This is an intriguing idea, and here’s my opinions, plus the way I’d try to implement the idea.

Keep in mind I have downloaded mp3s from indie groups that have sponsors, thus allowing them to offer those mp3 files for free download, so I have had a brush with the concept.

I’d offer a limited number of advertising spaces for a fee, then release the title for free download, having been paid for my work and time in producing the ebook.

The idea being that anyone who downloaded it might go visit the advertisers (or should we call them sponsors?), and then purchase something from them.

Because well, if they didn’t, then I’d have more trouble finding sponsors for the next ebook, wouldn’t I?

And there’s the first con: showing a return on the sponsor/advertiser’s investment.

Will readers visit their links?

How will tracking be done to know that they are visiting from links in my ebook, so that the sponsors/advertisers know their investment is paying off?

Second con: not all digital readers and ebook formats are created equal. That means that graphics driven advertising won’t likely be available in all formats. The way around that is to only offer text ads.

Graphic banners and the like are what catch people’s attention the most, in my opinion. I know they bug the crap out of me when I visit a web site that’s monetized with them. They’re distracting, eye-catching and that’s why they’re used. Irritating to some of us or not, they draw attention.

Will sponsors/advertisers be content with text ads?

Third con: Authors have been conditioned to expect to be able to earn from sales of books for longer than a few months or a year or two. Some traditionally published books go through several re-printings; the author can expected to earn beyond their advance, have at least a trickle of earnings coming in for possibly several years from a single title that proves popular.

It’s not guaranteed, of  course; but they can see it happen.

Which makes placing a single price on a title for the purposes of figuring out what to charge for advertising extremely difficult and possibly a sticking point for many authors/publishers.

How to handle that? Well, place a limit on how long the ad stays in the ebook file. Say $30, 30 downloads. Or $30, 300 downloads. It’d be a matter of trial and error on that.

Problem there? Finding new advertisers to take the place of the older ones that have decided it’s not working for them and don’t renew their ads. Authors/publishers would have to be constantly hustling to keep that ad space filled, and to be replacing the ebook file each time an ad space was retired or replaced with a new advertiser.

That’s a lot of work, and I don’t know of anywhere but small digital presses where you can limit the number of copies available.

Fourth con: Free ebooks aren’t welcomed at some of the larger distribution sites (Amazon, etc.) unless they’re from the larger, traditional publishers, because those distribution sites don’t earn anything from them. They want their cut too.

Which could lead to having to pay a fee in order to list your ebooks at those sites; another expense most ebook authors can’t afford to have on a regular basis.

Other problems associated with this idea that I can think of:

How do you price such ad space?

Do you limit the time the ads are included in the ebook file?

What about the fact that one distribution site that does allow free ebooks also keeps every version of each ebook file available for those who’ve ‘purchased’ it so that they can pick which version they prefer to download?

Formats? Which do you select to make the ebook available in that will continue to provide a one click link to the sponsors/advertisers?

Finding advertisers/sponsors willing to test the idea out at the start.

My thoughts:

Me? I’d be happy to set a price on each ebook, find advertisers/sponsors to split that price, and consider myself paid for each title.

I write quite a bit, and have several unfinished stories I would finish, knowing I’d earn something right up front as each was completed and ready to go.

My problem would be setting that initial price.

I know that currently, I can expect my sales to jump in number every year, with the addition of a few new titles each year. So while I may not be earning a lot per title, and it might take 3 or 4 years (or a lot longer) to even earn minimum wage for the hours and effort spent producing a title, my earnings are still increasing on a yearly basis from my writing efforts.

Let’s say I do set an initial price I consider fair compensation or spend hours figuring out one for a title.

How many ads will readers put up with before word gets around to not download my ebooks because of ads, or to go hit a file sharing site to get an ad free copy someone’s created of them?

My distribution platform would likely be limited to Smashwords, which does allow free ebooks, & my own web site(s). At least for a while, until some of the others decide having free ebooks by independent authors is a draw instead of a drawback.

Is that going to be enough traffic/downloads to keep the sponsors/advertisers interested?

My most popular free ebook, Shades of Gray, has been downloaded 1,611 times since 7/29/09. Roughly 8.7 downloads daily, just at Smashwords.

My other two free ones also at Smashwords? Only 208 and 180 times in the same time period. Point being, authors can’t even guarantee a certain number of downloads when ebooks are free to readers.

I personally keep coming back to the ‘setting a price per title in order to determine ad fees’ point. That’s really my sticking point on trying out advertising in ebooks.

We don’t know how many copies we might sell if there’s a cover price set. I averaged roughly 30 per title last year, and that was a 400% increase in sales from 2008 (with only 4 new additions to my title list in 2009).

There are so many factors to consider, it’s not remotely funny. Gives me a headache trying, to be honest.

I’d honestly rather be paid for my work than have tiny ‘royalties’ trickling in every year on each title – even though it appears I could somewhat reasonably expect those ‘royalties’ to increase yearly, as long as I keep writing and producing new titles.

Sigh. Let’s not even get into what sort of sponsors/advertisers I might have to approach, since many of my titles are ‘adult’ (language, violence, sex). Free or not, I imagine distribution would become next to impossible, except on my own sites, if all the ads were also adult in nature.

Any thoughts from wiser heads on how to work this idea out to a successful conclusion? Meaning, successful for authors, readers and sponsors/advertisers?

Be glad to hear other opinions!