Taking a significant step in developing the consumer e-book market, Microsoft and barnesandnoble.com have announced a strategic partnership whose primary aim will be to sell electronic books that use Microsoft Reader software via the bn.com Web site. The books, which can be read with Microsoft's ClearType technology, will be available for purchase by the middle of this year.
Because Microsoft Reader will be available from bn.com and elsewhere as a free download, the move will enable thousands of electronic books to be consumed by the public from a site they know and visit. Microsoft said it has already signed up content from major publishers in Europe, including Mondadori and Havas, and will announce several high-profile arrangements with American publishers over the next 30 days.
Microsoft's Dick Brass said he has as many was 5,000 American titles already and he hopes to have up to 10,000 available by the end of 2000. Bn.com's Steve Riggio added that his company, too, has begun signing up "charter" publishing partners for books that will be available as Microsoft Reader editions; the site may also use titles from Barnes & Noble Inc.'s publishing program, including, but not limited to, titles from iUniverse. And in the hope of mainstreaming the format, bn.com hopes to offer the books at a price discounted from the cost of a trade paperback, even as both parties acknowledged that publishers will play a critical role in that department.
While the partnership will undisputedly make e-books more popular than ever before, it is also sure to raise concerns among both competing software companies and booksellers regarding their ability to prosper in the e-book arena, given the swiftness with which Microsoft and Barnes & Noble have come to dominate their respective markets. "I wouldn't say there's exclusivity, but the arrangement provides a great deal of preference for strategic alignment," Brass said during a teleconference announcing the deal. "Steve [Riggio] will continue to sell e-books in other forms and Microsoft will continue to negotiate with other vendors."
Also remaining murky is the issue of hardware. At the beginning, Microsoft Reader will run on laptops and desktops, and Brass said that Microsoft is negotiating with companies that manufacture its Windows CE machines to provide a low-cost device that will allow consumers to read books using Microsoft Readers. The Windows CE machines themselves will also eventually run Microsoft Reader. All the handheld devices, Riggio said, would be sold at B&N stores, and B&N will also aggressively promote Microsoft product.
The move strengthens Barnes & Noble's foothold in the e-book market and gives Microsoft the necessary clout to approach and win over publishers. In so doing, Microsoft may have overcome the so-called chicken-and-egg problem of needing publishers to attract consumers and consumers to attract publishers, and, as Brass has said, "go directly to the omelet." It also represents the first shift in how e-books are sold--from a scattered, and often weak, grouping of electronic publishers each trying to sell books that use its own system to a more centralized model that will allow for more titles in one place.
