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The Reading World

Thinking about LibreDigital’s $15 million funding

LibreDigital this week brought down a $15 million B-round, adding Triangle Peak Partners to first-round investor Adams Capital Management, and signaling a potential flurry of investment in e-book distribution plays. The company facilitates file conversion and delivery for publishers of books, magazines and newspapers. Based in Austin, Texas, and founded in 1999, LibreDigital has evolved and suffered with the publishing industry, to which it sells content conversion, warehousing, browsing and distribution services. Now that it has $15 million in new capital and the burgeoning e-book industry on which to hang its marketing, LibreDigital is getting its day in the sun. The question is, is that sun rising or setting?

LibreDigital’s clients include major book publishers, such as Simon & Schuster, Hachette Book Group, HarperCollins, newspapers including The New York Times and USA Today, and many magazine titles. With e-book sales exploding, albeit from a very small base, LibreDigital seems poised for growth.

The company’s emphasis on helping its publisher customers experiment with marketing programs and pricing strikes me as on target, because only a wide range of options will help differentiate electronic titles from their paper counterparts. Price, of course, is only one dimension of value, though it is the one getting the most attention right now. Alas, another continuing problem is the rights management question, which LibreDigital appears to solve primarily through application-based restrictions, for example, these terms for the downloading of The New York Times. In other words, DRM is the main defensible feature of the distribution system. The solution offered by LibreDigital through Newstand.com does allow printing (no copying) of files rather than locking the data to electronic format.

There is no record of patents or patent applications by the company, a search of the U.S. Patent and Trademark Office database suggests. What, exactly, then is the company selling? Service, though they are described as products. The careers of the management team point to expertise in process development and management, exactly