Quote:
Originally Posted by mcl
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And since that's not happening, the profit that the publisher always made off N isn't held constant with the introduction of P (due to cost equalization). The profit is increased, because N is still bearing all the cost of X, but that cost is being used as an argument to raise the price of P.
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Your argument is only correct if sales of P are additive to the sales of N, if sales of N are replaced by P profits would decrease if the costs of production would not be shared by N and P.
The big problem is no-one at the moment knows what the effect of the ebook market is on the paper market, or on total sales. Sales apparently are so small as not to really matter at the moment. Therefore, publishers have to be conservative with pricing. If due to easier access the total sales of content improves, they will either make more profit or can lower prices. However, if ebook sales replace paper sales (incredibly likely in at least the paperback market) introducing ebooks at a low price will lead to losses in the future. And it is incredibly difficult to raise prices once people get used to them.