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NYT bookshop picks Barnes & Noble

Amazon.com's position on the Net receives another blow from a brick-and-mortar bookseller.

Who said the Net was the end of books? On the contrary, online bookshops are engaged in a heated battle over who will control valuable virtual shelf space.

Barnes & Noble piled up more fire power today after cutting a deal with the New York Times to be its exclusive bookshop on the Net starting in the fall.

The Times launched a site devoted to books with daily content and searchable archives of more than 50,000 of the newspaper's reviews in March. Now surfers will be able to link to Barnes & Noble directly when they want to buy a book mentioned on the Times site.

The move is only the latest in a series of competitive plays by online booksellers trying to secure their place in a booming market.

One day after Amazon.com (AMZN) garnered $54 million with its initial public offering, another Internet bookstore slashed its prices.

Book Stacks Unlimited, known as Books.com, knocked 40 percent off the suggested retail price for all New York Times bestsellers on Friday. In addition, it's discounting the majority of the titles in its online database by 15 percent.

"We did it in order to have our prices meet the competition," Mary Fair-Taylor, Books.com's director of marketing, said today.

The war between online booksellers has electronic commerce spectators transfixed as they wait to see who gets rich and who gets burned. Bookstores on the Net make browsing huge inventories simple with search engines and sell at lower prices because they don't have to maintain expensive chain stores.

The market only got tighter after Barnes & Noble opened its cyberdoors. The brand-name giant kicked of its grand opening by suing Amazon.com, challenging the virtual bookseller's claim that it is the largest online bookseller.

But suing rivals over sales pitches isn't the best way to eliminate the competition, analysts say. Keeping prices down and building an online community is a better tactic. "When you move to the Web, a lot of the traditional factors such as location become moot," said Nicole Vanderbilt, senior analyst for Jupiter Communications.

"No matter how nice any one bookseller makes their site, if somebody can undercut their prices, they're probably going to lose some business," she added.

Barnes & Noble dressed up its site by holding almost daily chat sessions with authors and by printing book reviews, commentary, and book excerpts, some with audiovisual effects.

Another potential big player that will soon enter the arena is Borders Books. No launch date is set, but visitors will be able to search its inventory, ask staff questions, chat with authors and musicians, and buy books, music, videos, and new media products.

"Bookselling is really flourishing on the Web because the products are a known quantity, so people aren't as afraid to buy remotely," Vanderbilt said. "But it's going to be hard for Amazon.com to compete with a household name like Barnes & Noble."

Others say Amazon.com will fare fine against the physical world's top sellers, especially after its impressive IPO and online brand power.

"Companies other than Amazon.com, Barnes & Noble, and Borders are not going to survive," said Bill Bass, senior analyst for Forrester Research. He said one advantage Amazon.com has is that more than 9,000 Web sites link to Amazon.com within their book reviews and other content. "They have thousands of storefronts woven into the fabric of the Internet. Barnes & Noble and Borders will have a hard time recreating that."

But, he added, "There is going to be huge price pressure on Amazon.com from Barnes & Noble and Borders because of the power those companies have with suppliers. They buy books in bulk at lower costs and can pass on those savings over online."

As for companies like Books.com, Bass said, "Amazon.com is the only exclusively online bookstore that is going to end up mattering."

His comments aren't deterring Books.com. The site has pushed books over the Web since October 1994 and has even turned a profit for the 30-person company. The vendor also started a frequent buyer club in which members pay an annual fee of $29.95 to receive 30 percent off of about 350,000 titles.

"Our main strategy is to base our business model on a membership model," Fair-Taylor said. "We'll offer our books at the lowest price possible and generate profit based on membership revenue."

Book Stacks Unlimited is owned by CUC International, a membership-based consumer services company with approximately 66.3 million consumers worldwide.