Very interesting article. Nice analysis of the economics of ebooks vs. pbooks. Bud Webster is a bit of a foil in the discussion, taking positions about pbooks that I think a vast minority here would hold, but there's an especially interesting discussion of piracy, including vinyl LP piracy of out-of-print music after WWII.
I happen to agree with Pournelle that ebooks won't really become popular until nearly everyone has a multifunction device that works reasonably well as an ebook reader. (I'm not saying content isn't also necessary-- they are both necessary but not sufficient in isolation.) Even Pournelle doesn't think the iPhone is quite the right device, but I think he's right that some kind of phone is likely to be one of the candidates, simply because so many people have been shown willing to carry one.
There is also a good discussion about the problem of e-babel. No surprises there, though Pournelle thinks if one technology dominates the "pocket device" market, that will probably settle the format wars as well. He could be right, but I'm still hoping for something less proprietary.