Amazon Launches Semester Textbook Rental Service To Battle Barnes & Noble

Amazon.com Inc. (Nasdaq: AMZN), the No. 1 e-retailer, said it will start renting textbooks to college students for a semester. At the end of the term, they can ship books back for free.

The new Amazon Student, a free membership plan for enrolled college students, will also offer six months of free two-day shipping from the Seattle-based service, as well as four years of Amazon Prime entertainment services at a 50 percent discount, the company said.

"College is expensive, and students are always looking for ways to save money on textbooks," said Ripley MacDonald, director of textbooks. "So no matter if a student wants to buy or rent their textbooks, Amazon can be a one-stop show."

The deal clearly takes aim at Amazon rival Barnes & Noble Inc. (NYSE: BKS), which operates 647 college bookstores that serve 4.6 million students and faculty members, as well as 691 retail bookstores in 50 states. Barnes & Noble also sells the Nook e-reader, which competes with Amazon's Kindle e-reader and Kindle Fire tablet.

The company announced a new partnership with Microsoft (Nasdaq: MSFT), the world's biggest software company, on March 30, in which Microsoft agreed to invest $300 million in a new joint-venture company to improve the Nook, as well as tap into the college bookstore market.

Subsequently, neither Barnes & Noble, based in New York, nor Microsoft, of Redmond, Wash., has provided many details of their new company, which was dubbed Newco at inception. Microsoft, meanwhile, announced it would ship its proprietary Surface tablet sometime in the second half, which would include books and magazines, along with many other entertainment features.

Some announcement is likely soon as merchants and retailers gear up for back-to-school sales in anticipation of the 2012-13 academic year.

Shares of Amazon rose $3.43 to $237.42 in midday Tuesday trading, while Microsoft shares rose 33 cents to $30.28 and Barnes & Noble shares rose 60 cents to $14.63.