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Porous Paywalls and Book Publishing

Felix Salmon recently wrote an article talking about how the New York Times paywall is working because it's porous. He contrasts that to other paywalled sites who haven't enjoyed the same success as the Times. As I read Salmon's article I was thinking less about pourus vs. rigid paywalls and more about DRM'd vs. DRM-free books.

There are definitely some similarities here. At O'Reilly we believe in a DRM-free world because we trust our customers and we believe they value our content enough to pay for it rather than steal it. It would be naive of us to think this philosophy totally eliminates the illegal sharing of content though. We just happen to believe those situations shouldn't cause you to penalize all your customers. Shoplifting happens from time to time at your local grocery store but that doesn't mean the store manager should put everything under lock and key.

But it was only when I read Fred Wilson's follow-up post to Salmon's article that I realized what other connection this has to book publishing: advertising, sponsorship and other revenue streams. As Fred points out, the Times doesn't necessarily have to charge for each online page view since they run ads on every page served.

I'm not suggesting we can suddenly give away book content and make the exact same amount of revenue with advertisements. But what I am saying is that advertising and its close cousin, sponsorship (e.g., "This book brought to you in part by..."), can and will play a role in the future of book publishing. Every publisher won't necessarily experiment with that model but many will.

24symbols is a great example of how this can work. 24symbols offer both freemium (free, ad-supported content accessible only while online) and premium (for-pay, without ads and can be read offline) models. The customer decides which option they prefer. That last point is critical. 24symbols isn't just serving up free content and hoping that alone will somehow create a successful business model. They're also offering an ad-free offline option that some number of users will upgrade to. They key is to make the premium service feature set compelling enough that customers want to pay for the it.

Will 24symbols be successful? It's too early to say (although I'm a huge fan of Justo Hidalgo and what he's doing with 24symbols; if you missed it, check out his presentation at our TOC SneakPeek from earlier this year). But I'm convinced the future will bring more advertising-based book publishing experiments, not fewer. And as I've said before, I can see a future where Amazon offers two versions of many (if not all) Kindle titles: an ad-free version with pricing similar to today's models and a second one with ads but at a lower price. Amazon has taken the first step with the hardware itself by offering the lower-priced "Kindle with Special Offers." As Jeff Bezos mentioned in the 7th paragraph of Amazon's most recent earnings announcement, "Kindle 3G with Special Offers has quickly become our bestselling Kindle."

Customers are already voting with their wallets and overwhelmingly choosing the advertising-subsidized version of the device itself. These results will undoubtedly encourage Amazon to start experimenting with ad-subsidized content as well.

Services like 24symbols and the Kindle platform are one thing, but the next logical step after that is for publishers to expose more of their content to the major search engines. How long will it be before some of the current New York Times bestsellers are fully and freely readable online with ads? If the stories are good enough and the premium alternative offers a significantly better reading experience (e.g., no ads, can be read offline, includes other features/services, etc.), some number of customers will upgrade, just like they're doing with Times subscriptions.



Joe, how would you see this working with a fiction title? A simple HTML page with ads like a web page or perhaps a web app with ad units built in?

Keen to read your thoughts.

I'd definitely give this a go as an author but maybe stagger the release. Paid first then go ad supported a month later. Of course, any useful data to the contrary would change that in an instant.

I'd be keen to make it an email submit on the freebie too, ie 'Enter email to receive a link to the free version of this title'. I'm only suggesting this as a way of looking for a future upsell or notification of other releases. Although an email submit may seem like a barrier to some readers. Again, I'd be keen to test this. Another thought: I wonder if Amazon would view the freebie as a 'Free Ebook' ... thus instigating a 'match price' notification on the paid title?

And finally, do you target the ads to the content... or the reader demographic. I think there is a huge difference between flashing an ad to a 60 year old who likes murder mysteries as opposed to a 25 year old with the same genre interest. They are very different demographics.

Maybe Facebook could release a book app that splits the ad revenue with the author?! That way advertisers could target their demographic with much better focus then most other ad platforms.

Sorry if this comment is a bit haphazard ... I have a toddler that is determined to turn my mind into mush through sleep deprivation!

Joe Wikert

Hi Chris. There are a number of ways this could be implemented. One is where a new ad pops up each time you open the book. You see it once and it goes away. Another is where an ad could be crawling along the bottom of the screen. Yet another is a skyscraper-type ad that might appear every few pages. The options are endless. And yes, it's very easy to see this being taken too far. That's something the industry will have to test and make adjustments to along the way. I still come across new and interesting ads on web pages using techniques I've never seen before. Some are quite annoying while others are novel enough to really grab my attention and cause me to click through.


Joe, I think the platform that successfully exploits the free model will have to focus on the advertiser not the reader. This may sound counter-productive to what a book business should be. But it isn't.

If 24Symbols (or Amazon or whoever) can't provide an ad dashboard that enables targeted advertising then they probably will not succeed with 'free'.

Facebook is a prime example of this - the ad dashboard works. Plenty of Fish is another. Even Google's Admob hasn't got the hard core demographic targeting needed for ebooks right.

In my opinion freemium just will not cut it. I don't even spend $9.99 a month on ebooks any more. I have more than enough 99cent and $2.99 titles to cover my monthly reading time. I want free. Nothing less. I get it everywhere else on the net when it comes to content.

Again, 'free' will work but someone really needs to look after the advertiser which in turn will look after the author/publisher.

I hinted at a Facebook app in my previous comment because FB allows advertisers to target a tight niche. I woud implore any platform developer to spend some time and money on the backend of FB before they push forward too fast.

As for the format: banner, scrolling, links etc will need to optimised to push ad rates to $10-20CPM to replace current publishing revenue. That in itself is a very tough ask.

That said... I actually think this model is going to fly. It will just need some serious iteration... oh, and a shit load of titles!! )

Once again, sorry for the bitsy comment... I'm watching Rugby and Formula 1 with my mac on my lap!!

The bourbon also doesn't help! ;-)

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