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New
York Times
After
being pilloried by investors for failing to capitalize on
its parent company's 550 stores and well-known brand, the
3-year-old online spinoff Barnesandnoble.com is making its
biggest bid yet to woo the chain's customers through a marketing
agreement with the Web portal Yahoo, which will provide
free Internet access to Barnes & Noble customers.
The deal, which is expected to be announced Tuesday, will
significantly bolster Barnesandnoble.com's exposure on the
Web by making it the most prominent bookseller on the Yahoo
site. Yahoo is the most popular site on the Web. Barnesandnoble.com
replaces Amazon.com, which did not renew its three-year
marketing pact with Yahoo. Barnesandnoble.com will also
sell books, music and videos in Yahoo's online shopping
network, paying Yahoo an undisclosed commission on its sales.
Beginning in October, Barnesandnoble.com and Yahoo will
also create a new Internet service under both brand names
that will be available using software distributed free in
Barnes & Noble stores. It is the chain's first effort to
support the online spinoff that goes beyond posting signs
and passing out coupons.
Barnesandnoble.com and Yahoo declined to disclose the terms
of the deal.
Barnes & Noble, which owns 40 percent of the online bookseller,
sold an initial public offering of the company's stock two
years ago with the promise that the online store could attract
customers through its parent company's chain of stores and
familiar brand name. But investors faulted Barnesandnoble.com,
saying it failed to demonstrate any marketing advantages
from the retain chain, sending its stock down well below
its initial offering price. Analysts suggested that the
parent company's executives feared losing sales to the online
spinoff and lacked an incentive to cooperate.
But Stephen Riggio, vice chairman and acting chief executive
of Barnesandnoble.com, called the new Internet service "the
most extensive and innovative cooperative marketing program
between Barnes & Noble and Barnesandnoble.com in the company's
history."
In addition to distribution in the stores, he said, software
for the new Internet service would be available for download
over the Internet and mailed to customers with shipments
from Barnesandnoble.com.
As for the possibility that its new online store customers
might defect from its brick-and-mortar stores, Riggio said
that the companies had no fears about stealing sales. "We
want to the customers to choose," he said, "We think they
will buy more."
Yahoo's president and chief operating officer, Jeffrey Mallett,
said Barnesandnoble.com made a "long-term commitment" to
participate in Yahoo's shopping network. He added that although
Amazon.com and Yahoo declined to renew their marketing agreement
in the United States, Amazon.com would continue to sell
books through Yahoo Web sites in Europe.
A spokeswoman for Amazon.com said the company chose to limit
its portal advertising deals to one with America Online
Inc., letting its deal with Yahoo expire.
Amazon.com has recently made efforts to cut back on its
marketing expenses, such as its deal with Yahoo. Amazon.com
has more than three times as many customers as BarnesandNoble.com,
the second largest online bookseller, and most of Amazon's
customers come directly to its own Web site.
Shares of Barnesandnoble.com rose 6 cents, to $4.56 Monday.
The new Internet service is one of a series of similar ventures
Yahoo has recently formed with retail chains to attract
new users not yet connected to the Internet. Yahoo announced
a similar agreement Monday with the discount chain Costco,
following previous agreements with the Kmart Corp.'s online
spinoff, Bluelight.com, and with the clothing retailer Spiegel.com.
The retailers will distribute free software in their stores
and provide access to the Internet through portals labeled
with both Yahoo's brand and their own.
For each deal, Yahoo will use Spinway, an Internet service
provider in Sunnyvale, Calif., that will connect users to
the Internet and sell advertisements that will flash on
the bottom of the users' screens.
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