Amazon's Plan to Insert Ads into e-Books

Leading up to the big holiday weekend, Amazon quietly applied for patents to insert ads into e-Books, including old and out-of-print publications, as well as in any versions available via the emerging world of "on-demand printing." (More on that in a minute.)

Here is how the online discount retailer describes the context for its new ad-serving technologies:

"The publishing industry has greatly benefited from the many advances in digital imaging and printing technologies. Indeed, one of the many advances has been the creation of an on-demand printing market where a publisher prints quantities of a book or other publication to satisfy orders for the publication at the time that the orders are made.

"This is especially advantageous where requests for the publication are sporadic or limited, such that generating a typical print run would not be cost effective. Moreover, on-demand printing proves advantageous when the publisher is not the originator of the publication and has only a printed copy of the publication, since the publisher can scan the pages of the publication, and generate a document therefrom."

Amazon's filing goes on to disclose its intent more clearly:

"While on-demand printing provides access to a wide variety of content, including out-of-print and/or rare documents, the content is fixed and, therefore, has not been adapted to modern marketing. In contrast, many Internet sites that publish content are able to do so profitably by displaying advertisements with the published content. Indeed, most content providers that host "free" Internet sites are typically supported by advertisements.

"Of course, in regard to out-of-print or rare books, they typically do not include advertisements and, if they do, the advertisements are out of date and inapplicable. However, as disclosed below, as part of printing documents in an on-demand fashion, the on-demand printed content provides the opportunity to incorporate advertisements, as well as other subject matter, in an on-demand printed document."

So, Amazon is planning on multiple revenue streams to build its e-Book business. First, of course, there's the Kindle, its pricey reader. Next, there is the purchase price for each book downloaded by users, either for the Kindle or for other e-reader devices. Then, there will be advertisements inserted into the e-Books and other types of "on-demand" printed books.

This isn't your grandmother's library experience we're talking about, nor even my 13-year-old's summer reading experience. He's currently reading "The Old Man and The Sea" -- now there's an example of what Amazon considers "fixed" content, that "has not been adapted to modern marketing." I'm imagining a future version, where keyword-served ads for shark fin soup or sunscreen might compete for the reader's attention with Hemingway's prose.

All of which raises a number of questions:

1. Does Amazon plan to share ad revenue with content creators, or will be forced to do so via the courts -- in our example, with the Hemingway estate?
2. A large number of old books are already in the public domain, as opposed to being under copyright protection; plus there are also the so-called "orphan works," books for which no rights-holder can be identified and/or located. Might Amazon's mention of on-demand printing therefore be an attempt to argue that this new business paradigm justifies altering the legal framework for determining rights and allocating ad revenue for these other classes of publications?
3. Ultimately, will the company be able to keep all of the ad revenue generated against the content it serves, or will it be forced into some sort of sharing scheme such as that proposed in the class-action settlement between some authors and Google Books? (It's notable that the same day Amazon applied for the patents, the U.S. Justice Department confirmed it had opened an anti-trust investigation into the Google case.)