There appear to be three sides to the ebook market. There are people who have wholeheartedly embraced the digitalization of our books and who don’t touch paper books for weeks at a time. Then, there are people who don’t want to read books digitally, and who are just fine — thank you very much — with their paper books. Finally, there are people who are nostalgic about physical books, but wish to move into the digital world nonetheless.

In an effort to satiate this third group of readers, Livrada has come onto the scene. The company, started by Leonard Chen, distributes physical gift cards that can then be redeemed for digital books. Users purchase a card in a brick-and-mortar store, and then use a redemption code on the card to download the book on a Kindle or Nook device.

It may not seem like an important product on the surface, but there is a clear sentimental value to having a physical representation of physical goods. After all, if you want to give someone an ebook right now, you end up sending them an email with a link to the Kindle store. The look on their face when they notice you picked out just the right book? You never see it.

Now, compare that to giving a physical product like a redeemable gift card. It may not sound like there’s a high level of sentimental value in the gift-giving process, and it may not be the same as a paper copy of a book, but the sentimentality is still far greater than sending an email.

Aside from the sentimentality, the market for giving a gift card redeemable as a book is big. According to holiday surveys from last year, two of the top three purchases being given as gifts are gift cards and books. In addition, Chen shared with me that a very large percentage of books are purchased as gifts.

According to Chen, the value of a physical product extends beyond the sentimentality, especially as Livrada’s cards begin showing up in more stores. Specifically, if the cards show up “wherever books are sold,” as Chen plans, there is the added value of discoverability for the service, “In this world it’s hard…to stumble upon a book.”

So far, the books are available only in Target due to an exclusivity deal made with the company. But according to Chen, Livrada is now talking to other retailers, looking to expand the company’s footprint across the United States.

However, there’s still one big problem with getting these cards in front of people’s eyes. Namely, how will Livrada be able to convince bookstores, vestiges of a declining market, to embrace the continued surge of ebooks?

According to Chen, this is part of the challenge. However, he does note that, “without an ebook strategy, they’re going to suffer.” But his strategy isn’t to bludgeon them into acceptance, but instead to empathize with the booksellers and the tough situation they have found themselves in.

To that end, Chen is using his experience in the music industry to show that Livrada understands the predicament physical bookstores are in. “I saw first hand how transition to digital can be both painful and exciting,” says Chen. “I bring empathy to the publishers.”

If the company’s sales figures hold up, however, it won’t just be empathy that Livrada is bringing to bookstores. As Chen shared with me, they have heard from third-party sources that Livrada cards are already some of the highest trafficked digital redemption cards being sold and redeemed. And as an added bonus, Livrada makes a bit of money off of each transaction.

So far, this money has kept the company going. According to the company, the founders have bootstrapped the company to date, and raised a small friends-and-family round earlier this year. However, it did note that the company is currently talking to investors for a seed stage round of financing.

Altogether, the company is taking on a decidedly small market of people who want to keep a foot in both the physical and digital worlds. But this small market could end up positioning Livrada nicely for whatever direction the book market heads next.

{Image courtesy Rahuldlucca]