An unlikely partnership to build the e-textbook business

Marketplace Contributor Apr 30, 2012

David Brancaccio: When you think e-books, the iPad and the Kindle come to mind — not Microsoft Windows. But Microsoft’s been losing enough ground in tablets and e-readers that today it’s decided to spend $300 million to invest in Barnes & Noble’s Nook digital-book business.

Marketplace’s New York bureau chief Heidi Moore joins us now. Hello, Heidi.

Heidi Moore: Hi David.

Brancaccio: Why Barnes & Noble? Why doesn’t Microsoft just build the thing?

Moore: Microsoft has tried to build before and — I will just ask you this: Do you own a Zune?

Brancaccio: I do not.

Moore: No, almost no one owns a Microsoft Zune; almost everyone owns an iPod. And what Microsoft learned from that sad little experiment is that the ecosystem of a product counts — you can’t just have the device to read things on or to listen to things, you need the ecosystem. Barnes & Noble has an ecosystem of books, so Microsoft doesn’t have to make deals with publishers and incur all those headaches — it can just ride the coattails of the Nook.

Brancaccio: Now what’s this about textbooks? Is there any more money there than in regular old books?

Moore: Yeah, clearly you don’t remember the vast expenditures of your college kids, but yes. I mainly just yell at them to get off my lawn… but when they’re actually in school, what they’re doing is buying books that are $100, $175 in some cases. And they’re really expensive. It’s a consistent revenue stream for a company like Microsoft.

Brancaccio: Nothing like a steady business. Marketplace’s New York bureau chief Heidi Moore. Thank you very much for this.

Moore: Thank you David.

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