Would this work for ebooks?
For a retailer dedicated to selling as much as possible at the lowest price possible, Amazon has a burgeoning ad network. They sell adverts on their site, in third-party apps, on Kindle ereaders, and on the lock screens of Fire tablets.
And now Amazon is selling adverts in apps distributed through the supposedly-free Amazon Underground.
When Amazon launched AU a couple weeks ago, they explained that app developers would be paid a fraction of a cent per minute for their apps and games based on the time users spent in an app, but what Amazon did not reveal was how they were planning to fund the service.
I can now report that Amazon is funding AU through the sale of full-screen popup adverts. The ads are shown when an AU app is first launched, and they only just started appearing in the AU apps on my Fire HD7 this morning. I didn't think to take a screenshot when I saw the first advert, but I did capture the second advert:
Just to be clear, this is not one of the adverts that some developers are still inserting into apps in the AU program (this includes Rovio, which has ads inserted in Angry Birds).
The screen shot shows one of the adverts that Amazon mentions in the Amazon Underground developer's FAQ:
When a user launches an Amazon Underground app for the first time, a welcome message in the form of an interstitial ad plays. In subsequent times that a user either launches or resumes the app, paid interstitial ads will also sometimes play. You do not need to do anything to enable these ads. Amazon configures the ads when your app is published to Amazon Underground.
Amazon has not yet listed Amazon Underground as one of its ad channels, but they do have similar ads including both the adverts on the Fire tablet lock screen as well as a "Mobile Interstitial" ad channel. The latter ads are intended for developers to put inside their own apps, but the description matches closely with what I saw on my Fire HD7.
In launching Amazon Underground, the retailer has taken the payment model from Kindle Unlimited and married it to an ad-supported funding model.
Do you suppose this idea could work for ebooks?
I would want to know whether the money is there before I debate the question, but Joe Wikert thinks that publishers should consider this model:
Why should publishers care about Amazon Underground? It sounds like an interesting model for game developers but not all that applicable for books, newspapers and magazines, right?
I’ve been talking about advertising in books for quite a while now and I think Underground represents a viable, incremental business model for this vision. It’s obviously not the best option for some content but I’m convinced enough publishers and authors will embrace it, so much so, in fact, that naysayers will even have to consider it.
Let’s be clear about this though: I’m not suggesting an ad-based model will generate the same amount of per-unit revenue as the paid edition. That’s simply not going to happen. If a publisher is earning $5 per copy sold of an ebook today they might only earn ten or twenty cents (at best) from each download of the Underground version.
Wikert is proposing an ad-funded engagement model which would pay ebook publishers in a manner similar to Kindle Unlimited.
With Kindle Unlimited, Amazon directly charges readers for access to the service. The funding is collected as part of a monthly subscription, and following some arcane black box calculations Amazon pays publishers based on the number of pages read.
Amazon paid $11.5 million to ebook publishers in July 2015. This would suggest that there's money in the engagement model, but let's not forget that we don't know whether Amazon is turning a profit yet. They could be running at a loss in the hopes that they will one day break even, and that day might never come.
The same caveat applies to an ad-funded engagement model. We won't know if it works until someone tries it; as ways, the proof is in the pudding.
The most likely outcome is that there won't be enough money in the idea to make for a sustainable business on its own (the tech costs are too high), but it could still work if offered by an existing ebook vendor.
Google, for example, could make a go of it. This tech giant already has an ad network and an ebook platform, and it's under pressure by analysts to raise revenues.
Selling adverts in ebooks would be a good way for Google to build on its existing investments while also challenging Amazon in one of its core markets. And best of all, it would give publishers a new alternative market, one which doesn't come with Amazon's requirement of exclusivity for Kindle Unlimited.
This sounds like a win-win situation for publishers.