Lightning Source Signs Deal With On Demand

On Wednesday Publishers Weekly (PW) reported that Lightning Source signed a "strategic agreement" with On Demand Books, owner of the Espresso Book Machine.

I've talked about the Espresso Book Machine (EBM) before here and later here. It is a machine that can print and bind an individual book in fifteen minutes.

According to PW , "the partnership with Lightning Source gives On Demand access to its scanning facilities, but it also gives the company access to copyrighted material through an opt in/opt out clause that Lightning Source will add to its publisher contracts. At present, the titles available through Espresso fall mainly in the public domain."

Lightning Source Inc. is a subsidiary of Ingram Industries Inc.

Ingram, as most people familiar with the publishing business know, is the world's largest wholesale distributor of books. Ingram is so large that, when Barnes & Noble proposed to buy it back in 1998, the Federal Trade Commission threatened an antitrust suit and forced B&N to withdraw its offer. The FTC reportedly had concerns because Ingram was responsible for as much as two-thirds of books shipped by wholesalers. Ingram also served B&N's competitors (Borders and especially Amazon.com). The FTC had concerns that the merger might impact growth of Internet book sales if Amazon's "main competitor also owned their primary supplier." (New York Times)

According to Lightning Sources's own site, the division "provides a comprehensive suite of demand-driven publishing solutions for publishers . . . Lightning Source stores books and other information electronically and delivers them 'on demand' in either traditional printed format or as e-Books in response to orders from booksellers, librarians, and publishers."

In other words, Lightning Source is a digital and print distributor. Both Ingram and Lightning Source are part of the chain of distribution between the publisher and the bookstore/retail outlet.

Publisher => Wholesaler/Distributor => Retail Outlet => Reader

There are currently two EBMs in bookstores. One is at the Northshire Bookstore in Manchester Center, Vermont. The other is at the University of Alberta Bookstore in Edmonton, Canada. ". . . one of the possibilities that the Espresso Book Machine opens up is for libraries, which have also been early adopters of the machines, to sell books, not just lend them. As the machinery becomes cheaper and easier to operate, nonbook businesses could choose to become publishers, as well." (PW)

Notice the differing strategies being adopted by Amazon and Ingram. As I explained yesterday, Amazon is focussed on vertical integration, seeking to centralize power to its publishing arm (BookSurge) and its distribution system (Amazon.com).

Ingram (through Lightning Source) is focussed on horizontal integration. Many EBMs placed in bookstores or libraries around the country would lead to a hugely decentralized market where there would be numerous distribution outlets.

It will be interesting to see which strategy will prove most successful in an industry composed of lots of different niche markets. If the markets are fragmenting, should the distribution system do the same thing?