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I think Penguin in particular is going to have some growing pains with the transition to ebooks, because such a large part of their library is the "Penguin Classics" line, which are public domain works that are completely free in ebook form from sites like Gutenberg, Manybooks, Feedbooks, even Amazon and B&N stores.
How do you compete with that? They'll have to focus on new translations and heavily annotated versions of classics which can provide added value and can be copyrighted as new work.
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