You have buyers:
- Who definitely want to buy and read the book, want to do so as soon as possible, and don't care too much how much they pay for the privilege.
- Who definitely want to buy and read the book, but are willing to wait a bit to read the book in order to do so more cheaply (particularly if they can spend the money saved reading/watching/playing something else in the mean time).
- Who are not sure whether they want to read the book, but may be tempted into trying if the book is cheap enough.
The fact that this price elasticity exists can be seen from the long-standing behaviour of the publishing industry, trying to maximise their profits with
Market Segmentation:
- High-priced hardcovers/trade-paperbacks for those unwilling to wait.
- Lower-priced mass-market paperbacks for those willing to wait.
- Remainder racks for those willing to try something new, cheaply.
(There are also libraries and second-hand bookstores, but they exist outside the publishing industry's segmentation and profit structure.)
Thus Amazon's figures are
not in fact presenting some radical new claim, they are merely quantifying, and giving empirical support to, an insight that was always there, if you looked carefully enough.
Where prices are highly elastic, two things need to be considered:
- What mass-market price maximises profits?
- What market segmentation is possible around this to further enhance this profitability?
The massive decrease of incremental/per-unit cost of production/distribution/retailing of going from pbooks to ebooks is likely to change the answer to the first question considerably (in a downward direction -- as the incremental cost reduction enhances per-unit profitability, and thus makes selling larger number of units for a lower price more attractive).
Some publishers (notably Baen) have already answered the second, segmentation, question for ebooks with:
- eARCs at 2-3 times the eventual mass-market price.
- Book bundles.