Originally Posted by Kali Yuga
You can't seriously believe that an organization like Amazon will work with just a shared hosting setup?
They need storage that can be increased on the fly, without any disruption in services (i.e. high availability, clustering etcetera). They need databases that tie into Whispernet (which they developed from scratch), their web front-end, purchasing, and storage. All of that needs backup, IT staff, developers, bandwidth, cell phone services, electricity, security, new and replacement hardware, not to mention the data center it's all put in. Not much of this is "redundant," as Amazon needs to expand their capabilities for the new functions and new customers. And, of course, there's the usual costs of doing business with a few million customers: publisher's cut, insurance, taxes, legal, customer service, marketing, PR, management, debt management, and profit.
And let's not forget, due to the economies of scale and aspects like print-on-demand and deals with distributors, it doesn't cost Amazon much to store and sell paper books. One of the reasons they were killing everyone else in the business is because they, in particular, were hyper-efficient and did not have to maintain thousands of physical stores. Even shipping costs them almost nothing, again due to scale and charging customers for S&H.
Around 95% of book sales are in paper form. Until that ratio is reversed, they need to make a paper format anyway, unless it's a specialty item. Ergo, no money saved.
Your math is way off. If the profit margins were that big, Amazon would be outperforming every company on the Fortune 500.
This reminds me of people who go somewhere like Thailand, see that a sarong that costs $20 back in the US sells for $1 over there, and gets dollar signs in their eyes. They fail to figure in all the other costs associated in either setting up a shop, or building a reliable supply chain for a wholesale business.
Ebooks cost slightly less to distribute than paper books; and in most cases, ebooks are priced less than paper. However, since it does not cost 90% less to produce and distribute an ebook than it does a paper book, it makes no sense to expect the retail price to be 90% lower.
While I won't say that the pricing situation is perfectly resolved -- it never is, since ultimately there is no objective number by which prices can ever be set for any product -- the problem isn't that they are charging too much; it's that your expectations are out of line with what is economically feasible.
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