... The third way is to use the ID-IDREF capability of XML.
<BooksAndWatches>
<Book id="PLAI">
<Title>Programming Languages Application and Interpretation</Title>
<Date>2007</Date>
<Author idref="SK">Shriram Krishnamurti</Author>
</Book>
<Watch id="TimexInd">
<Brand>Timex</Brand>
<Model>Indiglo</Model>
<Power idref="Lit">Battery</Power>
</Watch>
<Author id="SK">
<Name>Shriram Krishnamurti</Name>
<Employer>Brown University</Employer>
</Author>
<Battery id="Lit">
<Chemistry>Lithium</Chemistry>
<Volts>3</Volts>
</Battery>
</BooksAndWatches>
Not so different as the second way, really. id/idref can be thought of
as Primary Key/Foreign Key pairs. And the four xml docs of the second
way could all be brought into a single XML document as external
entities. Or Way #2 could be transformed into Way #3 with an XSLT
transformation.