Kindle Review – Kindle Fire Review, Kindle 4 Review

The low price of the Kindle 3 and the Nook will soon force Publishers to push advertisements into books – At least that’s what an OpEd in the WSJ claims.   

You’d think that someone making such a bold claim would back it up with some really solid logic. No such luck. 

WSJ illogicians spin their own brand of sophistry 

Here are the reasons that make the WSJ illogicians feel advertisements in books are inevitable (my counter-arguments are listed as bullet points) - 

eReader prices are dropping like a stone … what room is left for Publishers’ profits? 

• What does that have to do with eBook prices?  Publishers don’t make eReaders. This is such a terrible argument you have to feel bad for the article authors. Kindle prices are falling so Publishers have to put ads into books. Shouldn’t it be the opposite? Shouldn’t it be easier to sell $9.99 books if eReaders are super cheap?

Major tech players are jumping into book retail. 

• Well, unless book Publishers get seduced into believing advertising revenue will be more than book sales revenue there is no reason the entry of major tech players will result in books getting advertising. Publishers would have to be raving lunatics to not see what happened to newspapers when they embraced Internet advertising.

Overall sales have been stagnant or decreasing for over a decade. 

• Perhaps. However, eBook sales are exploding – paid ebook sales. Do we really think Publishers are so stupid they will exchange a guaranteed income stream for something that is a long shot?
  

  eBook sales are increasing 200% a year. We better stop charging for them and run ads instead. 

Production costs are higher now that Publishers have to produce both physical and digital editions. 

• That’s a rather irrelevant argument. You have to factor in profits - Who cares how much it costs to produce digital editions if they increase total profit.
• It’s also not been proven that production costs are higher. Converting a book into ebook format isn’t rocket science.

A $9.99 digital book is far less profitable than a $25 hardcover. 

• That’s an assumption. One that Publishers are spreading and we don’t know whether it’s true or not.

Can’t believe two very smart people would write an article with neither head nor tail. All it is is a bunch of appallingly bad assumptions strung together. 

Perhaps the 2 most amazingly wrong assumptions 

First, we get this rather specious claim - 

But historically, the lack of advertising in books has had less to do with the sanctity of the product and more to do with the fact that books are a lousy medium for ads. 

It’s impressive that the authors would make such a bold claim without backing it up with any data of any sort. They also kill the basic premise of their own article - Books are a lousy medium for Ads, Now we can put ads into books, Let’s stop charging for books and put ads into them.  

Yup, let’s put ads into books since they’re a lousy medium for ads.   

Second, we get this justification for putting ads into samples - 

Because not every consumer who reads a sample chapter will buy the book, it’s reasonable for the publisher to extract some additional value. 

Are you kidding us? The sample is already an advertisement – for the book. 

There can be no better way to kill readers’ enthusiasm to buy a book than to put ads into the sample. Which brings us back to the whole concept of ’books are a lousy medium for ads’.

There’s no way Ad Revenue can cover the cost of Books 

Let’s say a user pays $9.99 for an ebook. It has 450 pages. 

You’d have to arrive at some magical new form of advertising that delivers $9.99 in advertising revenue from a user reading 450 pages. 

Think about it for a second – Could you conceive of any sort of advertising that could generate $9.99 per book per reader? 

Let’s try –   

1. Let’s go crazy and put 450 advertisements into the book.
2. Let’s make them super-compelling so that users interrupt their reading and click on 45 of them. That’s an unheard of click-through rate but let’s assume it anyways.
3. Let’s make the products that are advertised magical and revolutionary so that 5 times the reader buys a product. That’s also an almost impossible conversion rate but let’s assume that too.

Even with those outrageous assumptions you’d have to find products that generate enough profit to be able to hand over $2 or more per sale to Publishers. Less than $2 for Publishers per sale and they’d be better off selling books for $9.99. 

Notice that we’re talking about 450 advertisements, one per page, and advertisements so good that 1 out of 10 times the user clicks on them. Even Steve Jobs can’t make ads that good. 

Ad Revenue is El Dorado for Content Creators 

Here’s how the argument goes - 

1. We know you’ve put in a lot of effort and money to publish this book.
2. Let us sell it for free - let’s give readers for free what they were earlier willing to pay $9.99 for.
3. This makes perfect sense because somewhere down the line users will click on ads.
4. There’ll be some money made off the ads and you’ll get a share.
5. That share is magically going to be $25 per book instead of $9.99.

You’d think that any reasonable Publisher would instantly see the flaw – Books are a working model while Newspapers tried the advertising revenue model and got decimated. 

However, a mix of greed and desperation makes advertising revenue seem like the solution. Publishers hear that instead of cutting costs they’ll increase their profits. They start believing that even people who don’t read books will start reading books just for the privilege of clicking on these magical ads that will make Publishers more than $9.99 per book. 

It’s all a grand illusion.

Perhaps the biggest problem with getting advertising to work in books is that readers are smart people. 

People who read books are the worst audience for advertisements 

Please note that there are two models -

1. A cash-back type model where Amazon says if you buy all your supplies from us we give you free books. This is not advertising and it would be an amazing move if Amazon could pull it off.  
2. An advertising model where ads in books try to convince people to buy things they may or may not need.

We’re only talking about the latter. 

Advertising tries to pretend that by being very targeted it’s offsetting the fact that it’s trying to train us to be mindless purchasers. 

The grand argument is that eventually algorithms will know better than us what’s good for us so super-targeted advertising is actually good for us. That’s nonsense. Facebook is the champion of super-personalized advertising and the only thing it has been able to sell is Farmville credits. 

People who read books are too smart to be manipulated 

Take a typical ad that tries to link a product with joy and happiness and winning the lottery and a ranch on the moon.

1. Let’s show it to 500 people watching Jersey Shore on MTV.
2. Let’s show it to 500 people reading The Stand on their Kindle.  

Which group is it going to be more effective on?  

We don’t even have to factor in that people who watch books are used to reading without interruptions and would not take kindly to advertisements. Ads just aren’t going to work well on smart people. It’s why advertising is failing online. People are getting really smart and they are getting the option to ignore advertising totally and they are exercising it.

It’s a huge joke being played on Internet companies and they don’t even realize it - They are using the type of monetization that is least likely to work on Internet users. 

Ads in Books are not inevitable  

You need two groups of people to be fooled for ads in books to work - 

1. You need content creators and suppliers (Authors and Publishers) to believe that advertisements can supply as much or more money than selling books.
2. You need to convince readers that having advertisements in books is worth the saving. As a bonus you need readers to not only be OK with ads in books but to also click on them and buy the products advertised.

The latter group might agree if you set really low prices for books with advertisements in them. However, that does not guarantee they will click on the ads – Not only do advertisers have to get ads into books they have to make them pay off. 

The former group is only going to agree if they can be fooled into thinking advertising in books will work or if they do not have any other option. With the Agency Model and $9.99 Publishers have something that is working pretty well. Why would they try to replace a model that is working just fine? 

There are enough challenges for Publishes and readers – The last thing either of them needs is for some malevolent middle-man to try to put advertising into books. If you really care about books then build an eReader or a paid ebook store or build a free library. Trying to take advantage of desperate and greedy Publishers by offering them the lure of advertising income from books would be an evil, evil thing to do. The only thing advertising in books would do is degrade the reading experience and threaten the future of books.

Filed under: books Tagged: | ads in kindle, ereaders vs advertising