[BillSmithBooks]

The relative cost of physical production, warehousing and distribution depends greatly to whom the publisher is speaking.

When they are speaking to authors, it is a HUGE cost for them.

When they are defending their pricing on ebooks, it is a tiny, insignificant part of the cost.

Publishers (and other big media companies) lie..."exaggerate" if you'd like to be charitable. We know that. Consider the scandal about discrepencies in ebook royalty sales reports that went whirling around writers' blogs a couple of months ago.

There is no debating the point: ebooks do NOT cost as much to produce as ebooks, as evidenced by the original ebooks by established pro authors like Mike Stackpole, Konrath, Dean Wesley Smith and many, many others,

But then again, none of the above authors has office space in the middle of Manhattan and huge teams of high-salaried executives to pay. None of them buy co-op space in stores or have sales reps pounding the pavement, and yes, none of them have to deal with printing, warehousing, distribution and returns...

But I believe Charlie Stross is right -- one way for publishers to retain some control over their destiny is to go DRM free and sell direct to readers.