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This is the part I find significant:
$5.20 for returns.
$3 for producing and shipping.
$3.90 in royalties.
90 cents of profit.
I have no clue how much of the $3 is which in the "producing and shipping" line. Let's say for the sake of discussion that $2 is the cost of printing it, shipping it from the printing plant to the warehouse, storing it in the warehouse, shipping it to the distributor, shipping returns back from the distributor, etc., leaving $1 for general overhead -- editing, accounting, etc.
So, with that assumption, an ebook costs the publisher $7.20 less to bring to market than a pbook. The publisher's cost is $4.90 for the ebook, compared to $12.10 for the pbook. And that's assuming identical royalties based on the HC cover price. If the publisher were to sell the books for $10, with the same 50/50 split with the online store, and the mentioned 25% royalties, then they'd be paying that $1 for overhead (if that much), and $2.50 in royalties (still more than an author gets from a paperback), and make $1.50 per ebook, rather than 90 cents. They'd be making over half again as much money per book sold, and the lower price of the books would not only increase their sales directly, but also drive an increase in ebook reader sales, which would expand the market for the books and increase their sales indirectly. If, as they fear, every ebook sale made is a HC sale lost, then they win on ebook sales to the tune of 60 cents per.
As the article, and posters here, keep pointing out, but the publishers just don't get: Barnes & Noble is not their customer. Amazon.com is not their customer. Apple is not their customer. Fred's Corner Bookstore is not their customer. I am their customer, and when I read about them thinking they have to train me to accept prices I know are inflated -- they can sell a MM paperback at a profit at $6.99, despite the need to physically print and store and ship and pulp books, but "have to" charge twice that for an electronic file? -- they can very easily lose me as a customer, and they're doing a good job of that.
I am their customer. You are their customer. We all are their customers ... or we were. Hard-right politics or not, Baen is looking pretty good right now. Some of theirs (including some duplicating books I have as pbooks), and a few others from indy publishers, are queued up in my TBR list right now. The "agency" publishers can go take a flying leap.
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