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September 19, 2000, Tuesday
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Bookseller and Yahoo to Announce Pact


After being pilloried by investors for failing to capitalize on its parent company's 550 stores and well-known brand, the three-year-old online spinoff 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 today, will also significantly bolster'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. replaces, which did not renew its three-year marketing pact with Yahoo. will also sell books, music and videos in Yahoo's online shopping network, paying Yahoo an undisclosed commission on its sales.

Beginning in October, 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. 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, saying it failed to demonstrate any marketing advantages from the retain chail, 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, called the new Internet service ''the most extensive and innovative cooperative marketing program between Barnes & Noble and 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

As for the possibility that its new online store customers might defect from its brick-and-mortar stores, Mr. 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 made a ''long-term commitment'' to participate in Yahoo's shopping network. He added that and Yahoo declined to renew their three-year marketing agreement in the United States but would continue to sell books through Yahoo Web sites in Europe.

A spokeswoman for said the company chose to limit its portal advertising deals to one with America Online Inc., letting its deal with Yahoo expire. has recently made efforts to cut back on its marketing expenses such as its deal with Yahoo. has more than three times the customers of, the second largest online bookseller, and most of Amazon's customers come directly to its own Web site.

Shares of rose 6 cents, to $4.56 yesterday. The new Internet service is one of a series of similar ventures Yahoo has recently formed with brick-and-mortar retail chains to attract users not yet connected to the Internet. Yesterday, Yahoo announced a similar agreement with the discount chain Costco, following previous agreements with the Kmart Corporation's online spinoff,, and with the clothing retailer The retailers will distribute free software in their stores and provide access to the Net through a portal labeled with both Yahoo's brand and the chain's.

The free Web service ''is a way for the merchant to stay directly in touch with their users, and it allows us to directly promote our services such as Yahoo mail and Yahoo instant messaging,'' Mr. Mallet said.

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.

Organizations mentioned in this article:; Yahoo Inc; Inc

Related Terms:
Books and Literature; Sales; Book Trade; Computers and the Internet

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