Electronic Books Turn the Page

If electronic books -- and the leading gadgets that read them -- are going to make a mainstream move, it may happen sooner than you think.

We still don't know how big the market for e-book readers is at the moment, because Amazon.com (NASDAQ:AMZN), Sony (NYSE:SNE) and the smaller players in this intriguing field are tight-lipped about their conquests.

Amazon's Kindle isn't cheap as the industry leader. Setting buyers back $359 -- or $479 for the larger DX model -- means it's still an unattractive value proposition for casual readers. Amazon prices its Kindle books aggressively. New releases and current bestsellers fetch no more than $9.99. Barnes & Noble's (NYSE:BKS) eReader.com now slightly undercuts Kindle with its $9.95 price point for bestsellers, but book lovers need to go through several reads before they can justify the initial Kindle purchase if value is the primary consideration.

Well, that may be changing. The blogosphere was alive during the holiday weekend, as TechGeist unearthed a patent application by Amazon that aims to serve up ads within Kindle books.

E-book lovers may cringe at the intrusiveness. The last thing anyone needs while immersed in Ernest Hemingway's Death in the Afternoon is a distracting block of ads pitching travel excursions to Pamplona or paella recipes.

But what if this isn't about the folks who pay Amazon for a Kindle copy? What if the ad-supported model is reserved for free books? Kindle already has subscription deals with newspaper publishers including New York Times (NYSE:NYT) and News Corp. (NYSE:NWS), so what if this is part of a grander monetization strategy?

I like it. As long as readers can pay for ad-free versions of their favorite books, why not apply the contextual marketing approach that has served Google (NASDAQ:GOOG) so well in cyberspace? An ad-based model may even justify price cuts on the readers themselves, and a price cut would really shove the nascent industry into the mainstream.

The next few chapters, no doubt, will be required reading.

Other page-turners in the Kindle saga:

• Why Amazon's Kindle DX Could Fail
• Tim Beyers doesn't like Oprah Winfrey promoting the Kindle.
• I, on the hand, have no problem with that.
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