Barnes & Noble Acquires E-Book Retailer
Book retailer Barnes & Noble has acquired e-book retailer Fictionwise for $15.7 million in cash.
In a short release, Barnes & Noble announced the acquisition and said it plans to use Fictionwise as part of its overall digital strategy, which includes the launch of an e-bookstore later this year. In addition to the closing purchase price, Fictionwise may receive earn out payments for achieving certain performance targets over the next two years.
Fictionwise operates the e-commerce sites Fictionwise.com, which allows users to purchase e-books for download onto computers, and eReader.com, which allows users to purchase e-books for download onto portable devices running the Palm OS platform using the eReader freeware program. Fictionwise provides eReader. Fictionwise also operates eBookwise.com, a site where it sells a proprietary e-book reading device called the eBookwise 1150 and e-books formatted for the device, as well as Libwise.com, an online platform that provides e-books to lending libraries.
Barnes & Noble will keep Fictionwise as a separate business unit. Founders Steve and Scott Pendergast, who launched Fictionwise in June 2000 as a partnership between Steve Pendergrast and Mindwise Media, LLC, which is owned by Scott Pendergrast, will continue to operate the business.
An FAQ section on the Fictionwise website states its customers can expect to see more e-book content than ever before and that additional resources will be available to improve the Fictionwise.com and eReader.com websites, as well as continue the expansion of the eReader freeware format onto more platforms.
Barnes & Noble sold its 75% ownership stake in seasonal specialty retailer Calendar Club in February 2009. The retailer posted a 7.4% drop in comparable store sales and 4.4% drop in total sales, with a net loss of $18.4 million, in Q3 2008. At that time, Barnes & Noble CEO Steve Riggio was quoted as saying the retailer would take steps to reduce expenses in the upcoming year.
E-book sales appear to be on the increase and may further threaten the performance of traditional book retailers. Amazon.com does not release specific sales figures of its Kindle e-book downloading and reading device, but in a note to clients, Citigroup previously estimated Kindle-related revenues of $153 million in 2008, $429 million in 2009, and $1.2 billion in 2010, off the strength of 500K, 1 million, and 3.5 million unit sales for those years, respectively. These forecasts are based on comparisons to iPod adoption rates and Kindle pricing. Amazon released version 2.0 of Kindle in February 2009.
Rival Borders announced the layoff of 742 employees throughout its stores on March 5, 2009. Borders has offered e-books in partnership with Sony since 2007.