Despite all the talk that most Americans read fewer books these days, e-books have become one of the retail world's hottest topics. The publishing industry now trembles on the brink of the same massive digital disruption that's still rocking the music business. Yet e-books aren't the only force changing the book world. Print-on-demand could have an equally earth-shaking effect on how books are published and purchased.

Paper tiger?
Unless you've been living under a rock, you've probably heard of Amazon.com's (Nasdaq: AMZN) Kindle e-book reader, or Barnes & Noble's (NYSE: BKS) rival device, the Nook. Google's (Nasdaq: GOOG) made its own big push to digitize books, occasionally getting into legal battles with publishers in the process. And Apple's (Nasdaq: AAPL) iPad launch, with its built in e-reader and online bookstore, represents yet another attack on Amazon's dominance in the digital book sphere.

However, in a tribute to the staying power of the old-fashioned physical book, print-on-demand services are quietly thriving. This growing innovation might help increase the efficiency of the publishing industry, according to a recent article in The Economist.

Instead of trying to guess about print runs, major publishers can simply print books on demand, freeing themselves from the hazards of their traditional guessing game regarding demand for books. Apparently, 30% of American books end up shipped back to the publisher and destroyed -- an outrageous statistic in our eco-friendly times. Print-on-demand will also help publishers big and small ensure that no title ever goes out of print.

Beyond the big publishing houses, print-on-demand also opens up a huge market in self-publishing from companies such as Lulu, Xlibris, and iUniverse.

Struggling bookstores might also benefit from print-on-demand. The Economist mentioned a bookstore in London that has a print-on-demand machine called Espresso onsite, creating "retail theater" as books are printed and assembled before customers' eyes. That process certainly sounds more romantic and interesting than waiting for a digital download, or simply snagging yet another paperback copy off a shelf.

The biggest player in the print-on-demand arena is LightningSource, which uses equipment from Hewlett-Packard and Xerox in its shops. University presses rank among the vanguard of its customers. (Interestingly, Amazon.com also uses print-on-demand machines, although it refuses to say how often, or for how many of the books it sells.)

Turning the page
The Economist article gives no indication that print-on-demand will be huge, but I think the technology stands an excellent chance of widespread success. The customization offered by print-on-demand could be just what the publishing industry needs to thrive once more. In the music business, artists have begun to experiment with premium-priced, bonus-laden physical editions of their new albums for diehard fans. Similarly, publishers could tempt hardcore bibliophiles to pay up for deluxe or personalized versions of new titles, even as more casual readers stick with cheaper digital downloads.

In a way, print-on-demand reminds us some consumers aren't necessarily looking only for whatever happens to populate the shelves at their local Borders (NYSE: BGP). The possibilities this new technology offers could be a real opportunity -- or a real threat -- to traditional publishers and booksellers.

If nothing else, both print on demand and digital distribution should make it easier for more diverse voices to find their ways into print, whether big publishing houses deem them suitable for large audiences or not. The Long Tail theory may not have made the "best-seller" or "blockbuster" extinct, but it has certainly opened up the marketplace to more options for obscure or specialized tastes.

The continuing story ...
What's your vision of the publishing industry's future? Would you invest in any of the media conglomerates with book-publishing operations, like CBS (NYSE: CBS) or News Corp. (NYSE: NWS)? What will happen in the war between e-books and old-school books? Let us know in the comments box below.

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Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.