[Andrew H.]

Originally Posted by FF2

Dear Professional Contrarian:

You are absolutely right - seller can pick any price they want. Their goods, their decision. And the seller can equally decide that the price is unfair and unrelated to the value of the product. And more so, can bad mouth the seller if they want for any principle they want include three cents is too much.

Except that the principle doesn't seem to be that the "value" of the book is unrelated to the cost, but that the producer is not passing along his cost savings. I.e., if a pbook costs $6 and an e-book $8, the ebook won't be bought on principle; if a pbook costs $10 and the e-book $8, the ebook will be bought. This has nothing to do with the "value" of the e-book; it just has to do with the publisher's perceived profit. (And it would be different if the purchasers just bought the cheaper e-book, too. But that's mostly not happening either: people are saying that they don't want to pay more for an e-book than a paper book, but they also don't want the paper book).

Obviously ebook prices have almost nothing to do with supply and demand.

E-book prices have as much to do with supply and demand as pbook prices do, and as the price of almost everything else in the market does. If you lower the price, demand goes up; if you raise it, demand goes down. The key for a producer is to find the point on the demand curve where your profit is maximized; the key for consumers is to have competition, so that the prices are driven to a point where profit is not maximized.

There are very few things in modern society that are actually constrained by supply - millions of people wanted Harry Potter books, but they never ran out.

It is not like a unique coffee table, limited edition printing or even an early printing of the hardback.
It is bits and bytes that can be reproduced (supplied) over and over with almost not additional cost (obviously, there is some, if almost nil).

No, it is almost exactly like this. The physical cost of reproducing (delivering, storing, etc.) a hardback book is only $2-$3, yet hardbacks cost much more than that. This is because the major cost of all books are the upfront costs of paying the author and paying the other people involved in producing the content of the book. You can't ignore this cost, for either e-books or paper books...they are spread across all books sales (and the author's cut, in particular, is a cut from each sale).

I am pretty sure the rules will change as we move more and more into ebooks and people's valuation of same.

Maybe...but this hasn't happened with other products.