June 6, 2000 10:50 AM PDT
Barnesandnoble.com invests $20 million in e-book site
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Barnesandnoble.com said today it is investing $20 million in MightyWords, a unit of Fatbrain.com, which allows consumers to download digital versions of books to a personal computer. The investment gives Barnesandnoble.com a 30 percent stake in the company.
Fatbrain, which sells technical books online, said that MightyWords received another $16 million in funding from several venture capital firms, including $10 million from Vulcan Ventures, Microsoft co-founder Paul Allen's venture arm. Other investors include Millennium Technology Ventures, Highland Capital Partners, and APV Technology Partners.
In the past few weeks, e-publishing has gathered momentum as several major publishing houses, including Simon & Schuster and Time Warner Trade Publishing, and some large technology firms like Microsoft have begun to see the potential of distributing books on the Internet.
This spring, online publishing got a big boost when more than 400,000 copies of Stephen King's 66-page novella, "Riding the Bullet," were downloaded for free in a test run in less than 24 hours.
Amazon.com and Barnesandnoble.com currently entice consumers with free online chapters, hoping to convert the casual browser into a buyer. The next step is to bring entire novels and nonfiction books to readers over a variety of devices. Last month, Microsoft partnered with Random House to offer Michael Crichton's latest novel, "Timeline," via Pocket PCs from Hewlett-Packard and Casio.
But while the publishers are increasingly enamored with online publishing, it is unclear whether consumers will rush to the virtual bookshelves. The industry must first overcome security and piracy concerns, as well as creating standard technologies that meet consumers' expectations for quality when downloading and reading books on portable devices.
With today's investment, Barnesandnoble.com will distribute MightyWords' content on its site.
MightyWords said it plans to look for other distribution deals with leading Internet sites.
Stephen Riggio, Barnesandnoble.com's acting chief executive, and Diane Daggatt, Vulcan Ventures' director, will join MightyWords' board of directors.
In addition to best-selling authors, MightyWords distributes some nontraditional content such as essays, serialized pieces, speeches and movie scripts.