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But publishers also say consumers exaggerate the savings and have developed unrealistic expectations about how low the prices of e-books can go. Yes, they say, printing costs may vanish, but a raft of expenses that apply to all books, like overhead, marketing and royalties, are still in effect.
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Out of that gross revenue, the publisher pays about $3.25 to print, store and ship the book, including unsold copies returned to the publisher by booksellers.
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So once the EBook has been out a while at hardbook prices and the mass paperback comes out selling at $7.99 will we see the print/store/shipping costs take off that and the ebook sold for $5? I very much doubt it. (maybe slightly more depending on how much difference there is between printing a paperback and hardback)
Even that $5 price IS STILL too much because ebooks are more restrictive than paper books. We can't resell the ebook and we can't lend it out. Add in DRM and it's not even "our" book and may not be readable in the future. We have less rights with the eBook so the price should drop accordingly.
Comparing ebook prices to Hardback is not a valid comparison because the price when the book first comes out been higher isn't an issue so long as the ebook is LESS than the hardback at that time, that's fine. Sure there's arguements that you may lose customers who won't wait until mass paperback is released and the price drops, but that's a different topic. The problem is we're not seeing the cost savings when the mass paperback is in fact released.
If publishers increase the price they sell ebooks to retailers when the hardbook is out, but then drop the prices when the paperbacks comes out AND include the print savings in that new price, then I doubt people would have as big an issue.
They don't need an agency model to do that though. Just sell ebooks for a higher cost initially to retailers and then later reduce the costs you're selling the ebooks for when the paperback comes out.
Chances are that won't happen though as the savings are certainly not been passed on in most cases at the moment even on sites where the publisher is in control of the prices.