E-reading, basically the act of reading books, newspapers, and magazines on mobile computing devices, has become surprisingly controversial. From people who cling to the “experience” of reading and say that reading on a screen will never replace the “feel” of a fine hardback, to recently published studies suggesting that reading on an electronic device creates a less insightful reading experience, it seems that e-reading is stirring strong emotions. At the same time, traditional publishers of printed media are looking to digital publication for answers to economic survival in the 21^st Century.

One answer to these criticisms is that, like it or not, e-publishing is here to stay, and it is growing rapidly. The iPad has fostered an explosion of e-magazines and e-newspapers driven mainly by one factor — advertising. Newspapers and magazines have been bleeding for years, as ad revenues, the heartsblood of both these media, has moved to the Web. Advertisers love the data they can get from the Internet. In paper publishing all they know is that the publication is bought by X number of households with Y average demographics. They have no idea whether the publication is read at all, or just used to line the canary’s cage, much less what impact their ad had. Online, by comparison, they can know exactly how many times their ad was viewed and pretty much by whom, for how long, and how often consumers clicked through for more information or to make a purchase.

So how important is this? When Time announced its first electronic edition on the iPad in April it gained three new advertisers — its first advertising gains in several years of steady revenue shrinkage. That fact, more than anything else, captured the attention of magazine and newspaper publishers worldwide, and since then, the industry has seen a steady stream of announcements of electronic editions of other major publications.

Book publishing has a different financial model, much more dependent on readers for core income, but it also has been suffering. The big problem for book publishers is not so much shrinkage as lackluster growth. Despite periodic reports about the death of the market, the overall book market has held fairly steady, and the Harry Potter phenomenon promises that a new generation of readers will maintain that market. But in today’s financial environment, holding steady is a disaster. Investors want to see strong growth in their investments. Without that, it becomes hard for publishers to raise capital. Valuation drops, making the company vulnerable to hostile takeovers.

For book publishers, e-publishing offers several advantages. First, it cuts costs drastically by eliminating the printing, physical distribution, and especially the cost of handling returns, which has become very large in this era of book supermarkets in which the average life of a book on the shelves is three weeks. And it provides a practical, inexpensive way to keep a writer’s back list — all the older books by that author — on the virtual shelves so that someone who discovers, say, “The Girl with the Dragon Tattoo” can also buy copies of Stieg Larsson’s first two mysteries. Cost-cutting is a traditional strategy for no-growth companies, and e-publishing offers a strategy for cutting costs without damaging quality for publishers who have already slashed staffs and services, such as editing and marketing. Just how attractive this strategy is can be seen in the amount Amazon.com has invested in the Kindle reader.

So what does this mean for readers? I will take a look at that in my next blog.