The opening up of the British Library?s vast book holdings to Microsoft represents a step-change in the battle to make ever more of the world?s paper-based knowledge readily available on the internet.

It is a battle where Google is making much of the running. The search group has a clutch of world-class universities signed up to a similar project, including Harvard and Oxford. On Thursday it unveiled the first group of books to be scanned and put online as part of its Google Print project.

However, Alistair Baker, managing director of Microsoft in EMEA, said internet companies were just at the ?beginning of a very long journey?.

?This is not about getting something out first and claiming first-mover advantage. The enormous technical challenges in terms of indexing and digital rights management will have to be very carefully thought through and we think we have a huge advantage there.?

Search engine companies such as Microsoft?s MSN, Yahoo and Google are struggling to gain access to increasing amounts of content to offer their users. Libraries represent another large untapped source of material.

Attracting users with increased amounts of desirable content is a key strategy for internet search engine companies, which make their money from selling advertising space on their search pages. The more users they attract, the higher the advertising rates they can charge. Search advertising has become one of the fastest growing sectors of the ad industry.

Although Google may have more libraries on board, it ran into trouble this year after publishers in the US, including the Association of American Publishers, filed lawsuits, arguing that Google was violating their copyright.

Consequently Microsoft ruled out any scanning of copyright material in its project. However, Mr Baker said the company would inevitably have to return to the subject of making such works available online.

Even without the copyright books, this still represents an enormous sea in which Microsoft and its army of bookscanners can trawl. The library estimated about half its stock of 150m items is out of copyright.

Microsoft said the alliance with an institution as prestigious as the British Library, which is legally entitled to a copy of every publication produced in the UK and Ireland and holds treasures such as the Magna Carta and Leonardo da Vinci?s notebook, would help it should it approach other libraries in the future.

Once digitised, the material will be made available on the British Library and MSN websites. Both organisations insisted that other companies would not be blocked from using the Library?s content as part of similar deals, however, it was unclear whether the scanned material would be made available to other sites.

Details on how Microsoft would commercially exploit the material were sketchy. Mr Baker said the company still had to decide whether some of the content would be charged for or whether it would simply help to drive web-traffic and therefore advertising sales.

The two organisations are also yet to decide whether there will be any revenue sharing arrangement be-tween the two of them.

Richard Boulderstone, director of e-strategy at the British Library, said the institution was primarily interested in simply getting as much of its content online as possible and was prepared to work with anyone to achieve that aim.

Despite the apparent rush to catch up with Google, analysts questioned the profitability of such online library schemes.

?Google was the first one to identify this as an area of interest. They?s not looking at this from a commercial perspective, but with a long-term and altruistic view. Their interest is indexing as much information as possible on the internet, and giving people free access to it,? said Scott Kessler, equity analyst at Standard & Poor?s.

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