Barnes & Noble And Microsoft Finalize Partnership To Create Nook Media

Officially named Nook Media as of Thursday’s announcement, the new B&N subsidiary will be composed of the bookseller’s digital businesses in addition to its college stores in order to foster a “mutually beneficial relationship with Barnes & Noble’s retail stores,” the company announced in a statement.

Despite Microsoft’s substantial investment (with additional payments beyond the initial $300 million, Microsoft expects that total investments over the next five years will come to $605 million), the partnership will not entail any significant restructuring for either company. B&N’s college businesses will still be led by Max Roberts, Patrick Maloney and Bill Maloney, while Jamie Lannone will head the digital operation. Barnes & Noble CEO William Lynch will oversee both businesses.

 “As demand for digital content continues to increase, we are focused on bringing ground-breaking reading and learning content and technologies to more people in more formats than ever before, including the imminent launch of our exceptional Nook reading application for Windows 8,” Lynch said in a statement. “We look forward to working closely with our new partner Microsoft to add value to their innovative new platform by bringing great reading experiences and one of the world’s preeminent digital bookstores to millions of Windows 8 users.”

“Nook Media is a leader in developing the next generation of digital reading and we look forward to the company bringing one of the world’s largest digital libraries to Windows 8 devices via their upcoming Windows 8 app,” Andy Lees, president at Microsoft, said in the B&N statement Thursday. “We are also excited by Nook Media’s product roadmap and expansion into markets around the world as demonstrated by their recent launches in the United Kingdom.”

How exactly this will affect Microsoft’s plans for its upcoming tablet device, the Surface, is unclear, though the partnership suggests that the California-based tech giant is choosing to back away from competition in the e-reader marketplace specifically with its new entry into the increasingly competitive field of mobile hardware.

B&N digital assets that are now part of Nook Media include all current Nook devices, as well as the Nook Store itself and and PubIt!, the company’s self-publishing service that allows users to upload their own content and distribute them as e-books. B&N is also transferring employees from each of these divisions to Nook Media.

B&N added that the company is still reviewing its strategic options in the new subsidiary, which may include separating Nook media as an independent company.

Barnes & Noble shares jumped on Thursday, peaking at $13.58 in late morning trading. Microsoft shares continued to wobble, dropping to $29.59 in morning trading but recovering in the early afternoon.