I don't know if someone else has already posted on something like this - as I have not read all of the forums - but here it is:
Currently, I am a user of librarything, a website I use to keep track of all my books that I read and to find new books that the site automatically recommend to me. However, I find that the recommendation system is very shallow, in that it mainly uses the authors that you have read and the genre of the book to recommend new books, and that is all - at least so far as I can tell - despite the rating that you give it. This is a real downturn for this site becuase if there is a book that is horribly written, and I presume that the rest of this author's writing is of the same calibre, the recommendation system won't really filter out the results. (For example, I read a book that I hated, and I rated it at its lowest, and lo and behold, it was in my top 15 books for recommendations.) For this reason, I think that it is vital that the INDIVIDUAL user is able to rate any book, and that your recommendation system should alter the results listed to appeal to that individual, not just based on the content of the book. That way, the same crummy authors don't keep appearing in the recommendations, mucking up the potential books that a reader would likely enjoy.
The potential of this site seems to lie in the objective nature of its recommendation system, and I think it would be entirely worthwhile to catalogue as many books as you can so that any user could build up a library in order to get recommendations that have to do with their entire library, not just a single book, or even a small number of books.
Personally, I would definitely start with the classics of literature. (I know, this site will try to break from traditionalist methods what books are good, but at least this would give you an appeal for a good number of readers.)
I think that the recommendation system that you have highlighted near the end of your video on the main page would be excellent. However, I would add at least one more factor other than perspective, action, dialogue, density, pacing, and description. This would be user recommendation, a seemingly hot-button topic in these forums. This would be a general "safety net" for your recommendation system so that people who really care about what is popular - having something later to talk about with their friends - will still feel comfortable using this system; counterwise, people who don't care at all what other people think can at least find books that are similar enough in style to what they like despite others' thoughts/opinions muddying the waters. (I have to say that I would be in the latter camp!)
Yet another feature that you could integrate would be a "partial library search," or some such feature, where a user could find a recommendation on a specific group of books listed in his/her library that s/he is particularly fond of, even if the span across a few different genres. Maybe this is hoping for too much, but perhaps your site could analyze the algorithms and such of all of those books, and average them out to some degree to find other books that fall within the same range, ordering the books based on accuracy.
Perhaps hoping for too much yet again would be to say that your recommendation system could incorporate vocabulary in its results. That is to say, if you could find algorithms that decipher the range of vocabulary used in a book, a user could more intelligently decide on his/her next read. For example, if a reader sees that a potential read has a very narrow range of vocabulary, then perhaps it will be a very light read, easy to get through, and ultimately not challenging. Or a reader could find a book that has a very wide range of vocabulary and the appeal would lie in its challenging, heterogenous - yet specific and intentional - nature of word choice.
If this could even be taken a step further - that is to say, if an algorithm could be found not only on the range of vocabulary, but the frequency of vocabulary usage, then I think that would be a miniature gold mine. Suppose there was a reader who had not been exposed to books with made-up vocabulary - such as A Clockwork Orange - who wanted to find one such book, then all s/he would have to do would be to prioritize vocabulary on the preference scale and specify the degree of common usage in books.
One obvious and easily overlooked feature of a recommendation system would be the length of the book. Perhaps a reader is interested in short stories above full books; perhaps then this same reader could come to your site and find a desirable short story that fits within the spectrum of his/her fancies. Furthermore, the same reader could also find lengthy novels that are appealing, and could likewise find a good, long book to read throughout the near future.
Yet another obvious - yet seemingly covert - addition to the recommendation function would be time. That is to say, the time range wherein a book a) was published or b) takes place would also have a direct appeal to the reader. Futuristic, modern-day, historical - all of these would be held within the reader's preference when looking for a new book to find as well as old books or ultra-new ones.
As to whether or not this site should be open source, a capital partner, a function service, etc. - I am not sure; I don't know about these things. MY preference - and I'm positive that I'm not alone - is that you should do whatever you can do do get a VERY large amount of books in your system as humanly possible; combine this with a recommendation system that is as comprehensive as possible, considering the above points (and others, as people may add to this topic), and you will have a website that is far and away second to none. I think it is also important to get as many of these things down as possible in the starting stages of your website, that way you attract a specific - yet not too specific - group of people to use your website, and you don' t have to worry about changing things later on. I think other popular social book networking web sites may have this problem; they have pigeon-holed themselves into something that they started with, and they cannot really get out of it now that they are so far in. Any big changes will negatively affect many of the users that currently use their sites.
Overall, I think the more multi-faceted a recommendation system is, the better user-response you will get. I have spent the last two days searching for a better site (which is how I found this one) to recommend books to me, and from what I can tell, no one has really come up with anything like this.
I hope that this has been helpful to any degree, and again, I must say that I feel that there are many who are like me who want a deeper recommendation system than one based on a single book. The same goes with recommendations systems that incorporate many books, but that are shallow in how they go about recommending other books. So I say kudos, to you, and I'm excited to see where you go. To echo some who have came before me in these forums,
I HEAR YOU. Best of luck.