Amazon prepping for paid ads on Kindle?

While sales of Amazon's (AMZN) Kindle electronic reader have exceeded expectations, there is a groundswell of complaints by its users over the cost of books in the Kindle format.

Amazon prices newly released bestsellers at around $10, and the buyer does not have the right to resell or pass along the book. Now a report suggests that the company may be planning to reduce the cost of books by inserting advertising within them.

According to Online Media Daily's Laurie Sullivan, several patents owned by Amazon and recently made public show the company is pursuing new revenue and marketing strategies made possible by the technology. The most interesting of these is the possibility of inserting ads in a book's chapter breaks, or every few pages, or in the margins. The ads would no doubt include hot links, using the Kindle's internet connectivity to allow users to access further information.

The open question is: to what degree would such advertising be used to offset the price of the book? If you were a Kindle reader and had the choice of paying $10 for the latest Janet Evanovich without ads or $2 for a copy with ads, which would you choose? Our history with television, radio and the internet leads me to believe that the ad-supported, cheaper version would dominate. By a wide margin.

Another option included in the patents would allow Amazon to provide a free Kindle version of a book to a user when he bought a paper copy. I can't see why someone comfortable enough with a digital reader would revert to the dead tree version, though.

If you use Amazon, you're familiar with the degree to which it tracks your tastes and purchases in order to serve up individualized suggestions. The same technology would allow it to serve up ads customized for you, much as Google does. In fact, it could tie even tie into Google's ad-serving network rather than do the heavy lifting for itself.

I view this as another joker placed atop the house of cards that is ad-supported media. Every new advertising opportunity further dilutes the market, and the buying habits of Americans can't expand indefinitely to fund 'free' infotainment. When we stop buying, as we have for the past six months, ad-supported media suffers, sometimes mortally.

I have a nightmare in which I'm reading The Sound and The Fury, and every ten pages, I'm interrupted by an ad from the Mississippi Board of Tourism. That's not progress, and I'm sure William Faulkner would agree.

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