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George Burke, above, and Shamoon Siddiqui recently took first prize for their book-renting company called Bookswim Inc. [Steven J. Dundas]

ABERDEEN — Touting itself as the Netflix of books, a startup company launched by a pair of 26-year-old friends is making its presence felt both locally and nationally.

Bookswim Inc., which rents books through www.BookSwim.com, last week began supplying 10 public libraries in Texas with the reading material for their book clubs. Two weeks ago, the Aberdeen-based company won $20,000 and first place in a business-plan competition run by Rutgers Business School in Newark.

Most of the company’s revenue comes from individual subscribers who are mailed from two to 11 books at a time for monthly fees ranging from $14.99 to $35.99. Like DVD-renter Netflix, BookSwim sends books based on lists that subscribers online. There are no late fees and rented books can be bought at discounted prices. Members may rent an unlimited number of titles per month but receive replacements only after returning books, using pre-paid envelopes.

BookSwim customers “don’t feel [book] ownership is necessary” but still want to read, says co-founder and chief marketing officer George Burke. He and co-founder Shamoon Siddiqui met in 2000 as undergraduates at the New Jersey Institute of Technology in Newark. Siddiqui graduated from Rutgers Business School last month with an M.B.A.

“On the whole, readership may be declining but the market of book readers is still huge,” says Burke. According to the National Endowment for the Arts, he says, 12 million people in the U.S. read three or more books per month. “They’re our target market.”

BookSwim had revenue of about $700,000 for the fiscal year that ended May 31, says Burke. The year-old company has 13 employees who operate out of a 5,500-square-foot warehouse. At any moment, two-thirds of the company’s 15,000-book inventory is outside the warehouse, he says.

“They [Burke and Siddiqui] are very tenacious and resilient,” says Fernando Alvarez, an economics and finance professor at Rutgers Business School who runs the annual business plan competition that the partners won this year. BookSwim made the finals in 2007 but was not among the winners. “They’re turning obstacles into opportunities,” Alvarez says of BookSwim’s deals with the Texas libraries, who could be considered rivals.

Burke doesn’t see libraries as direct competitors, however, because they carry few copies of new titles, do not mail books and charge fines for late returns.

Judy Daniluk, technology consultant for the North Texas Regional Library System in Fort Worth, says 10 libraries are each paying BookSwim $1,200 for a year’s worth of book rentals for clubs with up to 20 members that hold monthly meetings.

BookSwim buys its books from sources that include the online Amazon Marketplace and Baker & Taylor Inc., a library supplier. BookSwim titles that go unrequested after borrowers return them are sold to “free up cash to spend on additional inventory,” says Burke.

BookSwim pays an average of $5 in U.S. postal fees for round-trip shipments of two books at a time. The company mails to customers within the U.S. and will send books overseas to military locations. “Shipping will eventually become our biggest cost,” says Burke.

Competitors include Booksonline.com, which runs more than 40 book clubs, including Book-of-the-Month Club and the Science Fiction Book Club, and claims a total of 8.5 million members. BooksFree.com mails rental paperbacks and audio books to subscribers. Burke says this limits its ability to rent new titles, which normally come in hardback.

BookSwim doesn’t rent publications such as textbooks and the “Guinness World Records” that are constantly d, says Burke, because outdated editions would prove too difficult to rent or sell.

He notes that by calling itself the Netfix of books, BookSwim is able to “explain the business model in three words.” And with the word “Netflix” on the BookSwim Web page, “we’ll have a higher probability of turning up in Google search.”

But Peter Pizzi, a partner in the intellectual property group at Connell Foley LLP, a Roseland-based law firm, says that playing on another company’s name and reputation and copying its way of doing business could have legal ramifications. “Netflix could potentially argue that its [name is] a famous mark and this use is diluting its trademark and subject to a trademark dilution claim,” says Pizzi.

On the other hand, he adds, BookSwim could argue that “it was necessary to mention Netflix in order to explain [BookSwim’s] service, that it only makes limited use of the Netflix mark and that there is no indication that Netflix endorses BookSwim.”

Steve Swasey, vice president of corporate communications at Netflix’s headquarters in Silicon Valley, says business-model copycatting and brand-name borrowing is nothing new to his company. “We do have patents on our business process, but we are also aware that other companies use similar functionalities,” says Swasey. “It’s just not something that we’re going to pursue legally. There’s a company that rents purses and calls itself the Netflix of handbags, which is even mentioned in a throwaway line in the new ‘Sex and the City’ movie.

“These things happen,” he adds. “You build a successful business model and people copy it.”

Burke says BookSwim plans to seek up to $500,000 in angel funding in the coming months to hire a seasoned executive. “Shamoon and I realize that the next stage will take experience to push us to our goal of being a $200 million company by 2012,” he says. “And veteran executives don’t come cheap.”