Startup Livrada to sell ebook gift cards in U.S. Target stores

In an effort to make ebook gift-giving more spontaneous and fun, Los Angeles-based startup Livrada is partnering with Target (s TGT) to sell gift cards for bestselling ebook titles like 50 Shades of Grey and Gone Girl in the chain’s 1,771 stores nationwide.
The pilot program, which is initially available for Kindle (s AMZN) and Nook (s BKS) and will be available on other platforms by the end of the year, launches on Sunday, July 15 with six books. Five are published by Random House: Fifty Shades of Grey by E.L. James, Gone Girl by Gillian Flynn, 44 Charles Street by Danielle Steel, Odd Thomas by Dean Koontz and The Girl Who Kicked the Hornet’s Nest by Stieg Larsson. The sixth book, State of Wonder by Ann Patchett, is published by HarperCollins (s NWS).
The ebooks are sold like gift cards and will be found in Target’s electronics section, near the e-readers. (Target no longer sells Kindles, but it carries other e-readers, like the Nook.) Here’s how it works: A consumer buys a card for a specific title. Target takes a cut and Livrada gets the rest. The consumer (or gift card recipient) goes to Livrada’s website to activate the gift card and choose whether he wants the book for Kindle or Nook. Livrada buys the book directly from Barnes & Noble or Amazon and sends it to the consumer’s e-reader.
Ebook gift-giving is still in early stages, but it generally happens entirely online. When you buy a Kindle book as a gift for someone else, for instance, they find out when they get an email. Livrada wants to make it more physical. “Email-driven gifting is boring,” Livrada cofounder and CEO Leonard Chen, formerly a senior director of digital strategy and business development at Warner Music Group, told me.
A consumer can obviously buy one of Livrada’s ebook cards for himself, but Chen thinks most people will give the cards as presents: “You can give your friend a gift if you know they have an e-reader but you don’t know which [brand].”
“We’re looking for new ways of facilitating gifting of ebooks,” said Chantal Restivo-Alessi, chief digital officer at HarperCollins, “and we look forward to seeing how this new service can extend our reach to a wider range of consumers.”
Random House and HarperCollins pay Livrada marketing fees on the front end. Livrada also collects affiliate fees from Amazon and Barnes & Noble for referring sales.
Livrada’s cofounder and chairman is John Tantum, the founder and former president of Virgin Mobile USA. The company is currently self-funded and Chen says it is not actively fundraising yet — though that could become necessary later this year, when the company hopes to expand to other retailers, sell more titles and add support for platforms like iPad (s AAPL). Livrada is in discussions with other big-six and smaller publishers about adding their books to the program.

Will ebook gifting take off?

Many consumers still don’t know that it’s possible to give ebooks as gifts. Publisher Open Road ran a holiday campaign to try to educate them about the process last year, but most people still just buy ebooks for themselves. Livrada’s cards could make the process more spontaneous and physical. The cards themselves, which emphasize the books’ covers, look good and consumers may be tempted to pick them up. It’s possible, though, that they will still be confused about what the cards are for.
Companies have experimented with selling “physical” ebooks before, but have not gotten very far. Enthrill, a Canadian company, tested such a program last year and is now selling its ebook cards in 102 stores in Alberta. Livrada’s focus on gifting, and the cards’ availability nationwide, could help the concept get off the ground.