WHILE the big players such as US book giant Barnes and Noble have left the digital literature market, Perth’s eBooks is expanding its business into new areas.
WHILE the big players such as US book giant Barnes and Noble have left the digital literature market, Perth’s eBooks is expanding its business into new areas.
The Nedlands-based company has been busy developing two new business streams that will target academic and wholesale literature markets by taking such books online.
The company is raising $3.5 million from UK and US investors, which will be used to commercialise and market the new ventures that are expected to become the dominant part of the business.
The brainchild of lifetime bibliophile Stephen Cole, eBooks has been selling electronic books online since 2000. The company has managed to steadily increase sales of eBooks by 50 per cent each year, albeit from a low base.
The unlisted public company hopes the shrinking number of competitors will free up a market space it can capitalise on.
The first of its new ventures, which is expected to go live mid this year, is a project that will allow students and academics to borrow library books online by either downloading an entire text, or specific segments.
The eBook library service, known as EBL, has been developed in conjunction with Curtin University of Technology, Yale University and North Carolina State University in the US and nuclear research organisation CERN in Geneva.
Mr Cole said with EBL, eBooks acted as a distributor of content for the library.
The benefits of the system include increased revenues for publishers and greater access to high demand texts for students and scholars.
The second venture, which is currently in the development phase, is a wholesale model that will be used by book distributors.
eBooks is looking to launch the first version of the eBookEngine in the second quarter of this year in conjunction with launch partners: Dymocks Australia and “a major UK distributor”.
Mr Cole said the wholesale system was analogous to real world distribution systems. The only difference is the books are distributed in electronic format.
He said the system would aggregate content from publishers and allow retailers to catalogue an entire inventory or a subset.
For example, a finance website might only want finance-related material, Mr Cole said.
He said there was clear demand for this type of service but that the company wanted to fine tune the system with its two launch partners.
“We have a list of about 350 companies waiting for this service,” Mr Cole said.
“However, we want to make sure we can get it right before we get ahead of ourselves.”
It has been a busy couple of years for the company, which boasts shareholders such as US President Bill Clinton’s former Internet strategy adviser Ira Magaziner.
Despite its low profile eBooks also recently appointed Allen and Unwin chairman and former SAP managing director Kevin Gibson as its chairman.
“It’s time to get out of the trenches,” Mr Cole said
“I come from a strong book industry background. I come from the coalface.
“Kevin comes from one of the most successful technology companies. We couldn’t have a better adviser than Kevin.
“He knows what we need to have in place to maintain and grow our market share in what is a very rapidly growing industry.”
Books have been a lifetime passion for Mr Cole and his wife, who together established the Lane Bookshop in Claremont 1980 after working in book retail for major chains for many years.
They sold the Lane Bookshop to friends in 1995 and took two years off before establishing eBooks.
They bought the domain www.ebooks.com for $US1,500 in 1997. Three years later, they were offered $US1.5 million for it.
Initially, Mr Cole said, the hardest task had been selling their ideal to publishers.
“We had to show them that our model wouldn’t cannibalise their existing markets,” he said.
However, the relationships he had built with publishers during his years working in retail often provided the introduction he needed.
Oxford University Press and Cambridge University Press were the first to agree to licence content and an influx of publishers followed.
However, that was during the peak of the Internet bubble in 1999 and by the time the company launched in 2000, that bubble had burst.
“It was utterly devastating for the nascent eBook industry,” Mr Cole said.
He said initial sales were “incredibly small”.
“We had spent over $1 million and we were selling handfuls of books to what was supposed to be a global billion dollar industry,” he said.
“But we held to our view that our original rationale made sense.
“We knew one of the few recognised brands was something of value despite the fact that our revenue is small.”
While market sentiment soured towards technology eBooks continued.
It has slowly grown its staff from six employees to 23 and managed to raise about $1.8 million, through different capital raisings in its first difficult years.
eBooks also recently won a $478,000 Commonwealth Start Grant for the development of EBL.
Mr Cole said sticking to core concepts of the business, where technology came a firm second to the business relationships and literature, had made the difference.
“We’ve been growing 50 per cent on eBooks sales every quarter since we started,” he said.
“It’s the only thing we do. Nobody knows how to make eBooks work in the hands of customers like we do.
“The fact that we’ve been able to make it work, gives us a competitive advantage.”
