B&N replaces Amazon as preferred merchant on Yahoo

By Andrea Orr PALO ALTO, Calif., Sept 19 (Reuters) - Yahoo Inc. (YHOO.O) will announce on Tuesday that it has made Barnes & Noble.com a featured merchant on its site, effectively replacing the leading online book seller Amazon.com Inc. (AMZN.O). Yahoo, which will also announce plans to launch a free Barnes & Noble-branded Internet service, said it entered the alliance after one with Amazon expired. Yahoo's chief sales and marketing officer Anil Singh said the decision not to extend the deal with Amazon was mutual. However, an Amazon.com spokesman said it elected not to renew the three-year agreement with Yahoo because it found its parnership with America Online Inc. (AOL.N) to be "more compelling for a variety of reasons." Amazon, she said, last year decided it would drop either AOL or Yahoo, which at the time had both been partners. After reviewing the situation, it elected to stay with AOL. The spokeswoman said that Amazon would only renew alliances with partners that had proven to be "standout performers." As Amazon's new partner, Barnes & Noble.com will appear on every search result page in the Yahoo directory as a link that will connect consumers to the online book store. The deal also goes beyond the one Yahoo previously had with Amazon, and makes Barnes & Noble.com a featured merchant on Yahoo's shopping site. In describing the new partnership, Singh said that Barnes & Noble.com will take over many of the links previously held by Amazon, "and more." One key addition in this new alliance will be the free, co-branded Internet service, expected to launch next month. The service will be promoted through the 551 Barnes & Noble Inc. (BKS.N) offline stores, and will feature Barnes & Noble.com on the start page, effectively directing many first-time Internet users to that store. For Yahoo, the deal also provides a valuable partner in the offline world. Most Internet media sites have in recent months been striving to reduce their dependence on dot-com advertisers and develop deeper roots in the more stable old economy. Yahoo President Jeff Mallet said in a statement that the agreement reflects a strategy to create marketing programmes that leverage companies' online and offline assets. Yahoo stressed that while the new arrangement makes Barnes & Noble a premiere merchant, it is not entirely severing its relationship with Amazon, which will retain a prominent position on Yahoo's overseas properties. Terms of the deal were not disclosed, but Barnes & Noble.com's vice chairman Steve Riggio said in an interview it would be of "great value" to the store. Although Yahoo, the most visited Internet media site, has the potential to steer large numbers of shoppers to Barnes & Noble, the value of this type of partnership has sometimes been called into question. Several Internet merchants have recently dropped or renegotiated partnerships with Internet portals like Yahoo after finding that the cost of the partnership did not justify the number of new customers they were reaching.