U of Chicago Law & Economics, Olin Working Paper No. 463
RANDAL C. PICKER, University of Chicago – Law School
Text in hand, we have read books by candlelight, oil lamp and Edison’s incandescent bulb, maybe even the occasional CFL. But even as light itself has changed, the book has remained constant. Until now. With the rise of Google Book Search and ebook readers like Amazon’s Kindle, we have entered the era of the mediated book. We will still browse and read books, but we will do so through a screen.
This is more than just a change in medium. Digital texts are inherently on-demand works, that is, works that can be produced at the instant that a consumer wishes to interact with the text. Physical books historically have been printed in batched runs in advance of demand. This fact of production matters relatively little for the texts themselves, as we typically want books to be fixed, reliable artifacts.
This changes matters for how we finance books. On-demand texts can be financed through advertising. Printing in advance means that embedded advertising has little chance of being relevant at the point of reading. Mediated texts can be updated instantly with new, continuously timely advertising. That advertising also can be personalized for individual readers as the interaction between the mediating device and the reader will create a rich information stream to enhance the relevance of this advertising. That process of course will raise standard privacy issues.
The short history of 20th Century advertising expenditures in the United States is characterized by two facts. First, overall expenditures as a percentage of GDP are relatively constant over time, bouncing around over the last sixty years between 1.5% and 2.5%. The emergence of new advertising platforms – say radio in 1927; broadcast TV in 1949; cable TV in 1980; and the Internet in 1997 – hasn?t altered that essential fact. The emergence of another new platform – advertising-supported books – isn’t likely to expand overall advertising expenditures much if at all. Second, print?s advertising market share has declined steadily, from roughly 55% of advertising dollars in 1935 to a little under 21% in 2007.
Mediated content accounts for a large chunk of that decline. Now books and of course print more generally will be mediated too. And we will get a nice test. Does the decline in the role of print as seen in advertising dollars reflect the decline of words relative to images and sounds? Or is this a story not of content but of technology, in which a mediated platform is a better advertising platform? The rise of the new mediated books will change how we finance books and will change our understanding of the relative roles of content and technology in driving advertising.
Source: LSN Cyberspace Law Vol. 14 No. 32, 05/26/2009