Lulu, pioneer of print-on-demand books, became profitable in the fall

Jun. 3--Joanna Lopianowski-Roberts knew a book on creating a cross-stitch version of Michelangelo's Sistine Chapel ceiling would never make the best-seller list. But after spending 700 hours designing the patterns, she wanted to create a book so others could follow her lead, stitch by painstaking stitch. She didn't want to spend a lot of money, so she self-published her book through Lulu, a producer of print-on-demand books in Morrisville that doesn't charge authors an up-front fee.

"I've sold just over 100 books, which blows my mind," said Lopianowski-Roberts, an information technology consultant in Junction, Texas, who finds cross-stitching relaxing.

Authors like Lopianowski-Roberts don't do it for the money. But it's a business for Lulu -- and one that's growing fast.

Lulu has been churning out an average of 167,000 books per month so far this year -- compared with 122,000 in its best month last year. Revenue last month totaled about $1 million, up from $300,000 in May 2005.

The company, which has 45,000 titles available for sale on its Web site, has been profitable since last fall.

Lulu created a new category of book company when it started in 2002. It's not a mass market publisher like Random House, nor is it a "vanity press" that charges an up-front fee -- a minimum of several hundred dollars, if not much more -- to produce an author's book. Those fees typically cover services such as editing and sales promotion.

Lulu doesn't offer any of those services. And it doesn't receive a penny until a book is sold.

"We make money when you, the author, make money -- and not before," said Bob Young, Lulu's chief executive and founder.

As is often the case when a new approach gains traction in the market, Lulu's business model is attracting competition.

Blurb, a new books-on-demand company based in San Francisco, has raised $2 million in venture capital to date and is in the process of raising more. Like Lulu, it doesn't charge authors up-front fees.

Blurb provides free software that lets people design their own books. It's initially targeting people who don't see themselves as "authors" but have stuff -- recipes, photographs, an art portfolio -- that lend themselves to a book format.

Eileen Gittins, Blurb's founder and CEO, said the market is big enough for both companies.

"This is about expanding the pie," she said. "There is plenty of headroom in this market."

Young, for his part, says his focus is customers, not competitors. He is looking at ways to exploit new markets, including bloggers interested in converting their material into books and businesses seeking inexpensive ways to produce training manuals and other materials.

One market that Lulu might have exploited, said Young, has been usurped by the world's largest online bookseller. Amazon.com's BookSurge unit, which produces on-demand books, fulfills orders for publishers' out-of-print books.

Lulu, which has 60 employees, doesn't just print the books as they're ordered, one at a time. It also runs an online bookstore (www.lulu.com) to give authors a retail outlet for their books. It's up to the authors themselves to try to get their books in bricks-and-mortar stores.

Producing a book on Lulu is cheap enough that Hillsborough resident Cameron Kelly, 27, used a book he wrote to propose to his girlfriend, Angie Kreimer. The title: "50 Reasons Why You Should Marry Me ... And 51 Reasons Why I Should Marry You."

"I thought of it as a creative way to stand out and really show her how I felt about her," Kelly said. (She said yes.)

The book is a personal one -- it includes dozens of photos of the couple -- not designed to appeal to others. Still, Kelly has made it available on Lulu's Web site in case any of the couple's relatives want a copy.

"We have books that only ever sold one copy," Young said. "That book is still 'in print' if someone wants to buy another copy."

Lulu's appeal isn't limited to individual authors.

SpiderWorks Press, a publisher of technology-related books based in Arlington, Va., uses Lulu to produce its books and handle orders.

SpiderWorks' latest book, the publisher's 10th, is "The Xbox 360 Uncloaked" by Dean Takahashi, technology and gaming writer at the San Jose Mercury News. It's a behind-the-scenes look at the creation of Microsoft's latest video-game console.

SpiderWorks CEO Dave Mark said the traditional book-publishing model, which takes a minimum of six months to turn a manuscript into a book, just wouldn't work for his technology books.

"This is time-sensitive information," he said. " 'Xbox 360 Uncloaked' was written basically in real-time. As it was happening, it was being written."

The book went on sale three weeks after the manuscript was finished.

David Warlick, an education consultant in North Raleigh, has done it both ways.

He wrote a book published by an educational publisher and self-published another one through Lulu. His royalties for the Lulu book, "Classroom Blogging: A Teacher's Guide to the Blogosphere," were 40 percent higher. In addition, the Lulu book sold more copies in its first year and Warlick liked having total control of the book.

"Having worked through a publisher, I didn't have input on the layout," Warlick said. "I didn't have input on the cover. I was urged to include information in the book I didn't entirely agree with. It turned out to be a better book ... but it wasn't the book that I intended."

Warlick also writes a blog, or Web log, and is considering turning it into a book that he would self-publish through Lulu.

"Blooks" -- books based on blogs or Web sites -- are a growth market for Lulu. On a recent list of the company's 100 top-selling books, 20 were based on content first produced for the Web, said company spokesman Stephen Fraser.

Lulu played up its affinity with bloggers earlier this year by sponsoring the Blooker Prize, the first literary prize for blooks. It won Lulu tons of free publicity and played up the company's natural affinity with bloggers. "Blogging is self-publishing," Fraser said.

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Copyright (c) 2006, The News & Observer, Raleigh, N.C.

Distributed by Knight Ridder/Tribune Business News.

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