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Summary:

Imagine picking up that NYT bestseller in hardcover format in the bookstore, only to discover that it was filled with ads. That frightening scenario may not be unrealistic for e-books, at least that’s the takeaway from the recent MediaBistro e-Book Summit. Industry insiders met and lamented […]

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Imagine picking up that NYT bestseller in hardcover format in the bookstore, only to discover that it was filled with ads. That frightening scenario may not be unrealistic for e-books, at least that’s the takeaway from the recent MediaBistro e-Book Summit. Industry insiders met and lamented the viability of continuing the $9.99 e-book price without ads to augment the gains to the publishers.

The $9.99 price has been put in place by Amazon for Kindle e-books, and other retailers have matched it to be competitive. A panel consisting of representatives of Random House, Skiff and Adobe, made it clear that this price is not sufficient to support content creation and distribution. They put forth the idea that ads in the content would be the way to augment that low price to make their business worthwhile.

I am not surprised to hear the Skiff representative take the route of ads in digital content. I had the pleasure of doing an in-depth look at the new Skiff venture (subscription required), and it was clear to me that Skiff sees ad sales as a big part of its digital content distribution efforts to come. The company’s own statements bear this out in detail:

Newspaper, magazine and blog publishers will also be able to sell and integrate display advertising alongside the content that Skiff delivers, adding value for consumers and marking the maturation of e-reading into a mainstream media type.

The introduction of ads into traditional e-books would be lamentable. Reading an e-book should be the same experience as reading the paper equivalent, and that spells no ads in the content.

  1. Do these people just truly hate their customers?

    The shift from traditional publishers to DIY/POD type methods will continue to grow. Especially with this nonsense.

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  2. Are they crazy? Sticking ads in e-books??

    What a way to kill a good thing. E-ink was developed to replicate the experience of reading a printed book. If they start stuffing “e-paperbacks” with ads then if they don’t kill of the e-Reader industry, some enterprising app developer will find a way to block the ads.

    Ads in books? Just the idea is insulting, irritating and a slap in the face of bookworms.

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  3. I think the question is whether the differential between $25 for a ‘real’ book and $10 for an ebook just cuts out the distribution and printing costs. If there is too much of an ability to pay for the content creation being sacrificed, then they have to either raise prices or find alternate sources of revenue. We read magazines with ads, why not books?

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    1. That doesn’t make sense. Its cheaper to create an ebook… there is no overhead, no additional production cost. Aside from bandwidth, the sale of an ebook is nearly 100% profit. Adding ads to the mix is obscene and would drive many (including myself) to pirating alternatives and then they would make zero profit.

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      1. 100% profit? So they don’t pay the editors, the copyeditors, the cover designers, the marketing department… Even if it’s a print publisher that’s chosen to produce e-copies, all those wages are still relative to the success of the book. Producing an eBooks does result in extra work, too: e-stores involve a different marketing strategy to bricks and mortar, covers need to work in black and white e-ink as well as look good in colour (and scale well), text needs to flow properly no matter what size the reader dials it up to, and many other little niggly problems.

        The difference in costs comes from printing, storage and shipping (and there’s an additional cost if you choose to add DRM). Plus, the more you sell, the lower the per unit cost – one eBooks costs almost the same as one print book, but 1000 eBooks are significantly cheaper than 1000 print books.

        Don’t get me wrong, I think eBooks should be significantly cheaper than print books. Print publishers are shooting themselves in the foot demanding higher e-prices though, because the ePublishers can afford to undercut them regardless – the usual ePublisher business model doesn’t include advances, so they can take more risks on new authors and wait more time for sales to build (and sell books a lot cheaper). Definitely better for the reader, and depending on your point of view, often better for the author too.

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    2. I agree that a *set* price of $10 for all ebooks is dumb. The cost of an ebook should be the cost of the paper version minus the materials cost. If the author or publisher can decide the price based on market forces and whatnot, just like they do now.

      Of course, the “design” fee must still be included, because someone has to make the ebook. Perhaps some nominal bandwidth fee, though that would be rolled into the seller’s final price, I’d imagine.

      There’s no darn reason for all this fuss and confusion over e-book pricing!

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  4. I am sympathetic to the need to generate profits from books, including e-books. And I also realize that when I buy an e-book, I probably haven’t saved the publisher much in printing and distribution costs unless they have actually printed and shipped fewer books to bookstores. (I don’t know whether if e-book sales have been high enough to result in that yet). However, I would -much- rather pay a higher price for ad-free e-books than Amazon’s artificially low $9.99 for one with ads. If publishers take this route, I truly hope they offer consumers options– a $9.99 version with ads and one without at a higher price. Otherwise, I won’t be buying very many e-books. There must be some place where one can get away from ads, and books seem like a great place.

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  5. I definitely won’t buy any books with ads.

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  6. I guess people have forgotten… Many years ago, publishers did put advertising into their books. Ah, see here: http://www.nytimes.com/2007/12/02/books/review/Collins-t.html

    I started a much longer comment, but gave up. The economics of digital and physical books definitely deserves more consideration and analysis than I’m willing to put into a comment.

    Here’s two things to keep in mind:

    ebooks as a business have been going for better than a decade, but its still early days, as previous efforts were much smaller scale than Amazon and Barnes & Noble.

    I’ve read that with the existing contracts, Amazon is probably losing money on every book sold, and that’s not even considering their overhead or capital costs; apparently Amazon is trying to grow this business quickly.

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  7. I am sick to death of every gd thing that comes down the pike having some advertising garbage being flung in my face. Cable started back in the dark ages with the claim that it was a way to watch programming ad-free; you subscribe in place of watching ads. Now we pay AND get to watch ridiculous ads. Now blogs have ads. Look, advertising is just a way to get someone else to pay, but no one is ever satisfied. They want your subscription money AND all they can get from anywhere else. This is crap. I don’t subscribe to magazines anymore because there is more advertising in them than content. I won’t watch or buy any movie that REQUIRES me to sit thru some bonehead ad before the content I paid for, and I wouldn’t buy a book if it was filled with them. So I’ll stop buying ebooks (and I buy a ton of them right now) the day this happens. And if they don’t care, then I don’t care. Go ahead….make my day.

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  8. Before we all fly off the handle about ads being included in ebook material, let’s just take a deep breath and look at the thing from a real-world perspective.

    I don’t imagine for one moment that any publisher is going to intersperse the text of a story with advertising. It will be placed before or after the book manuscript and it will be mostly relevant to books, stories and products associated with literature. The second point is that you, the reader, don’t have to read it – it’s not compulsory. If you really don’t want to know about new literary associated products or other books that might entertain you, then scroll through the adverts.

    Lastly, ask yourself how you first found out about Kindle and ebooks – my guess is that you probably saw some advertising and thought, ‘hey, I’d like to find out more about that!’

    Now, I say all that, not as a marketer but as an author.

    Chris Warren
    Author and Freelance Writer
    Randolph’s Challenge Book One – The Pendulum Swings

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    1. I usually hear about things I’m interested by word-of-mouth (or quasi-word-of-mouth), like blogs or, on occasion, a product featured on a tv show.

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    2. With a e-reader, a full page ad is not exactly something you can scroll past. Also, if every book has a couple of ads in, your ereader is going to hold noticeably fewer books when full.

      Overall, I don’t mind the idea of a couple of ads at the end of a book, maybe for other works by the author or from the same publisher. A lot of print books do this. I have some old Penguins that even have ads for tangentially related products, tucked on pages that, due to the binding process, would probably have ended up blank otherwise. Ads I can choose to read or not, as I like.

      However, it’s the patent Amzon filed a while back that worries me (http://dearauthor.com/wordpress/2009/07/06/amazon-to-turn-books-into-magazines-with-ads-in-books/). Mined from metadata, user data and the book’s content, I’m not sure I want the next thriller I read to tell me that so and so pool supplies just down the road from me sell the very pool the victim just drowned in.

      Basically, as much as you’d love to believe ads won’t appear in the middle of the book, Amazon would like them to, so people have to read them. Marginal adverts. Hyperlink adverts. Full page adverts between chapters. Really, really annoying adverts!

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  9. The subject of ads in e-books, and the pricing of e-books is a very interesting one. I am all for authors getting just compensation for their works, but it would be folly to believe that authors will get their fair share of ad revenue derived from their work. I doubt they get such revenue from print work, and this will be no different.

    I liken the pricing of e-books to paperback book prices, not hardback pricing as is usually compared. I started buying e-books back in 2001, and back then e-book editions didn’t appear until the same time as paperback editions. Publishers didn’t want to compete with the high hardback sales, and rightly so. I didn’t like waiting for that bestseller I wanted to read, but I did so as the pricing made sense to do so. This is no different than waiting for the paperback edition to appear.

    I find it hard to believe that Amazon and other retailers are losing money on each e-book sold at $9.99. I can’t believe they would sell something at a loss to make it up in volume. It is not good business logic and these guys know business. The distribution costs of e-books are nowhere near that of print editions. I believe they have determined they can in fact make a profit at this price point.

    At issue is whether they can pay authors the same royalties they do for print editions. Lets look at that logically — e-book editions do not make print editions go away. Publishers will still sell lots of print books, even if e-book acceptance continues to grow. It is not straightforward to imply that e-books hit the authors in the pocket.

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  10. I should add that to believe publishers will not intersperse e-book content with ads is naive at best. One of the reasons I don’t like e-book readers with touchscreens is the ability for publishers to put those link ads on given words in the text. If you think they will not do that, you are sadly naive.

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