Read up on marketing in general. A lot of the Internet marketing books I've seen jump into tactics, but don't really explain much about the "why" or "how" different things work in marketing. Get a bit of the theory under your belt first, and look at traditional marketing. Most online marketing is just a spin on other marketing practices. If anything, start by reading up on market research. You'll never market as effectively as you can if you don't fully understand your target market and their motivations. Unfortunately, it's a step a lot of people skip in online marketing, especially on the smaller scale.
The only one I've read is 'The Long Tail' it's good but kinda makes it's point after a few chapters. Get it from the library if you can.
I'd skip the books and go straight to articles and blogs. It's crazy-sounding, but Internet marketing is a constantly fluid thing. Articles and blogs are far more up to date than books.
I agree with FreewayWebhost totally but I'm finding it really hard to find decent information on tools and marketing programs because there's so much rubbish out there. You've really got to read a lot to start getting an eye for what's good and what's bad. I think that being sceptical really helps. Oh, and there's no substitute for getting out there and doing it. The rest of the world is moving on as you're sitting there reading.
The problem with using articles and blogs exclusively (although they're great supplemental tools), is that the vast majority really don't teach you anything about theory or the fundamentals. You need to understand marketing in general before you'll ever be able to understand Internet marketing to the best of your ability. Sure... you can just do what everyone else is doing. But the most successful marketers are the ones who understand the basics first (market research, market planning, target markets, etc.), b/c then they can break the mold much easier by coming up with something new. Marketing isn't an area where you should simply follow trends. A lot of people do it... then again, you've probably never heard of most of their sites. Why follow what they're doing? You need to be able to evaluate your audience and situation, and tailor solutions to them specifically - online or offline doesn't matter. Articles are great if you just want to look at tactics, or read up on certain case studies. And if you look hard enough you might even find some really good information on some of the basics. But when you can pick up a textbook covering all of that in one place for just a few bucks these days, there's really no reason not to.
I agree that you have to know the marketing basics. Next to that do a lot of reading from blogs and forums.. Just wondering about some new books. Does anyone have some reviews on street smart internet marketing?