a9-d65de149ccef@sessionmgr14&hid=28&bdata=JnNpdGU9YnNpLWxpdmU=

    2. Greenfield, Jeremy. “What Publishing Companies Do in a World Where Anyone Can Publish a Book.” Forbes Magazine, June 27, 2012. what-publishing-companies-do-in-a-world-where-anyone-can-publish-a-book (accessed September 29, 2013).

  2. Tony Luong says:

    1. A traditional book publisher requires a long process in which an author can have their book published. Before a book is published and brought to the market, the material must be read and analyzed over in order to satisfy the needs of the certain publisher. This is the standard business model that has been used for years where the publisher controls all aspects of the author’s book. What is so unique about Lulu.com’s business model is that they offer a service that is structured around self-publishing. This means that any author has the ability to create their own book without the obstacle of a middle man. Lulu allows people to create different things from hardcover books to eBooks and at the same time, easily distribute them worldwide through their website. This business model is much different from the traditional publishing model because it doesn’t hinder the creative process that authors go through when creating their work. The meaning behind their words won’t get destroyed compared to when they go through a large publishing company.
    2. Lulu.com creates value to their customers through creative control. They provide the resources necessary to publish a book but they won’t interfere with the author’s creative process; starting from writing the material to actually distributing it to the readers. Lulu also offers their customers professional services if the author feels that they need help in boosting their chances of success. These services include expert help and guidance from professionals in the industry; cover design, editing, formatting, and marketing services.
    3. I consider Lulu’s competitive advantage as allowing everyone the ability to be able to create, publish, and sell their own materials through worldwide distributions. It is a system by which they don’t restrict themselves to only well established authors and professionals in the industry. They help and support everyone in a chance to pursue their goals by just providing open and free services.

    References:
    “About Lulu.com.” Lulu. http://lulupresscenter.com/page/view/p/lulu_com (accessed September 30, 2013).

    Young, Bradley. “Self-Publishing with FreisenPress Vs. Lulu.” Yahoo. September 28, 2012. http://voices.yahoo.com/self-publishing-friesenpress-vs-lulu-11790511.html (accessed September 30, 2013).

  3. 1.Lulu.com is unique compared to traditional book publishing companies because the writer can publish their own books, while making all their own choices. The author can choose whatever format they’d like, and with little risk, since they can print as little as 15 copies of the book. Also, the author has full control of the book, meaning they own everything, and control the price. The site also offers a lot of support and advising for the authors looking to publish books. Lulu.com allows new authors to reach their dreams by publishing books that may not have happened with a traditional publishing company. With a traditional book publisher, the rights to the book are purchased, and the author will make a percentage of money based on sales. With Lulu, the author keeps all the rights, but pays Lulu for every book published (20%).
    2.The main way that lulu.com creates value for their customer is by allowing their dreams to become a reality, while keeping the author in control. With lulu.com, authors are not exploited by big publishing companies that have all the power. The authors accomplish their goals, but with a good experience. Lulu also offers a large distribution channel, many of which are free. Authors can publish and sell eBooks or print books, with a know distribution channel to sell their book.
    3.Lulu.com can offer all the same services of a traditional book publisher, while offering the service to anybody. Lulu’s competitive advantage is mainly the fact that authors keep their rights and feel in control. Since anybody can publish a book, Lulu publishes a high volume of books, which allows them to make money by the volume, while not really taking on any risk. Since Lulu is not buying the rights, they don’t have to worry about what they publish. The authors pay them for their services, so Lulu will make the money whether the book succeeds or fails.

  4. Zhou Li (Louis) says:

    Question 1:
    The traditional book publishing industry is known as its strict accessibility and profit-driven exclusiveness (Book Publishing Report, 2012). Specifically, if an author intends to have his book published via a conventional book publisher, he has to go through a relatively complicated business process that requires excessive capital investment, complex business relationship management, insufficient manufacturing demand, inflexible marketing and distribution strategy, and the very bottom line – the book has to have a bestseller potential in it from a book publisher’s point of view (Machan, 2009). While many authors are being affected by the relentless incorporation of the publishing industry, Lulu.com, sees the situation oppositely, as they believe the smaller number of publishing imprints interprets that there are more high quality book manuscripts than the good sellers on publishers’ frontier (Milliot, 2007). Thus, many excellent books that fails in the book publishers’ screening process and numerous “niche books” that would not even cross the publishers’ profit threshold (Book Publishing Report, 2012), become the major beneficiaries of Lulu.com, a place offers book writers the opportunity that they can enjoy from the editorial and design services, book packaging selecting, efficient book cost and pricing system, professional marketing, distribution strategic planning, and ultimately the very basis of Lulu.com – custom publish-on-demand service(Machan, 2009).

    Question 2:
    The DIY publishing service from Lulu.com, solves the pain points that exist in the traditional publishing industry, where is profit-driven and limitedly accessible due to the massive time and effort that are required on the offline business platform (Machan, 2009). The print-on-demand strategy creates a low cost author-friendly environment for book writers to control and manage the entire publishing process without the hassles of negotiating with book publishers and manufacturers (Milliot, 2007); the online e-book digital development services efficiently help book writers flexibly craft every bit of their books with a variety of assisting service features (Book Publishing Report, 2012). Additionally, the post-publish planning becomes much easier as Lulu.com offers book publicity and marketing services ranging from basic product development and promotion to a full-body book publicity campaign (Book Publishing Report, 2012), also because of the essence of Lulu.com is rooted from an online information exchange platform, book writers can also easily connect with their social networks and extend the book publicity by themselves.

    Question 3:
    Lulu.com successfully combines the efficiency of online business model with the democratization of the means of production together, and creates a new world where anyone can be an author and can have their own production line no matter of what the size of the market is (Machan, 2009). The website is widely opened to everyone, and thus encourages every one of us to explore and awaken the potential that is hidden within ourselves (Milliot, 2007). Unlike the traditional publishing industry is mainly focused on revenue, Lulu.com, rather, sets up a platform for us to exchange our ideas and thoughts, and makes it available to the entire world.

    Citation:

    Machan, Dyan. “Author, Author!.” Smart Money 18, no. 7 (2009): 32. http://web.ebscohost.com.proxy.library.carleton.ca/bsi/detail?vid=3&sid=54c5d3cb-b9c1-4f40-96c3-7c6e018a724b%40sessionmgr12&hid=9&bdata=JnNpdGU9YnNpLWxpdmU%3d#db=bth&AN=42310282 (accessed October 1, 2013).

    Milliot, Jim. “Turning Bad Books into Big Bucks..” Publishers Weekly 254, no. 31 (2007): 20. http://web.ebscohost.com.proxy.library.carleton.ca/bsi/detail?vid=4&sid=54c5d3cb-b9c1-4f40-96c3-7c6e018a724b%40sessionmgr12&hid=9&bdata=JnNpdGU9YnNpLWxpdmU%3d#db=bth&AN=26184133 (accessed October 1, 2013).

    “Self Publishing Everywhere (and Nowhere) At Book Expo.” Book Publishing Report 37, no. 6 (2012): 1-2. http://web.ebscohost.com.proxy.library.carleton.ca/bsi/pdfviewer/pdfviewer?sid=d21af2fa-7023-4aae-8a85-3d4147925dc6%40sessionmgr15&vid=2&hid=9 (accessed October 1, 2013).

  5. Patrick Smith says:

    1.Lulu.com created a “personal experience” to books on a mass scale similar to what Starbucks created for coffee. Previously, an author had to be greatly supported by a renowned publisher in order to have their works published and subsequently successful. As such, if a story had a small number of influences, the book would be very low on a publisher’s priority list and an insignificant number of novels will be released. Bob Young, the founder of Lulu.com believes that these novels deserve to be accessed by readers. He designed this platform because some of which are of great quality and fall under the radar (Paxhia 2009).
    2.The company creates value by offering an easily accessible platform to build and publish a novel. An author also has the option to hire an expert to assist his developments. For example, it gives options that range from cover design & illustration, editing, book reviews, and promotional services (Wilson et. al). There is also plentiful customer support.
    In addition, an author can turn their on manuscript into a book and print in physical and digital format with little risk and cost.
    3. Lulu.com has made it possible to release a web book before the printed has been released. Previously, it has been common to do so after the release. Lulu also does not take an authoritative role as to if the novel in question is worth publishing (Paxhia 2009). The company has made it so the community decides. This creates an entirely different reception, as marketing segments are defined within a free communal aspect.
    Another incredible difference is the subject of royalties. With a traditional publisher, the author receives a 10-15 take. With Lulu.com, the author receives 80% of their book revenue (Paxhia 2009).
    References
    al., Edward Wilson et. “Self Publishing, Book Printing and Publishing Online – Lulu.” Self Publishing, Book Printing and Publishing Online – Lulu. http://lulu.com/ (accessed October 1, 2013).
    Paxhia, Steve. “Book Publishing.” Seybold Report: Analyzing Publishing Technologies 9, no. 8 (2009): 4-6.

  6. Matti Blume says:

    1. Lulu combines Print on Demand (POD) with traditional publishing services. Other than those tradional publishers Lulu doesn’t select their authors but let them select Lulu. And everyone can publish his or her works with Lulu. Furthermore Lulu claims no IP rights on the works that authors are sending in. Even free licensing is permitted, which almost now traditional publisher would allow. Also the pricing remains in the authors or outside publishers discretion, but Lulu takes 20% of the authors margin. Compared to other POD companies like Book on Demand or Blurb Lulu offers more services.
    The number of titles Lulu published since 2002, their start, exceeds 1.1 million. That makes 100k a year. In comparison Penguin Random House, the largest publisher in the world publishes only 15k titles a year.

    2. Customers can get almost every service from Lulu, they would get from traditional publishers. That includes layouting, printing, marketing and distribution. Thereby authors are able to publish their works for a fracture of the price they would pay andd the risk they woould take, if they asked a print shop to print a certain amount of their books (say a hundred copies). Again afterwards the author-publisher would have to deal with distribution and so on. And if an author did the described and realizes later that there is a market for even more copies, the journey starts again. So Lulu creates value to their authors by enabling effectiveness, and efficency while lowering costs and risks at the same time.

    3. Lulu published content may be in average of inferior quality compared to a traditional publishers catalog but the best books at Lulu’s are just as good as those published by other companies. Means, Lulu can attract talent in the literature. Books published by Lulu already won prizes. As the market leader, Lulu has a bigger and more diverse pool of authors. Focusing on the internet as sole mean of communication to authors keeps the cost down.
    Despite this I am hesitant to see a real competitive advantage on their side. Other existing POD companies can easily integrate vertically and offer similar service to their customers. With ebooks gaining market share over printed books, even things like text setting becoming less important thus lowering the barriers for self-publishers to go directly to distributors, like Apple, Amazon and Google.
    Before the planned IPO in 2009 Lulu had to rise the prices and let people go in order to cut back on losses and later to cancel the IPO and remain private.(Milliot, 2010)

    Sources:

    Milliot, Jim. 2010. Lulu Looks to Cash In on Self-Publishing Market. Publishers Weekly. 3/22/2010, Vol. 257 Issue 12, p6-8. 2p.
    Donaldson, Sonya A. 2009. Publish, Not Perish. Black Enterprise. Oct2009, Vol. 40 Issue 3, p42-42. 1p.
    Milliot, Jim. 2007. Turning Bad Books into Big Bucks. Publishers Weekly. 8/6/2007 Fall Preview, Vol. 254 Issue 31, p20-20. 1/2p.
    Jeon, S., Kim, S. T., & Lee, D. H. 2011. Web 2.0 business models and value creation. International Journal of Information and Decision Sciences, 3(1), 70-84.

  7. Trinh Ha says:

    The business model that Lulu.com employs the use of allowing authors to self-publish their own books through Lulu with customization options from your book cover to the paying additional fees for professional services (promotions, editing, book reviews, etc). It adds that publishing your own books through Lulu can be free and extra charges only applies with certain options that you (the author) would like to add on. It does not require you to make sure your work has been edited prior to publishing unlike with more traditional book publishers who will, under the company, review your book and only with its approval will they send it off to their printing company to be released. Under the more traditional publishers, the book publishers have full control on the construction and release of the author’s book. Similar to a freemium model where you can have the basic services done for free, and anything extra from Lulu comes at a charge (help with promotions, marketing, book editing, etc). Thus the more elaborate you create your book (binding, cover, etc) the more additional charges may apply.

    Under Lulu’s model, authors are given full control on their works meaning they can set their own prices for their books and have their work printed in a way they want it (cover, binding, book format – book, ebook, etc) and the only thing that Lulu asks for is a set percentage off your sales. It makes its revenue on a portion of the author’s sales (including printing, fulfillment, and shipping costs) (Business Source, 2010). For example, for a 100 page book – the author could stand to make 80% of the published sales while Lulu will only receive 20% on the sale (Lulu.com)

    Lulu.com offers its self-publishing authors more value by allowing them to not just customize and print their books, but also established channels of book distribution and marketing that authors from Lulu can use to promote and sell their books. These channels are highly valuable as they include connections to Amazon, Barnes & Noble, iBooks, Lulu’s own site, and so much more! Like any good books that sell, if customers demand it, there is a chance for it to be sold at physical, national & local bookstores.

    Lulu.com has many competitive advantages: free to use, wide access to bookstores, no “middle man”, author(s) control on self-published works, access to Lulu’s wide marketing and distribution channels, and so much more. But one main competitive advantage of Lulu’s is that it’s like a freemium model and anyone can use their services with no one/barrier stopping the author from publishing their own works the way they want it. The author’s work does not need to be approved by anyone/publishing company first – allowing authors to eliminate the middle work of having to try to find a publishing company to help release their works.

    Business Source, 2010. Lulu View on P vs E. [Accessed Sept 29, 2013]. http://web.ebscohost.com.proxy.library.carleton.ca/bsi/pdfviewer/pdfviewer?sid=e9724ae0-49d0-458f-a0d0-395e1a12f0d3%40sessionmgr10&vid=4&hid=24

    Lulu. [Access Sept 30, 2013]. http://www.lulu.com

  8. Rebecca Buvari says:

    1. Lulu.com uses a business model which contradicts a more traditional book publishers’ in a way that instead of selling few well-known titles in multiple copies, has decided to sell an extensive amount of titles, but rather fewer sales of each. This will instead be adding up to several smaller sales (Miranda, C.A., 2005). The business model is also built on the published authors directing customers to the site. They have a focused market orientation, since they have chosen to focus on smaller sold amounts but larger quantities of titles.

    2. Lulu.com creates value to authors through allowing them to retain full credit of their work. The company also provides worldwide distribution, allowing books to reach customers all over the world. They also allow customers to choose from a broader range of titles, which attracts a different and wider customer base. According to Michael Porter, value adding activities are thus that make the firm stand out from other firms. For Lulu.com these would be unique creation of a new way to explore an already existing market. Allowing them to provide new services for their customers in an unexplored market, while gaining control of the market. Lulu.com creates the opportunity to find an extensive amount of authors in one place.

    3.I would consider Lulu.com’s competitive advantage to be the fact that they differentiate from other online book stores. They also differ from traditional book publishers in such a way that they allow smaller scale and up and coming authors to publish their work through their site, and reach an extensive amount of customers. They have more titles for sale than regular book-sites, drawing the attention of many. According to Porter’s 5 force model, Lulu.com has a competitive advantage as it is a pretty narrow market, allowing less competitors to enter the market, which lets Lulu.com control a large part of the market. Since there is a high demand from both suppliers and consumers, Lulu.com is able to execute a higher bargaining power. There will not be much rivalry in the market, since this specific market was yet unexplored and being specific and specialized will allow the threat of substitution to be fairly low. Even so, as Lulu.com goes on to be a successful venture, new firms are more likely to enter the market, causing more competition for the companies already on the market.

    Reference:
    A Market of One. By: Miranda, Carolina A., Time, 0040781X, 8/15/2005, Vol. 166, Issue 7

  9. Zach Lahartinger says:

    What is unique about Lulu.com’s business model compared to more traditional book publishers?

    Lulu.com gives the ability to anyone to self publish, distribute and print. This model marks up against traditional book publishers which are very difficult to get in with because they are strictly thinking of volume they can sell and produce.

    How does Lulu.com create value to customers?

    Lulu offers something completely unique to its customer. It enables your average “want to be” writer to actually get out there and do it. Writers have the full supply chain process at lulu, allowing them to get exposure and distribute their unique works.

    What do you consider Lulu.com’s competitive advantages to be?

    I consider lulu’s unique competitive advantage to be their ability to access the long tail of the writing industry. I consider this model similar to the Netflix model, In that they are enabling audiences to see content which would have likely never been viewed had they not exist. Sure, a writer could self publish and try to distribute themselves, but lulu.com is a one stop shop that also acts as a collaboration and community to boot.

  10. Uynghiem Ngo says:

    1.

    LuLu’s business model is unique because it acts as a medium to allow users from different backgrounds such as business, creative writers, education, non-profits, and students; to create content and publish it directly to their target market. They remove barriers and provide a multi-service solution to inspire the entrepreneurial spirit of people who’d like the chance to publish their own work. This differs from traditional book publishing because publishing companies will require writers to go through a long process of approval, editing and negotiating a loyalty payment before being able to publish a book. In LuLu’s case, they empower and allow a content creator to become their own publisher without having to go through a long and painful process. “Business model is an unique on-line sales and global distribution system.” (Corporate Profile, 2009)

    2. Lulu’s Value added

    Removal Traditional Entry Barriers to Publishing . (Barrier to entry low)
    Empowering and ease of accessibility of content. (Fast Publishing Speed)
    Providing Multi-level marketing & distribution channels ( Print, social media, affiliate sites..etc)
    Total editorial and Copyrights (Protection of IP)
    Personalization, Customization and On-demand process. (Similar to Dell Model)
    Guaranteed Revenue split 80/20 (No negotiation required)
    3. Competitive advantages
    • Speed of publishing
    • No barrier to entry
    • Low-costs
    • Intellectual property protection
    • Unedited and Non-filtered creative content
    • Social Community of Creative writers. (two million members)
    • Huge reach in short period of time.

    References
    Gail Jordan, 2009. “Corporate Profile 2009” About Lulu.com Press Kit Release :
    (October 1st 2013), http://lulupresscenter.com/uploads/assets//Lulu.com_Press_Kit_Apr_2009.pdf

  11. E.Buschek says:

    1. What’s unique to Lulu.com’s business model?

    Lulu.com offers a way for anyone to publish their work, which is something that a traditional publishing house does not offer. With traditional publishing (I know since my dad runs one such company) there are often many ‘hoops’ the author must jump through – the book needs not only to be deemed worthy by the publisher; it also must match up with certain length and formatting criteria based on the agreement that the publisher has with the printer. For example, my father won’t publish anything less than about 75 pages, I think. Something like that, anyway.

    2. How does Lulu.com create value?

    Lulu.com creates value to customers by making the complex world of self-publishing easy and navigatable – providing the credibility of an organization and the experience of a publishing house without demanding that people live up to any sort of set standard- anyone can publish what they want. This makes life a lot easier for the customers, who really want to publish their books in a non-hassle way. It also makes it easier for people who want to support indie publications since all the books are browseable via the Lulu.com website, so people can look at a complete catalogue of all the authors’ works and order them easily. Basically, Lulu.com takes what is a difficult process and simplifies it so that it is accessible to everyone.

    3. Competitive Advantages – Based on Porter’s 5 Forces:
    Bargaining Power of Suppliers: The suppliers don’t have a lot of bargaining power since the publishers can make deals with printers and distributors anywhere and have work printed on demand and shipped, etc. So it is hard for a supplier to keep a publisher.

    Bargaining Power of Customers: The customers have a lot of bargaining power because not only are there traditional publishing houses to content with – there’s also many digital ones. So they can choose where they want to conduct business, putting pressure on the companies. That said, there is also such a large market that a company could likely lose a few people here and there and not feel it. Collectively though, customers have a lot of power.

    Threat of New Entrants: There is a threat of new entrants in this market because internet-based/digital publication businesses, and alternatives to large publishing houses, are a rapidly growing market, and there is still very little known about the limitations of such an industry, because it is so new. Many many people want to be writers, but can’t meet the criteria of traditional publishing houses, so digital ones can step in and offer a very attractive proposition to customers, making this industry a very popular one right now. It’s also pretty easy to get into, if you’re a business looking to try it. So the threat of new entrants is high.

    Threat of Substitute Product: There is a high threat of a substitute product in terms of publishing – there are many ways to publish, and many places to do so. That said, each book is different, so the idea of a substitute product for the books being sold is not as likely.

    Competitive Rivalry: There is a lot of rivalry with publishing, because the entire purpose of publishing, and holding the rights to print/distribute a work, is that it is an EXCLUSIVE agreement, unless explicitly stated otherwise. Because of issues of copyright, very few publishers want to get involved in collaborative/co-publishing. It happens, but not a lot. Therefore, every one of them is directly competing for the author’s business.

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