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Barnes & Noble Takes the Free ISP Route

If you give 'em free access, they will come. E-tailer BlueLight.com has signed up millions of folks that way, and now bookseller Barnes & Noble.com is taking the same approach, signing a new marketing and promotion deal with Yahoo! and Spinway Inc. as it replaces Amazon.com as the main bookseller at the search site.

Barnes & Noble superstores and Yahoo! are teaming with Spinway, an Internet marketing infrastructure company that provides a premium co-branded ISP offering, to develop a free Internet service for Barnes & Noble customers.

And as part of the three-way agreement, Barnes & Noble.com will be the premier bookseller featured throughout the Yahoo! directory and will be a featured merchant on Yahoo! Shopping. Financial specifics of the various arrangements were not disclosed.

Amazon.com ended its three-year book marketing deal with Yahoo earlier this week, saying it would concentrate its U.S. marketing with America Online .

Barnes & Noble.com Inc. shares were up as much as 37 percent on the news this morning. Shares were up as much as $1.69 to $6.25 at one point.

Barnes & Noble Inc. and Yahoo! called the deal a "landmark marketing relationship which leverages the online and off-line resources of the three companies."

The Yahoo! Fusion Marketing program will feature Barnes & Noble.com graphic links on every search results page in the Yahoo! directory and on all book category pages in the Yahoo! directory.

The in-store retail component of the agreement teams Barnes & Noble Inc. and Yahoo! with Spinway to develop free dial-up Internet access for Barnes & Noble retail customers. The service, which is expected to launch in October, will be promoted in 551 Barnes & Noble stores across the country and will include the distribution of CDs to facilitate registrations.

The service will have thousands of local access numbers nationwide and is designed to be easy to use, as millions of consumers using Spinway's service are accessing the Internet for the first time. The model does seem to work: Kmart's e-tail site, BlueLight.com, has signed up millions of consumers by offering free access to the Web.

"Barnes & Noble and Yahoo! consider retail customers as key to the future of the Internet," said Steve Riggio, vice chairman of Barnes & Noble.com. " Barnes & Noble.com will have access to a massive audience of Internet users, as Yahoo!'s reach represents a significant portion of people online today. The rollout of a co-branded free ISP brings terrific value to our retail customers, as well as providing a new marketing channel for Barnes & Noble.com."

Jeff Mallett, president and chief operating officer of Yahoo!, said the agreement "emphasizes Yahoo!'s ongoing strategy to create unique Yahoo! Fusion Marketing programs for leading brand name merchants that achieve their marketing objectives." Yahoo!'s Fusion Marketing program consists of interactive marketing programs designed to provide one-stop shopping for companies seeking to secure a measurable Internet presence.

Incorporated in January 1999, Spinway aggregates millions of consumers via a co-branded ISP offering and it is establishing its own advertising network by partnering with off-line brand-leaders. It already claims 5 million consumers as users. Spinway offers advertisers a way to target consumers by demographics, psychographics, geographics, time-of-day and keywords. Its proprietary advertising technology tracks advertising impressions and enables full motion video ads to run whil