I’ll admit that the very first thing I thought when I read this post from Pablo Defendini was “Damn, how can I come up with the capital to start this business?” The opening salvo paragraph:
If I were a rich man, I’d buy B&N, get rid of all the mass market shelf space, replace it with an Espresso Book Machine, start strong-arming publishers to print and bind really, really nice hardcovers at lower print runs and stock the hell out of those, and open up the B&N in-store ebook store to all devices and platforms (fuck it; even license mobi from Amazon if I can).
There is in fact an empty Barnes and Noble building in Myrtle Beach left over from when it moved two years ago. It’s been sitting idle ever since. It was always jumping before, so the location is capable of sustaining a thriving bookstore business. However, as cool as I thought this idea was, today I saw this story on MediaBistro about a bookstore actually using the machine.
Oddly to me, the story is written triumphantly as if this is a success story. Looking at the numbers, it looks pretty dismal to me. They paid for a $118,000 Espresso Book Machine and in 5 months have sold 1,500 books with it. Let’s say they sell those books at an average of $12, they average 250 pages long. My understanding of the variable costs is that they’d be spending $2.50 in licensing fees per book, about $2 per book in materials and at this point, $79 per book in amortization of the cost of the machine. In 5 months, they are 10% of the way to breaking even on the costs of the machine. At this rate of sales, in another four years they will have finally recouped the cost of the machine and can begin to profit from it. At that point, it will generate $80/day profit, which would be at the low end of a living wage for a single employee. This sounds like the opposite of a sucess story to me, it sounds like a rough start and possibly the early days of a boondoggle.
As cool as the technology seems to me, at this point one would need a lot more volume than this to justify the machine or a real eye to the long game. It’s possible that if one were to open a store with Pablo’s model in mind, that both the volumes would be higher and there would be enough revenue from the other sources to keep the business viable. However I’m reading that MediaBistro story not as the “booyah” it seems to want to be but more of a “Warning: potential loss of ass ahead” warning sign.