Neil, I would just like to thank you for providing such honest and open information from a publishers perspective. Those of us on the purchaser side of the equation do not usually get to see this, and it is very instructive.
I think many people here at MR, myself included, have assumed that the retailing of ebooks should be fundamentally the same as the retailing of pbooks, and thus we have failed to understand some of the issues associated with ebooks. The key one is that, unlike pbooks, retailers do not own the products that they are on-selling. My understanding of the process is below - please correct me if I am incorrect on any points.
With a pbook, the bookseller purchases the book from the publisher/distributor at a cost, usually around 50% of RRP. They can then choose to price that book however they choose - because they own it/have paid for it, and can thus sell it below cost, or at twice RRP if they choose.
However, with an ebook, the retailer does not purchase x number of licenses to then on-sell, but rather acts as an intermediatary between the purchaser and the publisher - in other words, they act as the publishers agent. So the publisher sets the terms and conditions for sale, and pays the retailer a commission on the sale.