Books II: We might live in a cyber world yet the printing presses are still running

Do you remember the paperless office? This was the dream that we were peddled in the early 1980s by people like Accenture (then Andersen Consulting) with the arrival of the PC. The idea was that all physical paper – the contents of our filing cabinets, lever arch files and bookshelves – would simply disappear, displaced by purely digital information.

If you are at in the office now, look around you. It didn’t happen, did it?

On the other hand, if you printed out the entire contents of your laptop, you would probably be crushed by the weight of paper. Last week, talking about Pearson PLC (LON:PSON), I celebrated my love of the printed page and I explained why I believe that there is nothing to fear from the digitisation of books and learning materials. This week is a kind of sequel to last week – Books II, if you like.

I’ve been fascinated by the history of technology ever since, as a student, I read the American academic Lewis Mumford’s masterpiece, The Myth of the Machine. Mumford believed, amongst other things, that the industrial revolution was made possible, not by the invention of the steam engine, but by the perfection of the clock. He showed how the birth of one technology does not necessarily entail the death of its predecessor. Several alternative technologies can co-exist, often to their mutual benefit.

With the rise of the fax machine from the late 1970s, people said that snail mail – post – would die the death. It didn’t. Then, with the ubiquity of the email, from the mid-1990s, the demise of the fax was expected. Well, I don’t know about you, but I haven’t sent or received a fax for at least a decade; but solicitor friends of mine still use them. Then, in the noughties, the text message (SMS) – pioneered by telecom geeks – surpassed the email. The kids don’t seem to send emails these days, still less punctuated ones; but people of my vintage do, many times every day.

(In fact, my emails are so sad they don’t even feature smiley faces or street-smart acronyms. Laugh out loud).

And consider the broadcast media. Time was, in my boyhood, when nearly half the nation – some 25 million people – huddled round the goggle-box to watch the Morecombe and Wise Show on Christmas Day. Now, the highest real-time viewing figures the BBC or ITV can realistically achieve are in the five to eight million range with such blockbusters as Strictly, Bake Off, Who Do You Think You Are?, or Downton Abbey. The fact is that broadcasters are increasingly competing with the internet, with home entertainment, with streamers and indeed with books, both paper and digital.

So what about the most important invention of human history, without which the dissemination of hard-won knowledge would never have been perpetuated? Forget the wheel – the Incas managed perfectly well without it and built a highly sophisticated civilisation that lasted over three hundred years. Of course I’m talking about the book.

The earliest Egyptian papyri date from the First Dynasty (early Bronze Age – about 3,000 years BCE). In time, papyrus (plant matter) gave way to parchment (made from animal skins – vellum being a finer form of parchment made from calf skin, as in veal). Later, longer continuous parchments were rolled up, hence scrolls. The library at Alexandria, at its apogee in the first century BCE probably contained many thousands of scrolls; which, collectively, represented the total sum of human knowledge at that time.

By the first century CE the codex, invented by the Romans, was gaining ground. The late first century Roman poet, Martial, praises the codex for its convenience. Scholars think that the codex achieved parity with the scroll around 300 CE and had almost completely replaced it throughout the now Christianised Greco-Roman world by the beginning of the 6th century. Though, as Jewish readers will affirm, Orthodox Rabbis still read from Torah scrolls to this day.

(Don’t worry, contrarian that I am, I’m not going to predict the imminent come-back of the scroll!)

By the way, many ancient scrolls were re-copied by medieval monks as codices. It is intriguing to reflect that many ancient books were lost to posterity because they were not upgraded to the new format. Just as, in my personal view, some the best recordings of classical music were lost when the vinyl disk was (nearly) put out of business by the CD.

Actually, though there has been a recent revival in vinyl – too late, alas, to save some wonderful recordings. When I was a student I possessed a vinyl edition of the great Feuchtwanger conducting Beethoven symphonies in Berlin in January 1945. One could almost hear the approaching Red Army’s artillery within the percussion. Where is it now?

The success of the codex was further accelerated in the 13th century by the arrival of paper (cellulose) in Europe from China. It’s typical in the history of technology how an invention is given new life by a dramatic improvement in materials. (The motor car, like the bicycle, would not have been viable without the pneumatic tyre).

Then came printing. The Chinese had developed woodblock printing in the 3rd century CE and block printing (using clay) emerged in China and in Egypt somewhat later, evolving eventually into moveable type. What was revolutionary about the Gutenberg method (Germany, circa 1436) was that it combined moveable type with a printing press. The mass production of high-quality paper codices was henceforth not just possible, but inevitable. The world would never be the same again.

The bloke in the toga who first folded some sheets of parchment into two and bound them together probably had no idea that he had invented the most enduring media format of human history. It seems odd to reflect that Jeremy Clarkson writes codices – but that is the format’s name.

Book publishing, as we discussed last week, is a great business. And go one stop down the value chain and you get to book printing, another great but little understood business. It reeks of ink and reams of uncut paper; it is unglamorous. Most people believe that all our books these days are printed in China or Singapore, but this is not true. Right here in the UK we harbour one of the biggest book printers in the world. It’s called St. Ives PLC (LON:SIV) and, as well as being a printer, it is also – no coincidence this – a leader in information technology around the exciting new field of Big Data.

So St Ives plc is a British book publisher which also provides marketing solutions including data management systems. A major subsidiary, Response One, provides integrated marketing services, including strategic data acquisition and planning, and insight-driven customer relationship management.

Another subsidiary, Occam, delivers data management systems including campaign management and database management. The Company also provides research services through Incite which develops marketing strategies through intelligent market research. Pragma Consulting specializes in retail and consumer markets while Forward Thinking uses business research to develop competitive strategy.

Over the last year, St. Ives’ share price has been on a gentle downward slope with mixed news flow, though underlying financials look sound. In 2014 the group’s total revenue increased from £322.7 million to £330.7 million, up 3%. Profit before tax increased from £5.5 million to £11.9 million with basic earnings per share increasing from 3.71 pence to 8.60 pence.

The dividend payout (something we should monitor closely in these choppy markets) is not bad either. Over the four years from 2011 to 2014, St. Ives PLC increased its dividend payout by around 104%. Compare that with BP’s 88% increase in dividend payout and AstraZeneca’s paltry 10% uplift over the same period.

N+1 Singer, the London-based broker and corporate advisory firm, set a price target for St. Ives PLC of 227 pence per share on 11 August. This suggests a potential upside of around 30% from the opening price of 180.25 pence that day. St. Ives PLC has a 50-day moving average of 182.11 pence and a 200-day moving average price of 182.84 pence. The one year high for the stock price was 223.77 pence while the year low share price was 156.68 pence.

Lewis Mumford believed that what set human beings apart was not our use of tools but our innate ability to use language and symbols, best exemplified by our ability to store information and ideas in books. Anticipating the internet, his vision was that the “pooling” of human knowledge would open up untold new possibilities. I’ve just checked on Amazon, and it seems that none of his books are available as Kindle downloads. He would not have been pleased.