We do — that was that state of digital media when paidContent launched in 2002. Other weird things were happening back then too: People still got much of their news from television and newspapers, and they learned about major events after they had already happened.

There have been some huge shifts since 2002: Tablets and smartphones are now ubiquitous, lots of people read on their digital devices, and just about everyone is part of a social network or three. This summer is the tenth anniversary of our launch. In an effort to gain some perspective on the past decade in digital media, I’ve been reading back through paidContent’s archives — a collection of over 80,000 posts.

Since I was only a freshman in college when paidContent came to life, I often didn’t know, as I read through the stories from the early days, how things had begun or how they turned out. As I watched them unfold, I wanted to grab our readers’ arms and give them advice (“Don’t buy that Zune!” “Invest in Facebook!” “Go for the good Twitter handle now!”). But I also realized how difficult it is to predict success.

Some takeaways from my trip through the archives:  Some companies — AOL and Yahoo come to mind — have been consistently bad at predicting what consumers want. And a couple of companies, namely Apple and Amazon, have been very good at it. Also, being a native digital company helps, but it’s no guarantee of success (what up, MySpace?). And after all these years, it’s still not clear what content customers will pay for, or how much they’ll pay.

Streaming and Moviebeaming

What do analysts, CEOs and bloggers have in common? None of us can predict the future. Roger Ebert joked in 2002 that “on-demand streaming movies on the Web, like HDTV, are five years in the future — and will be for at least another 10 years.”

If Disney’s Moviebeam had been the only game in town, Ebert probably would have been right. When it launched in three cities in 2003, customers paid $6.99 a month to use a device that could hold 100 movies and plugged into the back of a TV set. They also had to pay for each movie they watched– billing was done via the phone line. The company went through various unsuccessful iterations before India’s Valuable Group bought it in 2008. It was never heard from again.

Netflix almost went down the same road. It had a plan to release a Moviebeam-like “proprietary set-top box with an Internet connection that could download movies overnight.” But instead, it decided to forge ahead with streaming — starting with a complicated “quota hours” system in 2007 and moving to unlimited streaming in 2008. By 2010, the majority of subscribers were streaming something, and the company began offering streaming-only subscriptions, though CEO Reed Hastings said that same year that the company would keep shipping DVDs until 2030. (We’ll see about that.)

ABC was the first network to sell episodes of its shows on iTunes, back in 2006, and to stream shows free with ads on ABC.com — and later on AOL. But by the time premium subscription service Hulu Plus launched in 2010, the platforms getting the attention were devices with built-in access, like Internet-enabled TVs, Blu-ray players, and tablets.

Return of the living dead

Speaking of AOL: It’s something of a miracle that the company still exists. In 2000, when it merged with Time Warner, it was valued at $350 billion, and the next year, more than 24 million people in the U.S. were paying for its Internet access service. By the end of last year, that number had dwindled to just 3.3 million subscribers. Here’s a quick recap of some of AOL’s miscues over the years:

• AOL Voicemail ($5.95 per month)
• A teen service called Red (featuring “a talking head—using the image of an actual employee—that uses software to answer users’ questions”)
• A digital music partnership with Burger King
• A reality show called “Gold Rush”
• Social networking site AIM Pages
• Going free
• The hyperlocal Patch blogs

Though AOL was once a high flier, no other company ever liked it quite enough to buy it. Google bought a five-percent, $1 billion stake in AOL in 2005, leading analysts to wonder if Microsoft missed out. That resulted in a $726 million writedown in 2009. Time Warner bought back Google’s stake and finally spun off “the albatross” in December 2009.  AOL is still promising a bounceback. “The executive team expects a profitable content business by next year,” CEO Tim Armstrong said in May 2011.

Yahoo hasn’t fared much better. The company launched Yahoo Platinum in 2003; for $9.95 a month, subscribers got access to audio and videos.  The program was dead by October of that same year. It later tried a Twitter-wannabe microblogging service (“Meme…where you share everything that you find that’s interesting,”). Perhaps the smartest move Yahoo ever made was not buying AOL.

Where did these companies go wrong? In 2010, former Time Warner CEO Gerald Levin pondered that question in an interview with the New York Times . The AOL-Time Warner deal was “undone by the Internet itself,” he said. “I think it’s something that no one could have foreseen, and to this day, whether Apple is going to dominate entertainment or whether Amazon is going to dominate publishing, all the old business plans are out the window. How do you get paid for content?”

Know what’s cool? A billion dollars

In 2006, an RBC Capital analyst estimated that a certain social networking company would be worth $15 billion in a few years, based on “raw, unprecedented user/usage growth.”

Six years later, Facebook went public with a valuation of $104 billion. Too bad the analyst wasn’t talking about Facebook but about MySpace. The social networking company that Rupert Murdoch acquired for $580 million in 2005 sold for just $35 million in 2011.

Why did Facebook soar while MySpace — and other social networking services like Friendster — sank? It allowed people to build real connections using their actual personal information, and rolled out a product that was ready to scale and had good technology. Other companies realized sharing was important too — in 2005, Yahoo SVP Jeff Weiner called sharing “the next chapter of the World Wide Web” — but Facebook was able to implement it in a way that kept users coming back. The site surpassed Yahoo and AOL for “stickiness” in 2009, when Nielsen found users spending an average of four hours and thirty-nine minutes a month on Facebook.

Social has already disrupted some industries — witness the rise of Twitter and the way it has changed the way news is reported, with stories like Osama Bin Laden’s assassination breaking there first. In a sign of the importance of these emerging platforms, newspapers like the Wall Street Journal and New York Times are launching “Everywhere” initiatives to deliver news to readers where they are already hanging out.

Fast food and music don’t mix

Hard to believe it now, but there was real skepticism that iTunes’ 99-cent songs would be able to compete with peer-to-peer file-sharing services. “According to academics who’ve studied the economics of digital music distribution,” we wrote in 2003, the year iTunes launched, “the cost still seems too high to attract users of peer-to-peer file trading services.” The piece cited an economist who believed “the appropriate price of a downloaded song is 18 cents.” In fact, Real Networks dropped its song prices to $0.49 in an attempt to compete against Apple.

In the end, consumers choose selection and convenience over P2P networks. We called iTunes “a kickstart for the micropayments industry.” Was it? While Steve Jobs said in 2004 that Apple wouldn’t hit its one-year, 100 million songs downloaded goal, global digital music sales crossed $1.1 billion in 2006. In April 2008, Apple surpassed Walmart  as the largest music seller in the United States.

The company that arguably started the digital music revolution — Napster — didn’t survive. Once it no longer offered “free,” it was done, though it tried to reincarnate itself: launching a mobile music service, “Napster To Go,” with AT&T in 2004 (the one smartphone that supported it could hold up to 6 songs), partnering with Circuit City on a digital music store, getting itself acquired by Best Buy in 2008 ,and then being bought back by Rhapsody in 2011. Unfortunately, Rhapsody was already losing out to newer (and free) streaming services like Pandora and Spotify.

The partnerships with Circuit City and Best Buy, though, were probably the kiss of death. One of the big trends of the past 10 years has been brick-and-mortar retail stores’ consistent failure to compete effectively against digital-native companies. Best Buy wasn’t the only retailer to try to crack the digital-content business — and fail: Target and Sears both took a shot. And McDonald’s sold digital content over its WiFi network and even tried DVD rentals in its restaurants.

Do you like the feel of paper?

Just as digital music didn’t really take off until Apple introduced the iPod, the ebook revolution didn’t take place until the arrival of the Kindle. In paidContent’s early years, ebooks were written off as a failure in part because publishers couldn’t figure out what to do with DRM. (In 2003, “temporary electronic ink” that would disappear after a few months was floated as a possible solution.) Barnes & Noble decided to stop selling ebooks in 2003, and Yahoo stopped selling them in 2004.

Meanwhile, Amazon and Google were pushing forward. Google launched Google Print – now called Google Book Search, and still besieged by lawsuits seven years later. Amazon tested two now-defunct programs: Amazon Pages, which allowed customers to buy access to digital copies of select pages from books, and Amazon Upgrade, which bundled print books with online access to the complete work.

Customers weren’t biting. Then Amazon came out with the Kindle in 2007 for $399. Less than two years later, Amazon was selling more Kindle books than print books, and ebooks now make up over 20 percent of some big-six publishers’ sales. Barnes & Noble has had some success with its Nook e-reader and digital bookstore, but bankrupt Borders shuttered all its stores in 2011. Meanwhile, the Department of Justice suit against Apple and five big publishers for allegedly colluding to set e-book prices drags on.

Good thing Steve Jobs looked beyond ringtones

A Forbes survey back in 2002 found that “business professionals” would be willing to pay for “news content to be delivered to their cellular devices,” and some media companies tried early mobile experiments. Verizon offered a cell phone version of the Yellow Pages — which, at $19.95 per year, gained 15,000 subscribers in three months. But starting in 2004, everyone decided the future was in ringtones. A $4 billion global business by the end of the year, one company projected.

So, so many ringtones. You could buy them from Rolling Stone or from an ATM-like device called E2Go. A fall 2004 marketing campaign let you mix your own ringtones on Levi’s website. Billboard launched a top ringtones chart.

Could ringtones “prove to be a passing fad”? we wondered late in 2004. Luckily, yes — a new technology came along to shake up the mobile market. No, it wasn’t the $500 ESPN phone, but the iPhone, which came out in 2007. And by opening its platform up to third-party app developers, Apple got users ready for its next ecosystem-changing device, the iPad, in 2010.

Monetizing mobile

Advertising has always been a fuzzy business — how exactly do you measure engagement and success? Well, that’s still the big debate about advertising in the digital era.  ”If here’s anything that’s really holding back ad spending on the web, it’s the lack of good measurements,” Tim Armstrong, then Google’s VP of national sales, said in 2007.

Mobile advertising has also faced obstacles. In 2006, mobile carriers began allowing advertising despite fears of annoying customers. Customers were indeed annoyed – 79 percent of them found mobile advertising annoying, according to a 2007 Forrester study — but they could “see the potential benefits of mobile advertising and marketing to themselves,” particularly if they could get a useful special offer or coupon.

Further complicating matters for advertisers: The smartphone market is fragmented among different brands — marketers don’t want to spend the money to create different ads for Android and iOS — and there are two mobile ad universes: mobile browser and apps.

Nevertheless, mobile advertising has gained ground, crossing  $1 billion in the U.S. for the first time in 2011, according to the Interactive Advertising Bureau, totaling $1.6 billion for the year.

The next opportunity is social media advertising. And once again, it will be a challenge to figure out some standardized metrics. What’s a retweet worth, anyways?

Back to where we all began

Though micropayments worked well for music when Apple launched iTunes, the path to payments for written content has been rockier. In 2004, we wrote that “micropayments today are still characterized by a large number of competing transaction types” – including direct-to-bill, merchant aggregation, prepaid accounts and direct transfer – and “each of these face the current incumbent in digital content distribution: the flat-fee subscription model.”

Eight years later, it appears that the subscription model has won out. The iPad opened the door for magazine and newspaper publishers to create new revenue selling content on that platform, but the results have been mixed. When Rupert Murdoch’s “The Daily” iPad newspaper launched in early 2011, the company called it “the model for how stories are told and consumed.” We wrote, “The bet here is that while consumers are less and less likely to reach into their pocket for a few quarters to buy a newspaper, they might not care about the 14 cents on their credit card for a copy of an e-newspaper.” A year and a half later, The Daily has over 100,000 paying subscribers — but it’s living on borrowed time and may not get through the five years its publisher has said it needs to break even.

Writing for the web, of course, has been around for awhile. At the beginning of the decade, blogging was called “nanopublishing,” and the question was how blogs could support themselves doing it. All sorts of models have arisen. For example, Gawker tried a licensing deal with Yahoo, but that relationship ended a year later. The deal “garnered way more attention than we expected, but less traffic,” Gawker CEO Nick Denton said in 2006.

Some bloggers have stayed independent and make a living from advertising (or from their day job); others write their blogs under a newspaper, website or larger magazine’s umbrella — see the Dish’s Andrew Sullivan, FiveThirtyEight’s Nate Silver, WaPo’s Ezra Klein. Or, they go to work for the Huffington Post!

Magazine companies have grappled with whether to bundle digital editions with print subscriptions or charge for them separately. Time Inc. — which first put digital editions of its magazines behind AOL’s paywall in 2003 — started out charging separately, but today Time Inc. and Condé Nast print subscribers get the digital edition free. Hearst, meanwhile, is charging separately, and it said its digital business in the U.S. became “solidly profitable” for the first time in 2011.

Could there ever be a Netflix for magazines? Time tried it for print versions with its 2008 Maghound service. It failed, due to a lack of marketing and reader interest. Magazine publishers are trying again with joint venture Next Issue Media.

Many newspaper publishers, most notably the New York Times, tried paywalls at the start of the decade and then abandoned them – only to return to the model in the past couple years.  In its most recent earnings report, the NYT said it has 454,000 digital subscribers. Is that enough to sustain the newspaper in its 21st-century transition?  Probably the best answer to that came from  Vivian Schiller. But it was in response not to the NYT’s recent digital subscriber numbers, but to the NYT’s decision in 2004 to close the paper’s first paywall, known as TimesSelect. Schiller, then the SVP and general manager of NYTimes.com, was asked whether TimesSelect had worked.  “It did work,” she said. “It’s just a matter of as compared to what.”

Birthday cake photo courtesy of Shutterstock user [Robyn Mackenzie].

TV photo courtesy of Shutterstock user [Somchai Buddha].

Zombie hand photo courtesy of Shutterstock user [lineartestpilot].

Piggybank photo courtesy of Shutterstock user [cardiae]

Fast food photo courtesy of Shutterstock user [Sergio Martinez].

Book photo courtesy of Shutterstock user [TrotzOlga].

Ringtones and apps photo courtesy of Shutterstock user [violetkaipa].

Cash register photo courtesy of Shutterstock user [titelio].

Magazines photo courtesy of Shutterstock user [bernashafo].

The deal is bad news for Barnes & Noble, which was rumored to be working with Waterstones on a deal of its own. But it may not be so great for Waterstones, either. Here’s why:

It’s not clear how Waterstones makes money off the deal. Terms weren’t disclosed and there may have been a large upfront payment. Waterstones presumably gets a cut of each Kindle sold in its stores.

As for e-book sales, publishing industry consultant Mike Shatzkin’s reading is that “the only e-books Waterstones will share revenue on are those that are purchased over Waterstones’ in-store wifi network,” which hasn’t been built yet. The Wall Street Journal says Waterstones managing director James Daunt “implied” as much and “shoppers who turn on a Kindle in a Waterstones store will be greeted by a Waterstones interface that guides shopping for books, whether physical or digital,” but “Amazon ultimately sells any Kindle e-books bought in a Waterstones store.”

Waterstones turns direct customers over to Amazon. Again. Waterstones’ outsourcing of its digital shopping experience to Amazon is reminiscent of the deal that the now-defunct U.S. bookstore chain Borders made with Amazon in 2001. By the time Borders ended that deal six years later, it had lost years of managing its own digital strategy and placed its customers right in Amazon’s hands. As a former Borders employee told Bloomberg last summer when Borders liquidated its remaining stores, Borders “ended up being a customer-harvesting vehicle for Amazon.”

The funny thing is that, as The Bookseller blog FutureBook points out, Waterstones has turned its website business over to Amazon once before — from 2001 to 2006. Here’s why things are supposed to be different this time around: “Without the overhead of having to launch its own device, or partner 50/50 with, say, Barnes & Noble (a deal that both sides would have had to invest in), Waterstones can focus on where Daunt feels it adds value, a ‘curated experience.’”

Waterstones appears to assume that e-books won’t grow that much. Daunt tells The Bookseller, “Our future is in the physical bookshop, selling physical books and doing other things around it.”

That may be Waterstones’ future — but the strategy doesn’t work so well if most readers see the future in e-books instead. And we know Amazon’s betting on the digital side.

Photo courtesy of Flickr / Globalism Pictures

Corrected: An earlier version of this story incorrectly suggested that Random House would be paid $36 million. That amount instead represents the figure that Random House and Borders agree the claim is worth. It remains unclear how much the publisher will be paid.

In a court filing on Monday, the bankrupt bookseller and Random House proposed a plan that would have the publisher claim $36.4 million — less than $1 million short of the $37.2 million it had been seeking.

Random House, owned by privately-held German publishing giant Bertelsmann, was Borders’ fourth largest unsecured creditor when the struggling retailer filed for bankruptcy in February. It is one of several large publishers holding unpaid trade debt. The largest is Penguin Putnam which is owed about $41 million according to the initial Chapter 11 filing.

In Monday’s court filing, Borders says 3,960 different creditors have made claims to be paid. Many of these claims are likely to be disqualified for being late or otherwise invalid. Random House and Borders will put their plan, which has the support of a committee of unsecured creditors, before a bankruptcy judge for approval on November 14.

Borders collapsed once and for all in July after being unable to find a buyer to rescue it from bankruptcy. It has since liquidated its stores and sold its website and trade name to rival Barnes & Noble.

The landing page that Borders.com visitors are redirected to includes a coupon for 10 percent off any item and a free, limited two-month Barnes & Noble membership, which includes free express shipping and in-store discounts. (The paid membership, which costs $25 per year, also includes $25 off the Nook Color and some other coupons and special offers.)

Barnes & Noble has also taken over Borders’ Facebook and Twitter accounts, GalleyCat noted. A post on the Facebook wall notes, “As the world’s largest bookstore, Barnes & Noble uniquely appreciates the importance bookstores play in local communities & we’re very sorry that Borders has closed. We welcome you to join the B&N Facebook community to continue your love of reading with recommendations, deals & more. We’ll be here for a few weeks to help you discover all that B&N offers but hope you’ll join our B&N Facebook page to see for yourself.”

Several visitors to the Borders-now-Barnes & Noble Facebook page were confused, suggesting that Barnes & Noble has perhaps not done the greatest job getting out the message to the most loyal Borders customers (i.e., the ones who actually visit its Facebook page). “Wait, I’m very confused. Is there a part of B&N that is Borders?” one wrote. “Borders is now closed so they are showing their support for barnes and noble,” another user responded, before being set right by a few other visitors.

A bankruptcy judge in New York approved Barnes & Noble’s $13.9 million acquisition of Borders’ intellectual property, including its website and customer list, at the end of September. Customers who want to opt out of having their Borders data transferred to Barnes & Noble can do so through October 29 by visiting www.bn.com/borders.

Borders filed for bankruptcy in February, and after a series of possible deals fell through, the chain announced in July that it would liquidate.

In a court report, the advocate argues that a mass e-mail sent by Barnes & Noble CEO William Lynch did not inform customers about the extent of data that Barnes & Noble was obtaining, such as their purchase history. The report also claims that the e-mail’s tone suggested that Barnes & Noble was engaging in a magnanimous gesture to customers rather than complying with a court order.

The person behind the report that alleges the violation is Michael Baxter, a consumer privacy ombudsman assigned to the case when privacy issues first arose over Barnes & Noble’s purchase of the Borders’ customer list. In an earlier report to the Manhattan bankruptcy court, Baxter had said that many Borders customers were protected by an earlier privacy policy that forbid the sale or transfer of their personal information.

In response to Baxter’s concerns, the bankruptcy judge halted the sale. He eventually allowed it to go ahead on September 26 after the parties proposed a plan to notify former Borders’ customers about the sale through e-mails and a full-page ad in USA Today. The plan also required Barnes & Noble to inform the customers that they could opt out of the planned transfer but did permit the company to include promotional materials in the notice. Last Friday, the company’s CEO sent a mass e-mail to the former Borders customers.

Baxter’s court filing, first reported by Bankruptcy Beat, also includes an e-mail exchange in which Barnes & Noble executives effectively tell the privacy ombudsmen to go jump in the lake:

“I don’t find that to be acceptable, Paul. My changes were quite limited and important. We should discuss. If not I will consider bringing this to the Court’s attention,” a Sept. 28 email from the ombudsman reads.

“The transaction has closed. We disagree with your position that you have specific approval rights over the specific wording of the opt-out notice. We believe the notice complies with all applicable requirements of the sale order,” B&N’s lawyer responds on Sept 30.

It is not clear what, if anything, will come of Baxter’s report as it did not request the court to take any specific actions. As the bankruptcy judge’s order approved the sale immediately, there is little possibility of the transaction being revoked. The judge’s order did, however, include a requirement that a Barnes & Noble executive eventually submit a sworn affidavit saying the company has complied with all the privacy requirements.

Barnes & Noble bought the rights to the Borders’ customer list and other intellectual property assets for $13.9 million at an auction on September 14. The privacy aspects of the sale have also attracted scrutiny from politicians like Senator Richard Blumenthal (D-Conn.), who said the opt-out scheme was “unacceptable” and said customers’ explicit consent should be required.

Under the new privacy protection measures, former Borders customers will receive an email informing them that their personal information is being transferred to Barnes & Noble (NYSE: BKS), and giving them fifteen days to disallow the transfer. The companies will also be required to place prominent notices atop Borders.com and BN.com as well as take out a full-page ad about the name transfer in USA Today. The privacy arrangement, described in a Monday court filing, also permits Barnes & Noble to include promotional offers in the notification emails.

The judge’s approval, reported late Monday afternoon, comes two weeks after Barnes & Noble purchased a variety of Borders intellectual property at auction, including the bankrupt bookseller’s trademarks and website. The sale ran into trouble last week when the judge, citing the report of an independent privacy ombudsmen, said that longtime Borders customers were protected by an older privacy policy that forbid the transfer of their personal information without permission. Barnes & Noble said last week that it would walk away from the deal if it was forced to abide by the older policy.

Under the schedule proposed by the parties, the customer notification will be completed by the end of October. At this time, the personal information of former Borders customers who object to the transfer will be deleted and the rest will be transferred to Barnes & Noble.

The purchase of the Borders customer list appears to provide an opportunity for Barnes & Noble to widely expand its direct marketing efforts ahead of the Christmas season. The nature of the customer information is described as follows:

The Consumer Marketing Database contains information for approximately 48 million email addresses. For each of these email addresses,The Consumer Marketing Database contains a combination of some or all of the following data elements: first and last name (for approximately 20.4 million individuals), mailing address (for approximately 11.6 million individuals), seven digit phone number (for approximately 41 million individuals), and month and date of birth (but not year) (for approximately 7.9 million individuals).

The transfer will not include credit card or payment information.

The delay clouds the transfer of Borders’ customer list which contains information about some 48 million names according to court filings. Barnes & Noble (NYSE: BKS) acquired the list and other intellectual assets such as trademarks in an auction last week.

The sale was awaiting bankruptcy court approval but ran into a snag when lawyers for both parties asked the judge to cross out privacy restrictions tied to the deal. Those restrictions were set out in a report by a third-party ombudsmen, and stated that Barnes & Noble should be bound by an earlier Borders privacy policy restricting the transfer of customer names. The report said that Barnes & Noble should be able to use the data only if customers covered by the old policy granted it explicit permission to do so. In a court filing on Tuesday, the company claimed that Borders concealed the ombudsmen’s recommendations and said that it is entitled to back out of the sale if the court does not lift the privacy rules.

According to Reuters, a lawyer for Barnes & Noble told Judge Martin Glenn that the company very much wants to purchase the assets but fears the deal could fall apart. The judge reportedly told the parties that, if he allows the sale to take place on terms agreeable to Barnes & Noble, state and federal regulators might step in with their own privacy enforcement actions.

Barnes & Noble won the rights to the lion’s share of Borders’ intangible assets such as its customers lists and trademarks in an auction last week. The sale requires the approval of a federal judge. A hearing is set for 2:00pm today in New York.

The approval process, which is often a formality, hit a snag yesterday when Borders and Barnes & Noble both filed requests asking the court to cross out certain privacy recommendations tied to the sale. One recommendation says that Barnes & Noble is not entitled to have access to customers who joined Borders prior to mid-2008 unless those customers give explicit permission to share their personal information. Another bars Barnes & Noble from obtaining any information about customers who purchased video materials.

The recommendations were made in a report by the Consumer Privacy Ombudsman, an independent expert tasked with protecting personal information in the course of bankruptcy proceedings. The ombudsman’s recommendations are based on federal privacy law and on the fact that Borders changed its privacy policy in 2008. The report says that the old Borders privacy policy, which limited the transfer of personal data, should continue to apply to those who signed up under its terms.

In its court filing, Barnes & Noble says that the privacy recommendations “destroy the value of the transaction” and accuses Borders’ attorneys of failing to disclose the existence of the privacy report and of related correspondence from federal and state authorities. The company says this concealment provides grounds for it to walk away from the sale if the privacy recommendations are upheld. It also argued that its own privacy policy is as good or better than that of Borders and that the collapse of the sale would be a lost opportunity for all involved.

Borders’ filing says that its customer list contains information about 48 million individuals in one form or another.

Both Barnes & Noble and Borders have put forth legal arguments to say that the privacy recommendations are inconsistent with federal bankruptcy law and should not be part of the terms of the sale. The federal bankruptcy judge overseeing the case will have the final say in the matter.

Last week’s auction also saw Pearson (NYSE: PSO) obtain rights to Borders in Australia and New Zealand for $425,000 and Berjaya Books get the rights to Malaysia for $825,000.

Hilco Streambank said in a news release that the winning bidders included Barnes & Noble (NYSE: BKS) and Berjaya Books, a bookseller that operates a number of stores in Malaysia under the Borders name. The auctioneer also stated that ten bidders had participated in the series of sales that took place in New York on Thursday, and that the bidders included booksellers, publishers and Internet retailers.

Hilco did not break down the specific assets each company acquired or how much they paid for them. The assets include the Borders.com domain name and the global trademarks for Waldenbooks and Brentano. Hilco did not state if the sale included a list of millions of Borders customers that is the subject of a lawsuit involving the firm that managed the bankrupt company’s popular Perks rewards program.

The sales, which together totaled $15,775,000 require approval by the judge who is presiding over the bankruptcy. Details will be filed in court prior to a hearing scheduled for next Tuesday.

The case turns on a rewards program that once generated $400,000 a month for Borders and Next Jump in transaction fees. The rewards program had a total of about 40 million members, of which some 7 million of them had actually accumulated points. Next Jump says that when bookseller headed into bankruptcy, it created anger and confusion by failing to tell its Perks customers what would happen to their rewards points. Next Jump says it agreed to assume a $1.8 million liability in unpaid rewards points at its own website, OO.com, but that the customer list is now worthless because Borders refused to help migrate the customers. (Some half-a-million Borders members responded to OO.com’s solicitation — those are the customers Borders says Next Jump essentially stole.)

Next Jump says that because Borders didn’t help with the transition, many of the formerly loyal rewards members bolted. “They unsubscribed in astronomical numbers,” said CEO Charlie Kim, adding that Borders’ recent decision to sue to stop Next Jump to prevent it from using its trademark was a final act of ingratitude. He said Borders had “sucked punched” Next Jump.

In a court filing late last week, Next Jump said an initial buyer for the customer list bolted after its due diligence value revealed “the assets were virtually without value because of a low response rate and high unsubscribe rate.”

It is unclear what effect the Next Jump dispute will have on the auction of Borders’ intellectual property that is slated to go ahead this week. Although the controversy over the Perks program may have eroded remaining goodwill in the Borders brand, the winning bidder will still obtain access to a vast customer database of book lovers. According to Kim, the customer list includes not only the 7 million Perks members but an addition 33 million people who signed up for a more basic form of Borders rewards.

David Peress of Streambank LLC, the company that is managing the auction, told paidContent that he had received numerous bids and that there was “substantial interest” in the Borders name. The auction will take place in New York City on Wednesday.