[Greg Anos]

First, let's sort out what we're discussing. There are (leaving out specialty markets) three major makets for books. For convenience, I'll call them Toplist, Midlist and Backlist. Each market has it's own dynamics, and can't just be lumped together.

Toplist. This is the new book/bestseller market. What sells in this market is new. New title, that nobody has read yet. A premium is charged for the market, no matter what the form is.

Midlist. Book has been out for a while, or the author is not popular enough to charge a new premium for - but book is still in print and genereally available. This is a price senative market. No premium can be charged in this market, product substitution will take place instead of paying a premium. Ebook is expected to cost less, as cost of ebook production should be low.

Backlist - Out Of Print market. Market not driven by price as much as availability. Where there is plenty of availability, price is very low. Where extremely scarce, high prices prevail. Low ebook price in this market, inasmuch as once an ebook is available, it is plentiful.

You can't just apply Toplist prices to say, backlist items, the market will not bear it. Product substitution will occur. Nor will an educated consumer base tolerate the idea that all the costs of a Toplist item are necessary for a Backlist item. They know better.

Now the indie "specialist markets" understand these fact, and are making money from them by selling Backlist items for competitive prices. Competitive with the Backlist market (which is the used market). Shipping on books run 2-4 dollars, and a paper book rarely runs less than a dollar, giving a typical cost between 3-5 dollars. These specialists market at around $4-6, which is competitive. Often 2 or more titles are combined as a omnibus edition for that $4-6, bringing the cost per title down to $2-3, fully competitive with the used market.

All these markets exists, and customers "pick and choose" among them. Some sit mostly in one, with only occasional forays into the other markets, other are more evenly spread out. but "one size fits all" pricing doesn't work, and frankly, ceding the Midlist and Backlist ebook markets to other firms (which is what the "Big 6" are doing), is a long term, slow, suicide for the "Big 6" firms.

It's very similar to US automakers ceding the small car market to foreign competitors. It didn't matter in 1970. It ate their lunch, 10 years later...