The KSO shows that you can introduce ads into a reading environment in a way consumers will accept.
By paying consumers (in discounts with the KSO) to put up with the ads. That's it. That's all that will work.
Without being given a "cookie," no one will volunteer their books to be ad-ed up. You keep touting the KSO as model that works, but it's just too young to make that call. I think you'll find that many KSO owners are noticing that the special offers (the main attraction in the first place) start tailing off relatively quickly. Once consumers stop receiving "payments," what reason will they have to even glance at the ads? The problem isn't only on the consumer end, either. Manufacturers don't pay for advertising if they see no return on it. And judging by the looks of things... not many companies are following Oil of Olay and Buick down this particular path. I wonder why that is?