WRT target audiences, I'm one of those people who are categorically opposed to pure solutions.
I buy a few hardbacks (only from favorite authors), a lot of paperbacks, and a good number of non-DRM ebooks. I refuse to buy DRMed books.
What the publishers need to fear (about people like me, particularly) is loss of interest. There's always a new book I want to read coming out. If what I want isn't available when I want it, I move on. The chance of me coming back to a book later in the year, or a year or two later and buying it is small. If you don't have the book I want, in an acceptable format, at an acceptable price, when I'm looking at it, you've lost a sale.
I have no philosophical problem with ebook release at the current pbook price, with the price decending as the book goes from hardcover, to trade, to MMPB. That seems to me to be a fair and rational pricing stragegy. I'll decide my price point by how long I wait. If you keep the backlist available as ebook only, more the better. If publishers were even this rational, I think they'd be ahead.
I tend to agree with the Amazon spokesdroid quoted in the article, though. If it was me, I'd be putting out the book in every format simultaneously, at the best price I think I could get for each format and praying like hell that some _new/shiny_ doesn't come out and put my release under the radar. But that's just me. I hate to see a customer walk out with none of my product, and money left in his hand.
Regards,
Jack Tingle