Barnesandnoble.com Acquires Stake In Enews.com

Online book and music retailer barnesandnoble.com (Nasdaq: BNBN) announced today that it has cemented its alliance with magazine subscription company Enews.com by acquiring a 32 percent stake in the company. Additionally, the four-year joint service agreement calls for the New York-based online unit of Barnes & Noble, Inc. to receive warrants that could push its equity stake up to 40 percent.

“This agreement further strengthens Enews.com’s position in the expanding market for online magazine sales,” said Enews CEO Brian Hecht.

“By partnering with barnesandnoble.com and Hachette Filipacchi, we have aligned ourselves with the most recognized name in book selling and the fourth-largest e-commerce site in the world, as well as with one of the world’s largest and most respected publishers.”

Hachette Filipacchi, an international magazine publisher which publishes 28 consumer magazines including Car and Driver, Elle, George, and Cycle World, also made an investment in Enews and “will become a key strategic partner,” the companies said in a statement.

The Washington, D.C.-based Enews is already the exclusive seller of magazine subscriptions on the barnesandnoble.com site.

Strategic Alliance

Enews was one of the first explorers of the then desolate e-commerce landscape, traveling virtually alone when it first ventured out in 1993.

Enews offers subscriptions to nearly 1,000 magazines at what it calls the lowest authorized prices online. In doing so, it has driven enough traffic to its site to be ranked in or near the Top 10 in a number of categories, the company claims. It is an exclusive or premier magazine seller on Yahoo!, Lycos, Excite, Tripod and WebCrawler.

In touting the online magazine subscription service, Enews cites a study by Mediamark Research pointing out that 55 million of the 118 million magazine readers in the U.S. use the Internet regularly.

Barnesandnoble.com sees that demographic as a perfect fit for its business. Ranked in the Top 5 of e-commerce retailers, the company says that its investment in Enews is the first of several that it intends to make “in a strategy to expand its product offering in areas related to its core business.”

The online unit reported third quarter sales of $49.1 million (US$) and a total of 2.9 million customers. Its parent company — with nearly 1000 bookstores under the Barnes & Noble and B. Dalton banner — reported third quarter revenues of $715 million.

Contrast To Amazon

The approach taken by barnesandnoble.com is different than the one taken by competitor and top online bookseller Amazon.com. Amazon has rapidly expanded in several directions over the past 12 months by adding music, then toys, and more recently transforming its site to include a mall of other online stores accessible from the Amazon.com site.

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