[stonetools]

If you're a story-lover, they're incredibly disruptive. Randomly underlined or highlighted words distract from the story. Ads on the *edges* of the story would be fine--headers or footers. But most ebook formats don't support headers or footers; they're scrolling, rather than page-based, formats.

First of all, you're going to have to decide whether ads at the top of the page are eminently ignorable or horribly disruptive-you've said both.
Let's face it, you just don't want ads in ebooks-any ebooks, even if there is a full price, ad free version where you wouldn't have to see them. That's pretty much what it comes down to.
Is it IMPOSSIBLE to design ebooks so what you could put ads at the edges of the story? I'm betting it is possible. Would it be worth it for Apple , Google, or Amazon to develop such technology and offer it to advertisers, along with cooperating authors and publishers? I think so.

It'll flop horribly, then. $12.99 for the "normal" version, and $10.99 for the ad-infected version? Won't get buyers. Ads-in-books is such a hot-button negative concept that it'd need a lot of appeal to get over the kneejerk reaction. "We'll use these to drop the price to... more than you would've paid by Amazon's old bestseller system" is not going to be the successful sales pitch.

For the frugal buyer, ANY subsidy might be welcome. You and I fortunate in that (1)we can pay full price for the content we like , (2)don't have to rely on income from writing to pay our bills. Others may not be so fortunate. Its a lot easier to dismiss the ad-supported option if you are not in the posituion of the unfortunate.
In any case, I think that its the indie author, who prices her book at $2.99 or less, would be most interested in this , at least at first. Such an author would be on the look out for any additional source of income .

Saying, "we're sure advertisers will want in on this!" is not the same as "we have advertisers who are willing to pay for access through this medium!" That article is more than a year old; we now have Kindle lending books, an ad-supported *device* purchase, and more wifi readers... and still, no price-affecting ads in ebooks. No internal ads in ebooks.

Because its not done immediately doesn't mean, "It will never be done". Heck, it may take several more years before all the stars are aligned. Companies like Apple, Google, and Amazon are playing thhe long game. Frankly, I've little doubt that folks at every one of those companies are working on the concept.

Also: Under agency pricing, ebooks have to be the same price everywhere. (Well, they don't have to, but Amazon & Apple both have contracts that allow them to lower prices to match the ones elsewhere.) If the ad version is $10 at the iBookstore, Amazon will lower the $13 version to $10, unless the entire agency contract is renegotiated first.

If there's money to be made, these things will get re-negotiated and items will be appropriately priced. That's what lawyers, buyers, sales personnel, and ad men are for.
Am I saying that this is easy to do? Nope. If it was, it would have been done already. It will be done, not because it is easy or hard , but if its PROFITABLE. And since ebook ads are much more attractive than pbook ads to the advertiser in terms of freshness and relevance to the consumer, it just might be.