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Publishers take steps toward electronic distribution

Posted: Thursday, May 25, 2000

NEW YORK -- Three book publishers announced electronic distribution ventures on Tuesday, a sign the industry is getting serious about making books available digitally for personal computers and handheld devices.

Random House Inc. made best-selling author Michael Crichton's novel ''Timeline'' available for free online at barnesandnoble.com but only to users of handheld computers with a Microsoft operating system.

Also teaming up with Microsoft is Simon & Schuster Inc., which saw about half a million downloads when it released a short story by Stephen King online two months ago. On Tuesday, it released 15 Star Trek titles, saying the books would appeal to the ''early adopters'' of technology.

Separately, Time Warner said it had formed an electronic publishing division. It will solicit manuscripts for books and shorter pieces at a Web site that the company hopes to launch early next year. The site also will sell online versions of the books.

Two recent developments are pushing the publishing industry to move toward online distribution, analysts say.

One is the success of King's electronic book, the first online release by a big-name author, which demonstrated there is a market for e-books. The second is the growing online exchange -- and piracy -- of music, made easy by file-sharing programs such as Napster.

''I think the book industry is looking with horror at what's happening in the music industry,'' said analyst Dan O'Brien at Forrester Research. Publishers want to enter the digital arena early to avoid having consumers get accustomed illegal online acquisition, as has happened with music, O'Brien said.

The new electronic books use encryption technology from Microsoft and Xerox aimed at preventing copying and printing.

But Dick Brass, Microsoft's vice president of technology, acknowledged at a news conference with Random House and Simon & Schuster that ''no copy protection technology is perfect.''

King's e-book was also encrypted. But hackers quickly broke the code and posted freely copyable and printable versions online.

Timeline and the Star Trek books are available free at barnesandnoble.com. They can be read only on the two models of handheld computers that run Microsoft's Pocket PC operating system.

Pocket PC is touted in ads as Microsoft's challenge to the popular, market-leading Palm handhelds, but only about 10,000 computers running the system have been sold in stores since their launch April 19, according to market research group PC Data.

More than 10 times as many Palm computers were sold in the same period.

Barnesandnoble.com would not say how many people had downloaded Crichton's book by Tuesday afternoon but said it met with nowhere near the response as for King's book, which was downloaded 400,000 times in the first 24 hours.

While the new handhelds have made electronic books portable, it is still unclear if consumers will take to reading from computer screens.

Analysts say reference works and shorter pieces like magazine articles would make the transition better than full-length books like Crichton's ''Timeline,'' a hefty 450 pages.

''Obviously the novel is a sexy way to build awareness, but I don't think that going to be the primary application for this technology,'' said analyst Aram Sinnreich at Jupiter Communications.



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