More than three decades after Project Gutenberg began making public domain works available on the Internet, William Lidwell, founder of the B2B online learning system KnowledgeWire, has devised a way to monetize free e-book downloads of both copyrighted and public domain books. The "wow" premise behind the WOWIO name that Lidwell chose for his online book business involves advertisers, rather than readers, paying for e-books. Lidwell has six patents pending that enable WOWIO to collect user data and target advertisements based on the demographics and stated interests of readers.

Although WOWIO.com went live in August, the online bookseller's official launch coincided with the beginning of the year, around the same time that the company inked a deal with Oxford University Press for 100 titles. Other publishers that have signed deals include Soft Skull Press, Rosetta Books, Rotovision and Holy Cow@ Christian Comics. "The business model is based on the premise that the main difference between spam and content is relevance," Lidwell said. "The ability to intelligently target advertisements increases value for the reader, generates revenue for the content owners and enables advertisers to reach very specific groups." Publishers receive a percentage of net receipts and authors are paid royalties based on their contracts for digital rights.

WOWIO is adding a book a day, according to CEO David Palumbo, whose goal is to make 10,000 books available and to reach 500,000 downloads by the end of the year. "The thing that really stands out for me," he said, "is the number of folks who come back to download more titles." One reader has even downloaded 200 of the 500 books currently available from 25 publishers.

Each e-book—available as PDF files—has one full-page ad for every three book pages. Like magazines, WOWIO groups advertising in the front and back of each book, and then drops additional ads into natural page breaks. Advertisers pay anywhere from 4¢ to 64¢ per insertion, depending on placement and how targeted the ad is.

To manage digital rights and ensure that advertisers reach the demographic they paid for, WOWIO has devised a "watermarking" system with the reader's authenticated name on the cover of the e-book and a unique serial number in the corner of every page. When users sign up for WOWIO, they have to verify their identity through a credit card or college- or government-issued ID and promise to "behave," i.e., not share e-books. To further protect content, WOWIO sends out locked files.

For now, WOWIO is targeting the 18—24 age group, although the eventual goal is to reach all markets and demographics. To promote the site, a sizable Verizon sponsorship is being used to give away 20 $2,000 scholarships through e-books specially marked with Golden Ws. WOWIO has also recruited "campus ambassadors" to promote the Web site to other students and to persuade professors to adopt textbooks available on WOWIO.