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I don't so much think they need to provide the ebook with the paper edition - I figure it should be like movies: you can buy either the itunes download, or the DVD, or the special edition DVD that comes with the digital download as well. (Substitute Blu-ray or other format as desired.)
What I don't like is the way that Amazon is providing their "Digital Upgrade:" I think it's a rip-off. I believe that if they charge you extra for a digital copy in addition to the paper copy they should provide one that's usable. Given that in this model you're buying both versions - I see no problem with passing on the paper edition later.
Also: count me in the copyright infringement is not speeding camp. Yes it is illegal, yes many consider it immoral, but that doesn't make it the same as stealing. I can go with very similar, or even with someone saying they are morally equivalent, but they are legally different.
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