Amazon launched the next phase of its book-search program last week, emphasizing its intention to create a search tool, not a browsing one, along with its belief that the service can help publishers increase sales. Publishers, many of whom signed on for an undisclosed number of titles, responded cautiously.

"Search Inside the Book," the second phase of the program that allows customers to see more than just bibliographic data, is an ambitious project that seeks to turn a warehouse of books into an enormous searchable database and thereby combine elements of book shopping with Web searching. It allows customers to search the content of listed books by keyword and to read a limited amount of text, thought to be a page, surrounding the found keyword.

The e-tailer, which came under criticism from some publishers last month for risking book sales at the expense of its own development as a search engine, said it went through many stages of discussion with publishers before it launched. Amazon was quick to stress its contention that the tool is meant to aid customers in finding out about books they hadn't heard of, not to obtain information that will deter them from buying. "It's really focused on allowing people to find what they want and make purchase decisions based around that. It's not designed for excerpts. It's not a tool for browsing," said Steve Kessel, v-p of North American media, apparel and sporting goods for Amazon.

Amazon also said it prevents such found information from being downloaded; is using many "security considerations" to block too much information from being seen; and has sought to limit use by requiring a credit card—but not payment—from anyone wishing to use the service. "We're not trying to replicate the bookstore," said Kessel. "We're just trying to help [readers] discover additional books."

The company boasts 120,000 titles from 190 publishers—including many of the major houses—and said it hopes to continue to add to both. But it offered no breakdown of titles per publisher, and at least one publisher said it had been very conservative in what it offered Amazon—a selection of mostly backlist books.

Amazon, evidently concerned about industry complaints, provided publishers with a cheat sheet listing potential questions from authors or the media, along with suggested answers, such as "What is publishers' reaction?" (A: "Very positive").

Media Group Sales Up 15%

Worldwide sales in Amazon's media group, which includes books, music, video, software and magazines, rose 28% in the third quarter ended September 30, to $877.3 million. The fastest growth came in the media group's international markets, where sales increased 50%, to $375 million. Sales in North America rose 15%, to $502.3 million, the fastest growth in the media group in quite some time. CFO Tom Szkutak said the growth was due to increased volume in both Amazon's own stores as well as through third-party sellers. He declined to reveal if any particular media segments, such as books, did better than others.

Sales for the entire company increased 33%, to $1.13 billion, and the company produced GAAP-approved (not pro forma) net income of $15 million, compared to a loss of $35 million in last year's third quarter. During the quarter, Amazon opened an electronics store in Japan and a sporting goods store in the U.S. Unit growth, spurred by third-party sales of new and used products, rose 36% in the quarter.

Company chairman Jeff Bezos expects the holiday period to be the largest quarter in Amazon history. Sales are projected to be in the $1.76 billion—$1.91 billion range, an increase of between 23% and 34% over last year's fourth quarter. While Bezos said Amazon still expects "to lower prices for years to come," no new pricing scheme was discussed in a conference call with analysts. And the company gave no indication that it plans to soon lower the $25 threshold for customers to qualify for free shipping. Since customers can take a long time to take advantage of the free shipping offer, Bezos said he believes Amazon "hasn't gotten the full benefit" from its current free shipping policy.