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6charlong, I think you propose exactly the opposite business model from the Sony business model. In your model, Sony makes money for every person who reads books on their reader. The "reading books" marketplace is saturated, anyone can get any book they want, consider all the bookstores that have closed since Amazon.Com opened. In order to maximize sales, they can't charge much of a premium per reader since they are attacking a saturated market. If the publishers make and distribute books using open source tools, then Sony makes nothing per book. The earnings from your model are:
Earnings = small * number_readers + 0 * number_books_read
Sony is informed by their Playstation product, since playing games is a hobby like reading books. In this model you make little to nothing on the game player, producing a demand for accessories and game content. Then you tightly control these products to maximize profits. The earnings in the Sony model are:
Earnings = 0 * number_readers + medium * number_books_read
That's why you can't sell or give away eBooks you've read, they know number_books_read is > number_books. They've moved out of a saturated marketplace with small margins (books or handheld electronics, whichever you think the reader is) and into a marketplace with limited supply, one provider, and hopefully higher margins. If they could get this approach to work, like Apple did with iPod, then the Reader will be a business success. If we all decide to run BD on Baen/Gutenberg/... book sources and read those instead they will have the worst case scenario earnings:
Earnings = 0 * number_readers + medium * 0.05 * number_books_read
That will be the death of the Sony Reader, IMHO.
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