Do we really need another online book store?

Google’s “Editions” will enter an already crowded space with Amazon, Barnes and Noble (BKS), Apple’s (AAPL) iBooks, Kobo and many others later this month according to reports today.

Less than two weeks ago, Google reached a “preliminary approval settlement” with the Authors Guild, the Association of American Publishers and a handful of authors and publishers over the rights to publish books and make them searchable.  The timing is not a coincidence.

I do think Google (GOOG) does bring some differentiation and innovation to the market, which will bridge the gap between the Web and e-books.

Here are five reasons why Google’s bookstore will change the ebook industry:

1. Google already has millions of Adsense and Google Display website publishers that will advertise relevant book sales automatically in ad spaces already set up. Relevant-to-content book listings with the embedded ability to preview portions of a book will certainly drive sales.  Amazon (AMZN) Affiliates has a somewhat similar feature but without nearly as much of a reach, especially outside of the U.S.

2. While there will be a dedicated reader application on some of the bigger platforms, Google’s focus will be on putting your book collection in the cloud for reading on PCs, tablets, phones — anywhere there is a browser. Again, Amazon offers limited reading of books on the web, while the other major players do not.

3. Google’s Books initiative, which is about 10% done scanning old, out-of-print books, will allow smaller publishers and (even relatives of deceased) authors to recieve compensation where Amazon and Apple were less likely to add their out of print books to their stores.  This will be a boon for academics who often have to travel to the far corners of the earth to find rare books.

4. Books stored in the cloud.  Instead of storing your book collection on your iPad or Kindle, taking up valuable space, Google’s books will reside in the cloud, allowing you to download at will.  Last year, Google co-founder Sergey Brin made the interesting comment:

“The famous Library of Alexandria burned three times, in 48 BC, AD 273 and AD 640, as did the Library of Congress, where a fire in 1851 destroyed two-thirds of the collection. I hope such destruction never happens again, but history would suggest otherwise.”

(What happens if Google’s data centers get destroyed?)

While specifics haven’t been finalized, Google will likely offer a download-for-offline-reading option as well.

5. Google’s core search technologies (which are also indexing e-books) will make books that much easier to find by people searching for specific information.  Integrating e-books into search results will not only make searches and the information they provide more robust, but will create yet another huge buying channel that doesn’t already exist.

As I note the innovations here, I can’t help but think Amazon has the most to lose in this market.  Not only are they the current leader in eBook sales, but they’ve also invested much in what Google will be able to do easily (search, affiliate advertising, cloud storage, etc).  It is interesting to note that Amazon is also a Google partner in many areas, including music sales on Android, which may also be coming to an end this month.