Nook deal lets Microsoft integrate e-bookstore with its software, services

Computerworld - Barnes & Noble will distribute its free Nook Metro app through Microsoft's Windows Store, putting to rest talk of Microsoft embedding the program in Windows 8.

But Microsoft and Barnes & Noble will work on ways to integrate digital content purchased through the Nook app with other Microsoft products and services.

In one of several filings to the U.S. Securities & Exchange Commission (SEC) earlier this week, Barnes & Noble issued a redacted version of the commercial agreement struck with Microsoft, which invested $300 million in the bookseller's new digital content subsidiary and promised payments of another $305 million over the next five years.

The content-selling app designed for Windows 8's and Windows RT's Metro interface will be offered through Windows Store. The online outlet is now in beta, but will officially open alongside Windows 8 and Windows RT later this year.

"NewCo will develop and obtain certification of the NewCo Windows App ... complete development, obtain certification and commercially release the first version of the NewCo Windows App for Windows 8 (both x86 and ARM) in the Windows Store," the agreement states. NewCo is the temporary name for the subsidiary that Barnes & Noble created from its Nook and College businesses. For its $300 million investment, Microsoft received a 17.6% stake in NewCo.

Earlier this week, Microsoft declined to comment when asked if the Barnes & Noble app -- likely to use the "Nook" label like its e-readers and e-reading software -- would be integrated into Windows 8 or Windows RT. But the answer was tucked into the SEC filing all along.

Rather than include the Nook app with Windows 8 and RT, Microsoft will mimic rival Apple, which does not bundle its iBook app with iOS. Instead, iPhone and iPad users must download and install the bookselling program from the App Store, just as they do other devices, like Amazon's Kindle.

Microsoft has not yet announced an on-sale timetable for Windows 8, or when Windows RT-powered tablets, notebooks or ultrabooks will be available. It recently said that the next milestone for Windows 8, dubbed Release Preview, will debut the first week of June.

Under the terms of the agreement, Microsoft will provide assistance and support, including devoting employees' time, to helping NewCo create and launch the Nook app.

Even as the Nook app's bundled-not-bundled question was answered, the agreement also made clear that Barnes & Noble and Microsoft envision ties between the app and other Microsoft products and services.

"NewCo will use good faith efforts to enable Microsoft Products and Services to be used with the NewCo Store and distribution system," the agreement states, also listing eight possible scenarios.

Unfortunately for the curious, the eight scenarios were redacted.

Elsewhere in the agreement, potential integration was fleshed out in broad strokes: Microsoft software and services will be able to purchase digital content from NewCo's store, and "interact with content from the NewCo Store and annotations to Content."

Those interactions could include "the capability to publish to, purchase or consume (including read or annotate) Reading Content from the NewCo Store," the agreement states. Microsoft also has the right to make a user's NewCo-purchased content accessible through any of its existing products and services.

Under those terms, it would seem obvious for Microsoft to modify say, Office, specifically Word, so that a user could buy digital content from inside that application, then read it there.

The agreement also devotes a section to what it calls "Microsoft Reader," perhaps a hint at Microsoft-branded hardware.

"If Microsoft creates a reader, Microsoft may include an interface to the NewCo Store in that reader and may surface in that reader all Content purchased by customers from the NewCo Store," the document states.

Although it wasn't clear from the agreement that the section was referring to hardware, not software, the same Microsoft Reader name has been used by the company's e-reading software for the last 12 years. The Microsoft Reader software is to be discontinued in August.

Revenue generated from sales through the Nook e-store will be shared -- as will sales through other Microsoft products or services -- but any purchased using a browser will not.

Microsoft and Barnes & Noble have a target launch date for the Nook Metro app in mind, but it was struck from the agreement.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

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