I'm really excited about this, im a literature freak and even if am not a great ebook reader, I think this is better than Wikipedia. About the Borges problem you mentioned: La biblioteca de Babel in the original Spanish is something you said you could legally host If possible I would love to contribute on the Spanish side, If it helps, I think I can prepare the texts as plain .txt files or your predefine format. Just thinking out loud if "ñ" or "á,é,í..ü" might be a problem (?).

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