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February 24, 1999


By CBR Staff Writer

Bertelsmann AG has chosen UK-based free ISP Freeserve to be the vehicle for the UK version of its Books On-Line (BOL) service, which will launch next month. Bertelsmann has already launched similar services in Germany and France. Freeserve was the first ISP in the UK to offer free internet access and caused a revolution in ISP business models. It will carry BOL for the next three years. However, it appears the deal is exclusive in only one direction, as Bertelsmann may use other British ISPs to carry its bookstores but this will be the only such vendor Freeserve will carry. That appears to be bad news for WH Smith Plc’s Internet Book Shop (IBS), which is currently the only bookseller on Freeserve. Freeserve is a service of UK retailer Dixons Group Plc and has secured more than one million users in just five months of operation, leapfrogging America Online Inc, which has about half that number of paying subscribers. Interestingly, Bertelsmann is AOL’s European and Australian partner, but it recently sold more of its AOL shares, leaving it with a 1.9 percent stake in AOL, although it said at the time that did not indicate a weakening of relations between the two companies (02/24/99). The news was good for a 6.7%, or 73 pence rise in Dixon’s shares, pushing them to another record high of 1,163 pence.

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