ipicturebooks, Time Warner-funded publishers of eBooks for children, have found the going is tough. Although the Company's 'Shrek Activity eBook' was the #1 bestselling eBook at Amazon in June, Jim Kirchman, VP Marketing admits that the title only sold "hundreds of copies." However he feels the eBook marketplace is still too embryonic to judge success by sales figures.

Kirchman has spent the summer actively testing a variety of business models, marketplaces and marketing tactics. Here are some of his results:

- Although ipicturebooks initially targeted the consumer marketplace, they've received substantially more interest from teachers and school librarians. The Company is now offering beginning reader "bundles" as an adjunct to core curriculum, and has a partnership with AOL's In School program.

- The sales pitch that convinces school book buyers is, "the cost of an eBook is generally 20% less than a print book; they don't wear out; and every kid who wants a book at any time can have it."

- When offering eBooks on Amazon, it's critical to advertise your offering on pages outside the eBook ghetto because it simply doesn't get enough buyer traffic yet. Kirchman says, "We needed to go to book pages, go to where book purchasers live, as opposed to expecting someone to seek out an eBook."

- Kirchman has tested opt-in email campaigns to in-house and rented lists of parents for 'Shrek: Tell Your Own Tale,' an interactive, multimedia eBook readers can choose their own paths through. The campaign, a clever rich media email featuring free episodes, has pulled a 1-2% conversion rate for a $4.99 annual subscription offer. Kirchman doesn't know whether the unusual subscription offer or the eBook format is responsible for this low conversion rate.

- ipicturebooks has tested a variety of digital rights management systems. The test with SealedMedia seems to have worked out the best. "They enabled us to secure video, audio and rich media. It's very easy software to use."