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An ebook sale does cannibalize the paper book sales because if I buy an ebook I won't also buy the paper book.
Not offering an ebook or offering it an insulting price does cannibalize the sales of that particular offering. If the publishers don't offer an ebook somebody else will. If they don't understand the difference between gross profit and net profit shame on them.
I worked for computer dealers that sold both IBM and Compaq servers. IBM used to limit the technology they would put in the low margin servers because they were afraid it would cannibalize their high end server sales. Things like RAID controllers, hot-swap drives, redundant power supplies. Compaq put these features in their servers and won over a lot of long time IBM accounts because their servers were more reliable. It took IBM a while to realize that if you don't do it right somebody else will.
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