With the unit, dubbed iPublish.com, Time Warner will explore new avenues for the production, distribution and sale of fiction and nonfiction developed strictly for the Web, the company said in a statement.
Also today, Microsoft announced partnerships with Viacom's Simon & Schuster, Barnesandnoble.com and Random House to offer popular books for its Pocket PC.
Time Warner chief executive Gerald Levin discussed the iPublish unit last week at the company's annual shareholders' meeting.
The venture, which is set to launch during the first quarter of 2001, will have its own editorial and marketing staff led by Gregory Voynow, vice president of marketing for Time Warner Trade Publishing.
The iPublish site will consist of three sections: iRead, which will provide published works; iWrite, where members can submit new works for Time Warner editors to review for possible print or electronic publication; and iLearn, which will provide advice and expertise from Time Warner authors and in-house experts.
Several companies are exploring the potential of the online book publishing market, a nascent sector that has caught the attention of companies including Microsoft, Barnes & Noble and German conglomerate Bertelsmann.
Earlier this year, Microsoft teamed with Barnesandnoble.com to launch an electronic bookstore with Microsoft Reader software, which can be used to read books downloaded to portable computing devices.
Bertelsmann, which owns Random House and has a stake in Barnesandnoble.com, also has committed $16.5 million over three years to work with copier maker Xerox to print books on demand.
Time Warner, which is involved in a pending merger with America Online, said that certain AOL brands will become iPublish distribution partners. Time Warner said the unit is also partnering with Microsoft and Gemstar International for distribution and promotion, and it intends to ink several partnerships with e-book software companies, device makers and online retailers.