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As far as the ebooks vs. hardcovers issue, I have to wonder what percentage of the market is people who read, say, six books a year, and are going to read six books a year if those books cost $25 or $2.50, and what percentage is people like me (and I would suspect most of MR), who read at least a book a week, and are therefore far more price-driven on our buying?
On one hand, ebooks have certainly cannibalized hardcover sales for me -- I used to buy one or two hardcovers a year from Baen. Now I buy ebooks from them instead. But I've bought over $100 in ebooks from them in the first half of this year alone, so they're making a lot more than the profit from those two hardcovers from me ... and so are their authors. The truck drivers who have to haul pallets of books around the country, not so much.
Again, if we go with the figures Salon quote a few months ago, a publisher nets around a dollar from a typical hardcover. I'm sure Baen nets a lot more than that on one of their $5 or $6 ebooks. And for the price of one hardcover, I can (and do) buy several ebooks, tripling or quadrupling that net. So if ebook sales are cannibalizing hardcover sales, I'm sure Baen is crying all the way to the bank.
Let's make the generous assumption that the publisher gets half the cover price from a mass market paperback. So for a typical $7.99 paperback, that would be $4.00. Let us further assume that the cost of printing the book, sending it to stores, marketing it, and whatnot, all amounts to $1.50 per book. Since half of those books will be returns, each book sold has to pay for one of the unsold ones. That gives us $1 per MMPB net profit. Let's further assume that the production and distribution costs for an ebook are exactly the same (really expensive one and zeroes), except that there are no returns. So if it's a cartel publisher we're talking about here, insisting that they "have to" sell the book for $15, minus 30% for the reseller we have $10.50, and minus the production costs we have $9.00 ... nine times the profit they're getting on the mass market paperback. At least. They could sell that book for $5, give $1.50 to Amazon, $1.50 to cost of goods sold, and still be making twice the profit they are on a mass market paperback.
That's why they not only shouldn't worry about cannibalizing their pbook market, but instead they should be trying as hard as possible to do exactly that. It's not even a matter of accepting less profit but making it up on volume -- the profit, too, is greater. And there will be volume, because more people will buy $5 ebooks than $15 ebooks. Cheaper ebooks will drive the sales of ebook readers, which will expand the market for ebooks, and around again. Everyone wins.
The publishers' current idea of positioning ebooks as a luxury item ... well, I can't see anyone winning from that at all, including the publishers. Especially the publishers.
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