In your face, Amazon: Barnes & Noble joins battle for e-book market

Barnes & Noble (BKS), the nation's largest brick-and-mortar bookstore chain, announced yesterday that is has purchased the second- largest distributor, of e-books, Fictionwise, for $15 .7 million in cash.

The acquisition brings to Barnes & Noble a catalog of over 60,000 titles formatted for reading on a variety of platforms, including PCs, the Blackberry, Sony eReader, and Amazon's Kindle.

As walk-in bookstores continue to suffer recession declines (witness Borders Books recent round of layoffs), e-book sales have been accelerating, reportedly exceeding $100 million in 2008.

I suspect we are witnessing a market-changing event that will bring about an explosion of digital content reading devices and publications reformatted for internet distribution within the next 24 months. Only the high price of these reading devices stands in the way of this trend.

According to the Financial Times, Barnes & Noble is, not surprisingly, considering offering its own dedicated reader device to compete with the Kindle, possibly the new e-reader under development by Plastic Logic first seen in the wild last fall. Fictionwise has an agreement to provide content for the new Plastic Logic device.

The combination of Barnes & Noble distribution and marketing, Fictionwise content, and a digital reading device would form the strongest competition to Amazon's Kindle to date. However, unlike Amazon (AMZN), Barnes & Noble is burdened with the cost of maintaining a storefront empire in a down market, and losses in that sector could still overwhelm any profits in a nascent e-book market.

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