Barnes & Noble enters e-book business

Barnes & Noble Inc. on Monday stepped up its fight in the small but highly competitive market for electronic books with the launch of a new e-bookstore offering titles to be read on a variety of devices.

Barnes & Noble will sell books that shoppers can read on the iPhone, iPod Touch, BlackBerry and most personal computers, whereas competitors have sold devices designed solely for reading electronic books, such as Amazon.com's Kindle or Sony's Sony Reader.

New York-based Barnes & Noble said it also will be the exclusive provider of books for a reader from Mountain View, Calif.-based Plastic Logic, which expects to release it in 2010. And the company expects to make more devices compatible in the coming months.

"As the world's largest bookstore, we're trying to get digital books into the hands of people who want them — any device, any time, anywhere," said Barnes & Noble president William Lynch.

The company plans to offer 700,000 titles initially and up to 1 million within a year. That includes the more than half-million books Google recently made available for free. It will sell all other trade and traditional titles for $9.99 each.

Seattle-based Amazon, which reports its quarterly results this week, offers roughly 325,000 titles for the Kindle. Sony Reader offers about 600,000, including Google's free titles.

Analysts said the multi-format approach gives Barnes & Noble an edge in appealing to a wide array of consumers in this developing market.

"Instead of just betting that one device will win, they are betting on the whole category of digital reading," said Sarah Rotman Epps, a media analyst for Forrester Research.

Forrester estimates that electronic books constitute less than 2% of total U.S. book sales.

Barnes & Noble said it sees the market for e-books growing over the next several years. New revenue sources are crucial to the bookseller, whose sales have plummeted in recent years as competition has intensified from discounters like Amazon, Wal-Mart and Target. Shoppers cutting back on discretionary spending during the recession compounded its problems.

Michael Norris, a publishing analyst at research firm Simba Information, said Barnes & Noble's move may be sharp because most consumers aren't willing to pay hundreds of dollars for a reader — and they buy books only sporadically.

"Dedicated reading devices only have dedicated readers," he said. "And most people aren't dedicated readers."

Barnes & Noble did sell e-books in 2001 but exited the market after it found inadequate demand. But analysts say the Kindle's popularity has stimulated consumer appetite for electronic books.

Barnes & Noble jumped back in the fray in March with its acquisition of electronic book company Fictionwise and has worked quickly to develop its product line.

Shares of Barnes & Noble rose 64 cents, or nearly 3%, to close at $22.11 Monday and rose 9 cents in after-hours trading.

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