Time Warner and Bookface, whose site launched today, declined to disclose the size of the investment.
As previously reported, several leading publishers, including HarperCollins, Penguin Putnam, St. Martin's Press and Time Warner Trade Publishing, have signed up to provide full content of selected titles to Bookface. The company said it has created a secure platform that allows book pages to appear on browsers on which readers can highlight sections, place bookmarks and take notes.
The company and the publishers, however, are betting that consumers will read only a few chapters at most before choosing to download or purchase a copy of the book. Bookface is part of Amazon.com's affiliate program, with a "buy it" link to the Internet bookseller, the company said.
"This is a great way to convert browsers into buyers," said Tammy Deuster, Bookface's chief executive.
The Bookface launch comes as electronic publishing picks up steam. Several major publishing houses, including Simon & Schuster and Time Warner, and some large technology companies such as Microsoft have begun to see the potential of distributing books on the Internet.
"Internet publishing has the potential to reach a huge audience very quickly," said Jane Friedman, HarperCollins' chief executive. "We see great opportunity in working with Bookface to tap into this potential."
The site may help publishers and consumers become better acquainted with e-publishing.
"Bookface is sort of like a training wheel: It may train consumers to read online and to explore downloading," said Malcolm Maclachlan, a media analyst at International Data Corp. "It also could introduce publishers to a new revenue opportunity."
Indeed, Bookface, an advertising-supported Web site, said it will pay publishers a percentage of its advertisement revenue for each page browsed by readers on the Internet.
"People browse books in bookstores, and publishers have never made money from someone just browsing before," Deuster said.
Bookface will initially carry about 1,000 titles, including many works in the public domain by William Shakespeare, Jane Austen and Mark Twain. But publishers must become less stingy and release newer titles on the site if they expect e-publishing to really take off. Bookface will launch with new titles by fairly unknown authors such as P.D. Cacek, Melanie Tem and Linda Ladd--hardly the names that are likely to draw repeat visitors.
That will have to change quickly given the potential of the Internet to distribute bits of data quickly and efficiently.
There are no real competitors to Bookface primarily because publishers have been loath to lend their content to Internet sites. The same fate could await Bookface if publishers begin to withdraw support.
Just last week, Time Warner, which is involved in a pending merger with AOL, said it would also use Microsoft's display technology for the iRead channel of its new iPublish.com venture.
Time Warner said it is exploring several e-publishing initiatives.
Analysts also questioned Bookface's strategy of trying to become a destination site given the carnage witnessed by the Internet sector as companies burn through their cash trying to build their brand names.
"Forming a brand is pretty difficult right now," Maclachlan said. "If that is all Bookface is doing, their prospects are only as good as their software is difficult to reproduce."
O'Brien agreed, adding that Bookface should consider licensing its patent-pending technology to sites such as Amazon, Barnesandnoble.com and other more vertical sites such as technology and trade publishers.
Larry Kirshbaum, Time Warner Trade Publishing's chief executive, and David Steinberger, a president at HarperCollins, will be on the company's advisory board.