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Simon & Schuster to test appeal of online books

Testing the market for e-book sales, Simon & Schuster will unveil a plan to let consumers download chapters of books by best-selling authors in exchange for donations to charity.

Testing the market for e-book sales, Simon & Schuster will unveil a plan tomorrow to let consumers download chapters of books by best-selling authors such as Stephen King and Mary Higgins-Clark in exchange for donations to charity.

For a limited time, the excerpts can be accessed for a $1 to $10 contribution, raising money for Literacy Partners, a nonprofit group that helps adults learn how to read.

But philanthropy isn't all Simon & Schuster has in mind. The publishing giant is using the fund-raiser as a way to explore digitally distributing and promoting books, from college texts to Jackie Collins' latest romance novel. Free digital chapters already are used to pitch best sellers on sites such as Amazon.com.

The publishing giant worked with digital rights management company Reciprocal to set up its new Web site, HotAuthors.com. Reciprocal's system prevents people from sharing or reselling unauthorized copies of digital music or literature and ensures that all vested parties get the proper royalties from legal sales. The system also allows publishers to put an expiration date on access to a digital work.

"Although the Internet has the ability to transform the nature of publishing, until now publishers have been reluctant to put their authors' content online because of the danger of piracy and copyright infringement," Carolyn Reidy, president of Simon & Schuster Trade Division, said in a statement. "We are pleased to partner with Reciprocal, which can protect our copyrights during digital distribution as we together aid Literacy Partners."

Reciprocal says it has agreements to help other major publishers set up e-book distribution as well.

"The publishing industry has really woken up," said Paul Bandrowsky, CEO of Reciprocal. "With most of the significant publishers we have an agreement or are at the 'letter of intent' stage for full digital distribution."

Analysts hardly expect droves of book lovers to snuggle up with a computer on a lazy afternoon instead of with their favorite novel. But broad investments are being made on the device and content fronts to expand the demand for e-books by tapping into the formula that is fueling the online music craze.

"I think there will be a small market for downloadable fiction books," said Carrie Johnson, an analyst with Forrester Research who is working on an e-book report that will be released early next year.

"There is nothing wrong with books--so why change it?" she added. "But there is an opportunity for new content bundling to go after certain segments, such as travel and reference books, so consumers can just download, buy and [update] chapters."

Technology and publishing leaders are convinced there is a market for digital books.

For instance, Microsoft cofounder Paul Allen has invested more than $30 million in Fatbrain, whose eMatter technology lets authors and publishers sell digital copies of books, magazine articles and other documents via the Net.

Microsoft itself is investing in the e-book concept. The company has struck deals with publishing houses such as Penguin Books, R.R. Donnelley & Sons, Bertelsmann, HarperCollins Publishers, Penguin Putnam, Simon & Schuster and Time Warner Books to convert thousands of print titles into electronic copies of books.

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 in response to Internet requests.

The availability of e-books could increase now that publishers and technology makers are working to adopt the Open eBook initiative. The industries will converge in San Francisco next week to mull standards for digitizing books so they can be viewed on a variety of new devices, such as products by Softbook Press and NuvoMedia.

"The question is, now that we have the specification, what do we do to promote it and drive the market?" said Carol Risher, vice president of new technology and copyright at the Association of American Publishers (AAP). "Overall, the whole business of digital books is healthy, alive and growing. Every single publisher we represent has said, 'We want to get into the e-book market.'"

Still, some markets for digital books will be better than others.

Reciprocal tested e-books on hundreds of college students as part of a study this year and found that a majority of them like digital textbooks because they were cheaper and searchable. Students still printed out large chunks of the material, however, signaling a huge obstacle in the e-book market: changing societal habits.

"People don't like to read online; the print-out ratio for long sections of texts is really high except for short stories," said Peter Krasilovsky, an analyst with the Kelsey Group.

"But there is content that is especially good for e-books, [such as] government or sports data," he added. "Maybe consumers aren't ready to read books on the Web, but excerpts are a very good press strategy to get attention--that is bound to be successful."