August 19th, 2010
It’s a horrible thought, but the Wall Street Journal suggests that ads in ebooks “are coming soon to a book near you.”
It’s an opinion piece, rather than a piece of technology reporting, so the evidence is a bit skimpy. For example, the article notes Google already displays advertisements beside the results of searches on Google books. (“It’s a small step to imagine Google including advertisements within books.”) But they also note that last year Amazon filed a patent for advertisements on the Kindle. The article is written by a former book editor at Houghton Mifflin (William Vincent), who’s presumably given a lot of thought to the future profitability of the book-publishing industry. And his co-author, Ron Adner, is a professor at the School of Business at Dartmouth College.
They focus on the future, arguing that the ads-in-ebooks model just makes sense. One suggestion is to include ads in an ebook’s free sample chapters. (“Because not every consumer who reads a sample chapter will buy the book, it’s reasonable for the publisher to extract some additional value.”) Another suggestion: offer a book without advertisements — for a price. “Seeing ads in the sample may also convince a reader to pay for a premium, non-ad version of the full-length book.” I’m envisioning a massive boycott of the first book that attempts to include advertising — but there could be one silver lining. If the publishers earn enough money on the advertising in a book, they might consider reducing the book’s price, or even giving away new books for free!
In fact, Amazon used to sell ebooks at a loss, according to one analyst, earning its profits by selling the Kindle. But now Apple’s new iBookstore lets publishers sell their books at a higher mark-up. The competition pressured Amazon into offering offer their own publishers the same leeway, and ironically, Apple “has now forced Amazon to turn an estimated 30 percent profit on each book it sells.” It seems like Amazon prefers selling their ebooks at a much cheaper price, and the publishers are the ones who are resisting. But publishers might be willing to finally lower their ebook prices dramatically — if they could make up the difference on advertising.
Ironically, then publishers then have an interest in whether the reader finishes the book. “[W]ith advertising in the mix, a book downloaded 100,000 times but never read…may be worth less than one downloaded 50,000 times and read cover-to-cover.” Suddenly an author who writes an irresistible page-turner is more valuable than the author of a massive tome that takes forever to finish, the article argues, suggesting that in a future where there’s ads in ebooks, “Unread books suddenly become less profitable to a publisher.”
But it’s not clear to me who earns the profit in this scenario — the publisher of the ebook, or the digital bookstore who sells it. After all, advertisers would be thrilled for a chance to “target” their ads to readers of a specific kind of book — and would probably be willing to pay extra for this. But as a technology company, Amazon seems much more likely to deliver these customized ads than, for example, Houghton Mifflin. And hypothetically, Amazon could keep updating the advertisements displayed in your ebooks whenever you sync to their server. Advertisers would love the idea of delivering same-day announcements — so Amazon could charge a high premium for their in-book advertisements.
It’s may all come down to a single question. Would you accept advertising in your ebooks if it meant that the ebooks were free?