Monday, June 18, 2012

Are espresso books machines finally coming? Should they?

Ok, so what's an espresso book machine? Well, it's a print on demand book-maker that can give you a nice glossy-cover paperback in about the same amount of time it takes to order an espresso. This is the Xerox version:

Passive Guy linked to a great blog post this weekend regarding the financial feasibility of installing print on demand machines inside bookstores. I have always thought these machines were a fantastic idea. It's been nearly ten years since I first heard about them and I remember drooling over the concept. Walk into a Barnes & Noble, Borders, or Waldenbooks (remember any of these names?), browse through the book covers and descriptions, and pick out a couple to have them printed. Order a coffee while you wait. They'll both be done about the same time. 

I loved that idea. Now? Not so much.In his post, Alan Beatts makes these observations: 

"There does seem to be a financially viable way for large and mid-sized stores to have an Espresso Book Machine on site.  However, it is not based on the business model that I expected. Before going into that however, I want to run down some of the basic costs associated with the Espresso Book Machine (henceforth "EBM") based on current pricing and actual installed usage...

Initial Purchase
Machine Cost:  $101,000
Software License Fee:  $15,000 for 5 years (note 1)
Set Up and Training Cost:  $3,500 (note 2)
Total:  $119,500

Operating Costs (per book - note 3)
Content Fee:  $0.70
Transaction Fee:  $1.00
Materials:  $1.74
Maintenance & Utilities:  $1.83
Total:  $5.27

Average retail price per book is $14.55 (note 3) ...At $14.55 retail minus $5.27 in materials fees leaves $9.28 profit per book.  Borderlands is open 8 hours per day, 362 days per year.  At the rate of one book per hour, the profit in a year is $26,847.88.  Based on the cost of the machine, I would pay off the machine and start making a profit in 4 years and 5 months.  At the rate of 3 books per hour, the machine pays off in a year and a half."

Okay, that does sound feasible. But is it, really? Imagine how something like this would change the face of Barnes & Noble:

  1. The paper industry is gone. The printing presses, the boxers and shippers, the truck drivers. They're all out of a job. Publishing is now about licensing, and bookselling is about printing. 
  2. The bookshelves no longer have books on them, they have covers (something similar to what we once saw in video rental stores. So what's the difference between a giant two-story Barnes & Noble and a video store? About thirty employees. So they're all gone, save for a skeleton crew who can answer questions about the printing machines, recommend books, and make a decent cup of coffee.)
  3. That big, beautiful two-story bookstore? It's gone, too. There's no need for a space like that anymore. Not with ever-tightening profit margins and the minimal space required by book covers. The big store is boarded up now and Barnes & Noble have moved their three employees into a tiny corner space in the local strip mall. You remember it. It used to be a Blockbuster. 
  4. Now that good old B&N has managed to keep profits up by firing employees, disbanding their shipping and receiving, and moving into a tiny corner bookstore, what kind of market have they maintained? The wrong kind. Their client base is now a dwindling market of aging clingers who refuse to ever read a book that they can't get wet. Meanwhile, generations of new readers are embracing simpler, cheaper, and more practical e-books by the millions.
Ultimately, I believe that this technology would have changed the world, had it been embraced ten years ago. Now, it's too late. At least for big corporations like Barnes & Noble. But I do believe this tech still has a chance, and that lies with the Independent bookstores that are once again cropping up all over the country. Indie bookstores are good at specializing and attracting niche markets. But the Indie bookstore that figures out how to get one of these machines may be with us for a long, long time. And they may do a good job of keeping paper books a reality for the rest of our lifetimes. I'm not sure about Barnes & Noble, though.

That's my two cents, long-winded and probably wrong, as it is. We'll find out in the next few years.

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