In afternoon trading, B&N.com was up nearly $1.34, or 30%, to $5.91, on the news of a comprehensive advertising deal with Yahoo!. Under that deal, the bookseller replaces
, which isn't renewing an ad deal with Yahoo!, as premier book retailer on the popular portal. Yahoo! was up $2.06 to $107.12, and Amazon was off $2.31, or 5.4%, at $40.50.
That's quite a jolt for B&N.com, especially after one considers how shares of
reacted Monday to a similar deal.
Costco's and B&N.com's separate deals with Yahoo! each elevate the firm to become a prominently featured merchant on Yahoo!. In addition, following up on the fast growth of
service offered through Yahoo!, each company is launching a free Yahoo!-partnered Internet access service bearing that company's name.
So how did Costco's stock do Monday after its deal was announced? Costco fell $1.25 to $34.06, and was down another dollar by Tuesday afternoon.
Forget about explaining the warehouse-bookseller divergence by calculating the cost of the Yahoo! deal for Barnes & Noble.com; the companies weren't disclosing the value of their deal, nor even the length of time their agreement covers.
One analyst, though, found some strategic value in the deal for B&N.com, a unit of bricks-and-mortar retailer
Barnes & Noble
and German media giant
On Barnes & Noble.com's part, the deal is aimed not at taking existing customers away from Amazon.com, but giving itself a shot at new customers as they come online, says Robert Hertzberg, an analyst with
. B&N.com's problem, he says, is that most people, when they think about buying a book online, think of Amazon.com first. It's B&N.com's hope, by giving out free Internet access discs in its 551 stores across the country, that Barnes & Noble.com will be "the first place they think about, not the second place," Hertzberg says.
But Youssef Squali, Internet analyst at
, points out that Barnes & Noble will be fighting it out with a lot of other brands for space in the free Internet access business. Squali estimates that there are 5 million or 6 million active users of free ISPs out of the 50 million or 60 million Internet users in the U.S. But he says he doesn't expect the percentage of free ISP users to expand among the Internet population, and he suspects that cheaper prices for conventional dial-up access, along with competition from high-speed providers, will squeeze the free-ISP market.
As for the marketing value of a free Internet service, Squali points to the example of free Internet access offered by Brazilian banks to their customers. Free access "has been a very good tool to retain customers. It has not been a good tool for attracting customers," he says.