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Random House Invests in Xlibris

April 3, 2000

NEW YORK (AP) _ Committing millions of dollars to authors that the publishing world usually ignores, a subsidiary of Random House Inc. has purchased a stake in the digital custom press Xlibris.

Founded three years ago, Xlibris makes books to order and sells them over the Internet through retail outlets like Barnesandnoble.com and Amazon.com. Xlibris has published about 600 books so far, some selling as many as 1,000 copies, and hopes to release ``tens of thousands″ books over the next few years.

``With the help of Random House we should be able to support a mind-boggling number of authors,″ said John Feldcamp, CEO of Xlibris, which is based in Philadelphia.

Neither company would discuss exact terms of the deal, but they said the transaction is worth at least seven figures. Random House, a subsidiary of the German media conglomerate Bertelsmann, made the deal through its recently formed Random House Ventures unit, which invests in technology companies.

``We thought it would be interesting to get into involved with what Xlibris is doing,″ said Richard Sarnoff, president of Random House Ventures. ``Given the revolution in communications the Internet allows, there’s no reason the audience shouldn’t get to find authors they otherwise wouldn’t know about.″

The deal with Random House already has changed how Xlibris does business. The company had been charging authors a basic fee of $450 to take a manuscript and make it ready to be ordered as a book, but as of Monday that service will be offered for free. Xlibris would still charge for amenities such as a galley for the author and a customized book covers.

The deal continues a trend in which traditional publishers and bookstores are increasingly putting money into new formats. Just in the past year, Barnes & Noble Inc. purchased 49 percent of iUniverse.com Inc., the main competitor of Xlibris; several publishers starting experimenting with electronic books and Stephen King, a Simon & Schuster author, published the novella ``Riding the Bullet″ exclusively online.

``The whole issue is: Do you view all of these start-ups as competitors or do you view them as potential partners?″ said Lorraine Shanley, co-director of the publishing consulting firm Market Partners International.

``It’s clear the winning strategy is to see them as partners.″


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