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Fictionwise Buy-Gives B&N Big-e-Book-Boost

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MAIN NEWS HEADLINES
March 12 – March 19, 2009 Edition

Fictionwise Buy
Gives B&N Big
e-Book Boost

NEW YORK, NY/AUTHORLINK NEWS/03/12/09–Barnes & Noble, Inc.'s acquisition last week of Fictionwise, one of the largest online e-book retailers, now probably positions B&N to become one of the largest e-book retailers, behind Amazon and Google.

The $15.7 million acquisition comes only a few days after Amazon.com, America's largest online bookseller, announced its Kindle e-books will now be available on Apple's iPhone and iPod Touch devices.

"We bought Fictionwise because we like how they've approached the digital and e-book markets," said William Lynch Jr., president and chief operating officer of Barnes&Noble.com, in an interview with The Wall Street Journal . "They have one of the most popular applications on the iPhone, and they really understand merchandising. They also have a lot of institutional knowledge about this space."

Barnes & Noble 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. Barnes & Noble intends to keep Fictionwise as a separate business unit and the founders will continue to operate the business.

Fictionwise, founded in 2000 and based in Chatham, N.J., stocks 60,000 to 65,000 titles and is adding 500 new titles a week, said Stephen Pendergrast, a co-founder with his brother, Scott's Mindwise Media, LLC. Fictionwise.com offers a comprehensive collection of fiction and nonfiction in popular eBook formats, including Gemstar/Rocket, Secure Adobe Reader, Secure Mobipocket, Secured MS Reader and Secure eReader, and also in audio formats.

The pair said they decided to sell because "the business is exploding and we needed to partner with a corporation that could provide us with necessary firepower."

E-books sales, while still a small part of the market, have shown extraordinary growth in recent years. In a single year, from the fourth quarter of 2007 to the fourth quarter of 2008 (the most recent period for

which figures are available), electronic book sales more than doubled from $8.2 million to $16.8 million, according to The International Digital Publishing Forum, which collects quarterly US trade retail eBook sales in conjunction with The Association of American Publishers (AAP).

Barnes & Noble, Inc. (NYSE: BKS), the world's largest bookseller and a Fortune 500 company, operates 799 bookstores in 50 states. Barnes & Noble conducts its online business through Barnes & Noble.com (www.bn.com), one of the Web's largest e-commerce sites.