Brace for impact. What I’m about to say is going to make a lot of people angry, including some of the people at Google (NSDQ: GOOG) who are going to rightly point out that when they pre-briefed me on today’s Google e-books announcement, we never once discussed ad-supported reading.
Instead, they told me all about their plan to establish a set of tools that will offer e-books to people looking for book information through Google’s search engine. They explained that this will make it possible for the millions of people who conduct book-related searches every day to have easy access to 3 million books — some out of copyright, some out of print but under copyright, and a full range of in-print titles including bestsellers. They also described how independent booksellers will be able to use the same set of web-based commerce and reading tools to build their own branded e-book stores to finally extend their brick-and-mortar customer relationships into the digital space.
Since then, I’ve spoken to half a dozen reporters who were also pre-briefed and they have all had a similar set of questions: can Google compete against Amazon? (NSDQ: AMZN) (No, but it can compete against Barnes & Noble.) Is it too late to make a dent in a mature market? (No, less than 10% of online adults in the U.S. read e-books; there’s plenty of room to grow.) Is Google’s cloud-based strategy unique? (Yes and no: It supports all devices except the Kindle, but the Kindle platform actually supports as many devices as Google will.)
All of that is true, and I’m genuinely glad to have Google enter this market because it will be reaching potential customers at a unique point in their book-buying journey: at the point of web search, not at the point of searching the bookstore. This means many things you didn’t realize a book can help you with — overcoming depression, remodeling a bathroom, making friends and influencing people — will now be surfaced alongside all the YouTube and other results Google will offer. This is a net plus for books.
But the ultimate effect of Google e-books, if Google knows what’s good for it, will be the creation of an ad-supported publishing model. This is where the anger starts. Because I’m putting words in Google’s mouth — words they may or may not be thinking but certainly words they don’t want to say out loud — but mostly because I’m proposing something that is so counter to the philosophy and mindset of the publishing industry that I may be shunned for even suggesting it.
Opponents of my suggestion will conjure a worst-case scenario, where Dickens’s, “It was the best of times, it was the worst of times,” could end up sponsored by a Google AdWords campaign that reads, “Is your day feeling like the worst of times? Try our new sports drink to get your afternoon back on track.” I’ll agree this example may be atrocious, but I can just as easily identify dozens of very smart examples. For example, not only would Kohler and Home Depot want to sponsor your browsing of a book on bathroom remodeling, as a reader you may actually appreciate the link to the relevant plumbing resources.
Before anti-advertising types crawl all over me, let me explain the most important reasons why this makes sense. First, books are the only medium left not significantly sponsored by advertising. From the Android Angry Birds game app to Pandora music streams to Hulu.com to the venerable NYT.com, advertising is essential to the success of nearly all media — analog and digital. The only reason book advertising has not happened is that the economics of distributing books have required that people pay for them — in a way they have never paid for the newspaper, magazines, or even music, where a majority of listening has always been radio-based. If you make people pay the full price of a book’s creation and distribution, you can hardly expect them to endure advertising. Plus, books last for such a long time that an ad placed 25 years ago in my copy of The Hunt For Red October would be laughably irrelevant today.
That has all changed now. Since Google intends to provide its books from the cloud, it can deliver ads that are timely and targeted. And the economics of publishing are swiftly moving away from an analog production model. (I blogged about this to much ado last month), which means that soon, we will no longer need to force the entire cost of a book on the buyer of the book, but instead can extract value from the reader of the book, in direct proportion to the value they get from it. In other words, the more pages they read (the more value they get), the more ads they see and the more value the publisher and author receive.
Also, consider this: The two most common ways people acquire books today are borrowing from a library and borrowing from a friend. There are several reasons for that; economically, a principal reason for this is that until you’ve read a book you can’t be sure whether it’s worth the price printed on the book’s jacket, so you prefer to get the book for free when possible. But how can you get people to try a book to find out if they like it before buying it?
In the e-book world, Amazon and now Google can let you sample the first chapter or two (or three) for free. And while that’s a good way to get someone interested in a book, advertising is an even better solution. Imagine you find a new book, highly recommended by your Facebook friends or a blogger you trust. Instead of a limited free trial of the first chapters, from which the publisher and author get no recompense if you don’t ultimately buy, what if you were offered an ad-supported read of the book instead? As you read, the meter starts ticking and revenue accrues directly to the publisher and author. If you don’t like the ads, you can buy the book at any time to remove them. But even if you choose to read the whole thing without buying it, it’s an easy thing for Google to figure out how many ads you have to see for it to generate enough revenue to replace the cost of buying the digital book.
I’ll stop there, I have a hundred more justifications for why this is the next logical step for the industry, why Google is perfectly poised to do it. And, I can anticipate all the complaints from publishers as to why they will hold strong and reject this extra (easy) money. But it will happen. And by raising this flag and starting the verbal war that will ensue, I have done my part to ensure we get to the future sooner rather than later.
This article originally appeared in Forrester Research.