No one would mistake a book publisher for a tech company, but they do have one thing in common: offshoring. Just as Apple (AAPL) and other major gadget makers rely on companies like Taiwan’s Foxconn Technology Group to assemble products, the big New York publishers send manuscripts overseas for production. “There are literally tens of thousands of people in India and the Philippines and other parts of the world doing layout and compositioning,” says entrepreneur Matt MacInnis.
MacInnis is the founder and chief executive officer of Inkling, a San Francisco startup that over the past two years has created about 120 multimedia-rich iPad versions of popular textbooks. While researching how the publishing world works, MacInnis, a former employee of Apple’s education division, says he was “flabbergasted” by the “intense inefficiency” of book production. To create a 4,000-page behemoth like Harrison’s Principles of Internal Medicine, he says, publishers and so-called content supply-chain optimizers such as Innodata (INOD) and Aptara ship bulky manuscripts back and forth across the world multiple times.
MacInnis characterizes Habitat as “an infrastructure for producing digital content at scale” and hopes it will release a flood of e-books for iPad toters. Most e-books available today consist primarily of text because it’s relatively straightforward to flow a bunch of words into a digital template. Cookbooks, travel books, textbooks, and other types of works with an emphasis on graphics and images tend to still be purchased mainly in print because they’re harder to digitize. But together, those scholastic and professional volumes, as they’re known, are roughly as lucrative as popular nonfiction and fiction titles, which generated $13.9 billion in revenue in 2010, according to the most recent numbers available from the trade group Association of American Publishers.
A few publishers have experimented with smartphone or tablet apps, such as the iPhone version of Mark Bittman’s How to Cook Everything, but hiring developers and designers to build one-off projects is expensive. “Why would they spend $30,000 developing an app they’re going to charge $1.99 for?” says Michael Norris, a senior analyst at Simba Information who follows the publishing industry. Inkling Habitat “could potentially be a way for publishers to make the math work.”
Inkling is offering the software free of charge, with the stipulation that any book produced using it be sold through Inkling’s online store, where the company takes a cut of each sale. (The amount varies from publisher to publisher but is often around 30 percent, according to MacInnis. Publishers are free to sell their Habitat-produced e-books elsewhere, too.) The startup received $17 million in funding in August, building on previous investments from venture capital firms including Sequoia Capital.
Habitat puts Inkling in competition with Apple, MacInnis’s old employer. The Cupertino (Calif.) company released its own tool for producing iPad-ready e-books, iBooks Author, in mid-January. MacInnis is unconcerned. There are “no collaborative tools in iBooks Author, and all the data is local on your desktop,” says MacInnis. “There is no meaningful learning content that has ever been created by one person sitting at their computer alone.”