PW: netLibrary Restructures, Names Kaufman President

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netLibrary Restructures, Names Kaufman President
Calvin Reid -- 4/24/00
Looks to business, education, consumer markets and expands role as distributor of all e-book formats

NetLibrary, a Boulder, Colo.-based firm that originally focused on providing online reference texts to libraries, announced a flurry of aggressive initiatives last week that will expand its e-title offerings, broaden its target market and expand its role as a distributor, marketer and promoter of e-books of all kinds.

In pursuit of these initiatives, which include the purchase of MetaText, an Orlando, Fla.- based firm that produces online editions of textbooks, the company has implemented a management restructuring. The new structure features three divisions focused on the corporate, educational and trade/ consumer markets; a fourth division will manage e-book distribution to online retailers. Heading up the new management team is Robert Kaufman, who was named president and CEO. Kaufman, who had been CFO, will report to netLibrary chairman Timothy Schiewe.

The changes reflect netLibrary's intent to move beyond its early business model of time-based online subscription access to e-books for libraries (as well as consumers) and distributing e-books in all formats, enabling e-texts to be downloaded to home computers, dedicated reader and Palm devices. In fact, the company has developed its own netLibrary reader, an HTML-based application, available for free, that works like a browser, allowing users to read downloaded e-books. The company currently offers more than 18,000 titles from more than 200 publishers.

The corporate division will focus on business and technology books and eventually offer digital periodicals, journals and reference material. The division will be overseen by Rich Rosey, executive v-p for institutional markets. David Melancon, chief marketing officer at netLibrary, will oversee the operations of the consumer and educational divisions. Melancon told PW that the moves were part of a "bridge strategy" to "add structures" to address these new markets. He added that publishers want "further distribution" of e-books, and that online retailers "want to get e-books from one source." And while the site sells e-books, it plans to become more involved as a "device agnostic" wholesaler, reselling e-books for all formats and devices to online retailers.

Among the flurry of deals netLibrary has recently made is the acquisition of e-book distribution rights for Russian President Alexander Putin's upcoming memoir, First Person, from Public Affairs. Melancon told PW that the new deal with Public Affairs gives netLibrary worldwide rights to distribute the e-book edition to retailers. "Trade titles are still only 10% of the [netLibrary] site," said Melancon, "but that will increase rapidly. We also have rights to 20-35 e-titles in the next two months that will be released simultaneously or prior to print." He also noted that Putin's First Person will feature a "value-added" bonus--extra information and notes that are not in the print edition. Melancon declined to confirm published reports that netLibrary was prepared to spend $250,000 to promote the book, but said, "We are prepared to put a lot of marketing effort into the book."

On the educational side, MetaText, which partners with publishers (Norton and Wiley, among others) to create online textbook content, will be part of the education division. The MetaText platform allows students and professors to make notes and communicate by e-mail; ultimately, it will provide full multimedia content, including sound, video and animation. Melancon emphasized that the firm "always works with publishers. We have no desire to work with authors. Publishers are arbiters of content; we work with them to strengthen the value of their content."

NetLibrary also has a deal with Houghton Mifflin to do the e-release of The Leap by Tom Ashbrook, the story behind the launching of his Internet company, HomePortfolio.com. The deal will include online promotions as well as print and broadcast publicity.

The company has also entered into a promotional campaign with the Discovery Channel to sponsor its recent dinosaur TV special and to sell e-book reference works on dinosaurs through the Discovery.com Web site. Melancon said that there will be more deals to come. "We want to be the partner of choice when publishers want to showcase e-books," said Melancon.

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