Barnes and Noble Joins Amazon, Sony on the eBook Bandwagon

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Includes: AMZN, BKS, SNE
by: Seth Gilbert

In the early days of the Internet, Amazon (NASDAQ:AMZN) looked like the underdog when it matched up against big box book sellers like Barnes and Noble (NYSE:BKS). Now, targeting the smaller niche of eBooks, the roles are reversed as Barnes and Noble will look to match Amazon’s technological strengths with a new entry into the eBook marketplace.

Barnes and Noble said Monday its new eBook store will stock as many as 700,000 titles including new releases priced at $9.99. BN is calling it the world’s largest eBook store, surpassing both Amazon and Sony (NYSE:SNE), though that claim may be misleading given the inclusion of as many as 500,000 free titles offered in partnership with Google’s (NASDAQ:GOOG) Book Search. (Sony is also partnered with Google)

William Lynch, President of BN.com, suggested the move is a principal part of Barnes and Noble’s digital strategy, saying the company believes “readers should have access to the books in their digital library from any device, from anywhere, at any time.”

At the same time, however, Lynch acknowledges the market sizing for digital books remains unclear. “We see eBooks as additive for the publishing industry. The question is how much, and we don’t know that,” he said.

At this stage, many analysts estimate eBooks presently account for only a fraction, maybe $100m to $200m, out of the publishing industry's tens of billions in wider annual revenue. Though growing, the eBook segment is, at best, a small niche. The expectation is that will change in the longer term – particularly if eReader platforms are embraced as useful tools for wider use, things like textbook alternatives and news media subscription distribution (digital paper, blogs, etc.) platforms.

To embrace the largest possible market opportunity, BN’s bookstore will support iPhones, Blackberries, and most computers out of the gate. The BN store’s books won’t be readable on Amazon’s Kindle or Sony’s Reader.

For portable e-reading platforms, BN will support Plastic Logic’s competing large screen e-reader device when it debuts in 2010. Plastic Logic, based in Mountain View, California, is currently building a factory to produce the devices in Germany.

Fictionwise, an eBook seller Barnes and Noble acquired in March, likely figures heavily into the new bn.com offering.