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logo_btmnew6Fictionwise has been acquired by Barnes & Noble, said to be the world’s largest bookseller, for $15.7 million in a stock deal that TeleRead revealed earlier today.

I spoke with Scott Pendergrast of Fictionwise at 7:20 a.m. EST this morning and he told me that all the Fictionwise sites—Fictionwise, eReader and eBookwise—will continue as they currently exist. Fictionwise will still be managed by its current team as an independent entity under Barnes & Noble. Scott said that Barnes & Noble was fully behind Fictionwise’s philosophy of "platform neutrality and eReader everywhere".

A full press release and FAQ were to go up on the Fictionwise site at 8:30 a.m. EST today. (Update: Here’s a press release (source of the $15.7 million figure) which we’ll reproduce at the end of this item. The FAQ is here.)

Analysis: In his exclusive telephone interview with me, Scott Pendergrast said he and his brother, Steve, shopped the site around to a number of buyers with the understanding that the current philosophy toward e-books would survive—and that presumably means that you’ll still be able to buy nonDRMed books from Fictionwise when publishers allow.

The actual transaction is notable for who did not buy Fictionwise: a company like Amazon or Ingram that might have ended Fictionwise’s nonDRMed multiformat releases.

If the Pendergrasts’ current plans survive, this could also be good news for the ePub standard, which will be the core format for a reinvented eReader.

What’s more, if the Pendergrasts’ vision remains, eReader will be available for Linux, complete with DRM capabilities for publishers that insist on "protected" books.

The fact that Amazon or Ingram didn’t buy Fictionwise also could be good news for Lexcyle (developer of Stanza) and other e-reader vendors interested in licensing Fictionwise’s DRM.

Of all the major DRM systems, the one in Fictionwise’s eReader softare could well be among the gentlest, allowing you to copy a book to an unlimited number of your own devices–unlike systems from, say, Mobipocket. Fictionwise DRM uses encrypted credit card numbers as a way to discourage copying.

In retail terms, the deal might open up all kinds of financial and inventory resources for Fictionwise.

Not everyone sees full positives here. "Fictionwise was the big independent in the industry, and also the company most willing to work with small publishers and non-DRM," Rob Preece of BooksForABuck.com, a small e-publisher, said in a TeleRead comment. "I’m sorry to see them go as an independent force, and not especially happy that BN made the purchase as they haven’t traditionally been especially friendly to small publishing.

"Still, great news for Scott and Steve to cash out their position after a lot of hard work. And wonderful that if FW was to be acquired, it would be acquired by someone committed to books and not automatically leading to more consolidation in the industry."

If B&N respects the Pendergrasts’ philosophy, then, as noted, the nonDRMed books will indeed continue.

Press release follows

Barnes & Noble Acquires Fictionwise
Thu. March 05, 2009; Posted: 08:30 AM

NEW YORK, Mar 05, 2009 (BUSINESS WIRE) — BKS | Quote | Chart | News | PowerRating — Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller, announced today that it has acquired Fictionwise, a leader in the e-book marketplace, for $15.7 million in cash. 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.

Headquartered in New Jersey, Fictionwise was founded in 2000 by Steve and Scott Pendergrast. Barnes & Noble intends to keep Fictionwise as a separate business unit and the founders will continue to operate the business.

ABOUT BARNES & NOBLE, INC.

Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller and a Fortune 500 company, operates 799 bookstores in 50 states. Barnes & Noble is also the nation’s top bookseller in quality, and for the fifth year in a row, the top bookseller brand, as determined by a combination of the brand’s performance on familiarity, quality, and purchase intent, according to the EquiTrend(R) Brand Study by Harris Interactive(R). Barnes & Noble conducts its online business through Barnes & Noble.com (www.bn.com), one of the Web’s largest e-commerce sites.

General information on Barnes & Noble, Inc. can be obtained via the Internet by visiting the company’s corporate website: www.barnesandnobleinc.com.

SAFE HARBOR

This press release contains "forward-looking statements." Barnes & Noble is including this statement for the express purpose of availing itself of the protections of the safe harbor provided by the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. These forward-looking statements are based on currently available information and represent the beliefs of the management of the company. These statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks include, but are not limited to, general economic and market conditions, decreased consumer demand for the company’s products, possible disruptions in the company’s computer or telephone systems, possible risks associated with data privacy and information security, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, possible disruptions or delays in the opening of new stores or the inability to obtain suitable sites for new stores, higher than anticipated store closing or relocation costs, higher interest rates, the performance of the company’s online and other initiatives, the performance and successful integration of acquired businesses, the success of the company’s strategic investments, unanticipated increases in merchandise or occupancy costs, unanticipated adverse litigation results or effects, the results or effects of any governmental review of the company’s stock option practices, product shortages, and other factors which may be outside of the company’s control. Please refer to the company’s annual, quarterly and periodic reports on file with the SEC for a more detailed discussion of these and other risks that could cause results to differ materially.

SOURCE: Barnes & Noble, Inc.

Mary Ellen Keating
Senior Vice President
Corporate Communications
Barnes & Noble, Inc.
(212) 633-3323
mkeating@bn.com For full details on Barnes & Noble Inc (BKS) click here. Barnes & Noble Inc (BKS) has Short Term PowerRatings of 5. Details on Barnes & Noble Inc (BKS) Short Term PowerRatings is available at This Link.

 
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