[murraypaul]

Originally Posted by DMcCunney

What part of "80% of the costs of producing the book are incurred before the book reaches the point of publication in printed or electronic format" is not clear to you?

The part where those costs are all that matter. They are not the cost of the book to the purchaser.
You are completely ignoring everything that occurs after this point, including retail. That is unrealistic. In the eBook model the retailer does much less than in the pBook model, and over time the retail commission will be forced down. That is why store lock-in plays well for Amazon, it means the publishers have to go through them to (easily) get to Kindle users. If the market standardises on ePub with generic DRM then in less that 5 years you will see large publishers running their own eBook stores and cutting Amazon/B&N/... out entirely.

And the costs incurred before print/bind/warehouse/distribute are also variable.

How?
You pay the advance once. You edit once, you typeset once per edition, you publicise once per stage of release. How do these costs increase if you sell 10000 books rather than 1000?

Part of our disagreement is that I think you see far greater cost savings by eliminating the print edition than I do, and have an unrealistic idea of how much ebook prices can be lowered if they are removed from the equation.

Half the product that they paid to produce gets destroyed. How can that not be inefficient? You have printed and bound a book, shipped it to a retailer, taken up shelf space (which ultimately the retailer will charge you for one way or another, maybe by higher margins on next years books), and got nothing for it. Every eBook that gets 'produced' gets sold.

You also have an unrealistic idea of how much producers will lower prices, even if those costs don't exist.

That is a separate issue. The question is how much they could be cheaper. Publishers keeping the prices high is why people are complaining.

If I'm a publisher, I need to make money on sales of my books. I have to make a profit. And the question I ask if I'm smart (and all too many in publishing or any other industry aren't) is not "What is the maximum profit I can make?" It's "What is the minimum amount of profit I have to make to survive?" One of the problems facing publishing (and other industries) is that the answer to my question is often higher than the best answer they can determine to the "maximum profit they can make" question. They're in trouble.

And some of them will change and thrive, some of them will not and will collapse. That is capitalism, the ones that cannot adapt will be beaten by the ones that can.

And the quotes in the article aren't as meaningful as you might wish. Without knowing underlying numbers, percentages aren't very informative. "Sales went up 3000%!" Super. From how many units to how many units? What was the original price you reduced? What does this mean in terms of actual revenue and profit?

The 3000% was revenue, not units.

Books are in an analogous position: they compete for time more than money.

If the implication (of the entire section, not just what I have quoted) is that demand is inelastic, then I disagree strongly. The Kindle makes impluse buying also zero effort. Amazon recommends a book, you read the blurb, think it looks interesting, and look at the price. There will be a price limit that means immediate sale, one that means read sample and one that means move on.
I did this a couple of days ago, for Wolf Hall. I'd never heard of it before, but it sounded interesting, had won an award, which is presumably an indication that it isn't terrible, and (most importantly of all) was less than $5. For that price I'll take a chance. If it had been $10 I'd have moved on.
The three Stieg Larsson books were also <$5, I've heard good things about them, so I picked them up. I've got Fagles' Illiad in paper, but is was less than $5, so I picked up a Kindle edition. And so on.
You make a small amount of money by competing with your competition for a limited market. You make a large amount of money by expanding to a larger market.
There are getting on for 100 million iThings out there than can run iBooks/Kindle/... Most of the owners are probably not regular readers, but might be interested in the latest sports book, autobiography, tv tie in, ..., if they are made aware they can get it, and it is an an impulse buying price.