From the web page:

http://www.nytimes.com/library/tech/00/05/biztech/articles/23books.html

May 23, 2000

4 Giants Set to Embrace Electronic Publishing
By DOREEN CARVAJAL

In signs of an intensifying digital rush in the American book industry,
three trade publishing giants and Microsoft are poised to plunge deeper
into the emerging electronic literary market.

Time Warner Trade Publishing, a unit of Time Warner, is expected to
announce today the creation of a separate online publishing venture called
iPublish.com and iWrite, an unconventional hybrid that will solicit
manuscripts from would-be authors for review for electronic publication.

And in a dueling morning new conference, Microsoft -- along with Simon &
Schuster, a unit of Viacom and Random House, a unit of Bertelsmann -- will
detail the giveaway of electronic versions of Michael Crichton's most
recent book, the thriller "Timeline," along with agreements to publish more
than a dozen Star Trek titles in electronic form readable only on
Microsoft's new reader software for hand-held and personal computers.

The frantic pace of developments indicates that the industry is fast
reaching a critical mass in its embrace of technology that could reshape
the market, although skeptics still argue that electronic books are at
least two years away from gaining widespread popularity.

Microsoft's alliance with two of the nation's top trade publishers is the
company's first successful deal to obtain popular new titles for its
software, which has thus far had little to offer readers except older
public domain titles and fairy tales.

And over the next three weeks, a person close to Microsoft said, there will
be more such announcements.

But today, Microsoft executives will introduce their first marquee author,
Mr. Crichton, who will try to pick up where his fellow best-selling writer
Stephen King left off in March, when copies of his electronic novella,
"Riding the Bullet," ignited a two-day burst of 400,000 orders that
overwhelmed booksellers like Amazon.com and Barnesandnoble.com.

Fittingly, "Timeline" is a story about historians employed by a technology
billionaire not unlike Microsoft's chairman, William H. Gates. In the
fictional realm, the entrepreneur wants to build a theme park with ancient
artifacts, so historians are dispatched through time travel to feudal
France, where they confront the thrills and chills of swordplay and
pitch-filled catapults.

In the evolving world of electronic publishing, the chills come from lowly
competitors, who are challenging large mainstream publishers to take new
risks.

"The large conglomerates realize now that they better learn by doing rather
than to continue to observe not one, not 5, not 50, but hundreds of
startup.coms that are entering this market," said Robert E. Baensch, a
former publishing executive and director of New York University's Center
for Publishing, who predicts that a mass market for electronic books is two
to three years away.

But until then, the mainstream publishers that dominate the business appear
unwilling to wait -- even if it is not clear yet how protected the
electronic titles are from hackers. It took about two days before Mr.
King's novella was successfully hacked and posted online.

One executive in the electronic book industry said that talks were already
under way with Microsoft and other software and device manufacturers to try
to resolve the issue.

In the meantime, Time Warner's start-up, iPublish, is already considering
ways to experiment with the very form of the book. A top Time Warner
corporate executive said it would probably publish short offerings of
digital nonfiction and fiction from established authors like David Baldacci
and Walter Mosley.

With a staff of 15 employees who started last fall, the new electronic
publisher will also offer condensed versions of print books. Serial books
are also in the offing and will be priced by installment.

Those new titles -- along with older digital books from Time Warner -- will
start becoming available next fall. The works will be available for reading
with Microsoft software and will also be available to rivals including
Gemstar's Rocket eBooks, SoftBook Readers and NetLibrary's Peanut Press
versions for Palm hand-held devices.

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"Electronic publishing as a medium that can expand an author's audience
rather than cannibalize it."

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The Time Warner executive said the company was also creating another more
unconventional publishing arm, iWrite, which will seek manuscripts from any
would-be author. The new company is similar in nature to Xlibris, a
Philadelphia-based Internet start-up that recently sold a 49 percent stake
to Random House. Xlibris also solicits work from any writer but charges
fees for editing and review.

IWrite will not charge editing fees, the executive said, and the company
will hire people to read the material, much like the old-fashioned slush
pile of unsolicited manuscripts that editors have been receiving -- and
reading sporadically -- for decades.

"We look at electronic publishing as a medium that can expand an author's
audience rather than cannibalize it," the executive said. "First of all,
we're really hurting with younger readers. Our audience is tending to move
more and more to north of 45. We really feel we have lost a huge chunk of
that audience in the 18 to 34 range, and it seems to me that electronic
books will really hit hardest with the younger readers."

Initially, Microsoft's giveaway of Crichton novels will be available only
through one bookseller, Barnesandnoble.com.

But even so, competitors like Gemstar appreciate that the software giant
has made the move. The company has struck a partnership with the French
electronics maker Thomson Multimedia in an effort to manufacture and sell
more than half a million electronic book devices this fall.

"Renowned authors such as Michael Crichton will bring a great deal of
credibility to the reading community and will go along way to usher in the
age of electronic books," said Gemstar's chief executive, Henry Yuen, who
has been making the round of publishers' suites in search of titles that
can be offered digitally. "I expect that this type of endorsement will be
followed by other major publishers and authors."


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