BITS, BYTES AND E-BOOKS.

• Author: PETERSON, ERIC

BOULDER-BASED NETLIBRARY BETS ON A VIRTUAL BIBLIOPHILIC FUTURE.

Boulder's netLibrary Inc. is banking $100-plus million on a future where people curl up in front of the fireplace with a Palm Pilot instead of the traditional bound paper tome. The growing 400-employee company, which partners with book publishers to produce and distribute electronic versions of their titles, aims to make "e-book" and "netLibrary" synonymous to tomorrow's readers.

Now, however, netLibrary's focus is on today's book market, a market that still holders tradition in high regard. Current display technology lacks "the look of clean white paper with heavy black ink, but it's getting close," said Alan Charnes, executive director of the Colorado Alliance of Research Libraries in Denver. "There's still many people who love a paper book -- they love the smell of it, they love the feel of it. But I think people will get over that."

Since netLibrary prices its e-books comparably to their non-virtual counterparts, the company trumpets the increased interactivity and durability of e-books as prime selling points. netLibrary's strategy now is to market to libraries and retailers first, and consumers second.

Investors - among them the Anschutz Family Foundation, Sequel Venture Partners, Tango Partners and McGraw-Hill - have bet more than $100 million the netLibrary model will work.

"Librarians are really used to buying electronic media, so it was a great market for us to begin with," said netLibrary Executive Vice President David Melancon. "What you're seeing now is a lot more hype, and consumers get brought into the picture. This is the way any market starts. It starts with early adopters, it starts with enterprise users."

Cambridge, Mass.-based Forrester Research Inc. predicts sales growth of downloadable e-books from $34 million in '00 to $400 million in '04.

Hype aside, netLibrary suspended a $29.95 annual subscription offer earlier this year in order to steer traffic from consumers toward existing library customers. At press time, 37 major public library systems in the United States (none in Colorado) had purchased e-book collections from the company, as had hundreds of academic and corporate libraries worldwide.

Libraries see e-books as an alternative to physical expansion. Libraries are "running out of room," said Edward Kurdyla, general manager of Englewood-based Libraries Unlimited Inc., a textbook publisher and one of netLibrary's more than 200 publishing partners...