Barnesandnoble.com, Microsoft in Book Deal

Barnesandnoble.com Inc. said it’s teaming up with Microsoft Corp. to open the first major Internet store selling digital books. The books will be available for downloading and reading on a screen or in single paperback copies printed on demand, the online bookseller said. Microsoft is launching the latest version of its free software for reading on screens as part of the deal. Financial terms were not disclosed.

The Barnesandnoble.com move marks a step past No. 1 rival Amazon.com Inc.--which lacks those technological capabilities--and comes as publishers and booksellers try to map out the new territory for digital books.

Barnesandnoble.com said Microsoft was backing the venture in part through an advertising campaign and will pay authors and publishers for the right to advertise their books with its software.

New York-based Barnesandnoble.com said it also has started discussions with agents about buying the digital rights to books still under copyright. That would put the company into direct competition with publishers.

Barnesandnoble.com shares rallied $1.44 to close at $5.19 on Nasdaq.