[Pardoz]

Originally Posted by Kali Yuga

But my primary points are that 1) ebooks are not 60% cheaper to make and sell than paper books

I haven't seem much data, but all the hard numbers I've seen tend to indicate that returns on e-books are an order of magnitude or more lower than they are on paper books. Most of the figures that get thrown around on the production costs of a paper book don't take into account that a third of the average print run ends up in a landfill.

2) price does not, nor should it have to be, inextricably set at, say, 5% above the cost to produce the item.

Oh, absolutely.

In the short term this will lead to a cannibalization of higher-margin hardcover sales (you don't really think it costs 3x as much to make a hardcover as it does a paperback, do you?).

Sure, but publishing was a profitable industry before a wonky tax decision on power tools created the current dependence on the Big Hit Hardcover, and there are indicators out there that e-books could signal the return of the profitable midlist publisher. The catch is going to be surviving the transition between models; some will thrive, some will die, same as every other time something's shaken things up.