For years we've been hearing about how the future of publishing was coming. And then, without much fanfare, suddenly it's here. Ebooks and ebook readers, once a thing of sci-fi, are not only real but they are selling like hotcakes (people are even lending them!). And that's not all! That other holy grail of future reading, book publishing on demand, is now not only real—it is available right here in town. SoHo's McNally Jackson installed the city's first permanent Espresso Book Machine (EBM) last month. The city previously was home to an EBM at the New York Public Library, but that was version 1.0. According to On Demand Books CEO Dane Neller the new version is "smaller, much more reliable, and three times faster. It's truly a different generation machine."
With the EBM 2.0 up and running, we thought we'd give it a shot. So last week we walked into McNally and asked to buy a copy of Huckleberry Finn. And about twenty minutes later (there were a few hiccups) we walked out of the store with a still-warm $17 copy of Huck, complete with all the stamps and scratches of the Google Books scan it came from. And while we can't say enough about the awesome staff at McNally who walked us through the weirdly fun process (you don't actually do the printing yourself) we thought it would be interesting to check in with the man behind the machine. In this case, Neller.
Is the one that's been installed at McNally Jackson the first in the city? It's the first permanent installation, the New York public library had one.
How did you choose them? We really liked their store. Anyway, we believe it is the future of book retailing. It has a wonderful selection of titles. It's a small store, it's not one of these mega chain stores, and it has a beautiful coffee shop, it has a good feeling, it has lots of authors that go there. For us, it's really what we believe a bookstore should look like.
Are there any other local stores scheduled to get one this year? We're having some discussions, though I'm unable to tell you who they are, but yes.
So a customer at McNally Jackson can't just go in and use the machine by themselves, right? Well, the machine is interesting. No, you can't do that now and walk in. We don't allow anyone to actually operate the machine. But in terms of now the ability to discover and then order a book, that can still be done by walking in. Now you have the functionality of going either walking in and using one of their kiosks or working at home or at the office and very, very shortly—we hope within a few weeks—you'll be able to do two things: you'll be able to go to our own website—the website you see now is changing—and you could select titles—it'll be a consumer website—where you can select titles and then pick a retailer and have that book printed. So now you don't necessarily have to walk in the store to print one. [Ed. You can already search and select books to print on McNally's website]
How do you work with publishers? I recognize that a lot of the books that you're running are free copyright or older, but I see that on Espresso net there are new ones, too. We work with publishers in several ways. We have a relationship with Lightning so whatever Ingram has permission to print through their centralized printer, we also generally get rights to. Say if Simon and Schuster makes available a print of book through Lightning, then that will also be made available through our distribution channel. Lightning offers both a fully distributed channel as well as a centralized one.
We also go direct to publishers, and we're doing that currently with all sorts of publishers, both trade and academic and professional. We also have a relationship with aggregators like Google and Internet archives that tend to be more public domain stuff, where we connect with them. So there are a lot of different ways that we get content. One of the most active ways the machine is being used is actually by self-publishers, where they go up to the machine and there's a functionality where they can upload their file and make their book on the fly.
That was my next question. If this is intended for more academic or self-publishing in general. We didn't know actually. We just knew we had this great technology, so we just let the market place take it over. What we're finding is it's being used for all of these, but the growth of self-publishing is tripling and quadrupling every year. What we found is this machine is truly a community self-publishing center. What I didn't realize, but I'm realizing now, is so much self-publishing is local. Local authors go into book stores and libraries and want to connect with a retailer as a place where they can not only print their book, but sell their book and talk about their book. And likewise, retailers want to have a way where they have a little more stickiness with their customers, because there is a lot of pressure on book retailers. And this is just because there is a natural bridge for letting that happen.
In terms of charging for books, I assumed publishers get a fee and you would get a small cut from that. How much does a book retailer make if they've installed one of your machines? It's not easy to answer because it varies so much. If it's an academic title it is one thing, they tend to be higher price points, if it's a trade book they tend to be lower margins, if it's self-publishing it's another one. I'm not trying to avoid the question, it's just hard to answer. One way to put it is typically even on the lowest margin books, the retailer is getting at least a good a gross margin as they would the old way. But the cool thing about this when it comes to self publishing titles and academic titles and when the price points go up or in the case of self-publishing when there is no publisher to pay a fee on, the retailer obviously does a little better.
If somebody uses one of these machines to self-publish a book, would that book be in your system for someone else to print? Yup, that's the beauty of it. It depends on the published author. Some authors come in and just want something done locally and not made available on our web. We have a system called Espress-Network where title can be permissioned to be made available throughout or system.
A catalog or catalogs is what I think your website called it? Yeah, so effectively you'll see that with out websites, if a self-publisher wants that book made available on our catalog, we will. Sometimes people come in and have family memoirs where they prefer that it's not. But the answer is yes, that is one of the things we do. Depending on the retailer, they'll make that book available on their shelves.
How do you see this on demand books differentiate from the rise of ebooks over the last couple of years? I think they are complimentary. I don't think they are competitive. I mean, they are kind of because one is print product and the other is not. With self-publishing, my guess is you'll see so many authors want the physical copy of that book. So what I think you'll see is the first run with print, and maybe the second run depending on the success of it, but then they'll make it available for wider distribution on ebooks. And then I think for copyrighted books, you'll continue to see on the trade side growth in the segment, I think its going to flow as a percentage it will grow in numbers—you know the law of larger numbers—but you're not going to see the same growth, though you'll still see growth. I think print will still predominate for the foreseeable future, then on the academic side I think print is going to remain very dominant in that area for a variety of reasons.
The machines are made by Xerox now? Do I understand that correctly? No. We have a relationship and a partnership with Xerox, that includes exclusive sales and offers worldwide servicing and leasing. But the machines themselves are still owned and manufactured by OnDemandBooks. We work with Xerox but we make the machines ourselves. They provide a printer, which we integrate with our system. [Ed. FWIW, the McNally machine uses a Xerox printer for the books, an Epson printer for the covers, a Mac Mini for the brain and everything else appears custom.]
How are you getting information out to the public about this? You seem to have them pretty well scattered around the world already. Because we're kind of a business to business company, we haven't been actively selling ourselves to the generally public. Partially because we've been developing this product over time and we just wanted to stay under the radar screen a little bit, but now I think you'll see more of that because we've hardened our design. So it kind of is word of mouth and what we're doing with public relations and the press, so I think as our website goes up and we start to drive traffic to catalog, more people will come to understand our technology.
I saw you have machines installed in places like the NYU campus in the Middle East? It's interesting. This machine is very nimble and robust and so many different places find different uses for it. I can't disclose what our retailers do with it because that's private information, but it is being used for things that you'd imagine like self-publishing, academic books, library books. It really depends on the site and what their speciality is.
And what's next for you guys? There is a new website coming out, but
is there a 3.0 in the works? [Laughs] No. Right now we're working hard on our design and we're going to stay with that and that's the one we're going to launch. You'll see from time to time release upgrades on our software products and we'll obviously continue to get more content and more refinements to our self-publishing software. So I think development for now is going to be more on the software side than the hardware side. Say with a year, maybe sooner, there is a good chance there will be a color option. We already make color covers, but we'll probably think about making available a color alternative to the book block.
If our photo tour wasn't enough for you, here's a video that also explains how the EBM 2.0 works:
There is a formal launch of the EMB planned at McNally Jackson on February 15.