There's also an element of being taken for a ride here. I can afford the $8 snickers bar from the minibar in the hotel, but I won't buy it because I feel like someone is taking the piss. Attempting to use their position to extort me.
Same for ebooks. When your costs are lower, but you're charging more, I'm not going to buy the book because though I can afford the book I feel like I'm being somehow extorted.
For ebooks, you can reduce your distribution costs (there's some cost of creating the file and distributing it, but you don't have shipping costs or returns), but of course you still need to make back your fixed costs. I manage ebook production for a university publisher (but I have no say on pricing decisions, only the technical stuff), and for us, the savings for ebooks doesn't really translate into a big price difference, because our fixed costs are such a large part of our expenses. In our market, ebooks still don't amount to a big percentage of sales, because the reader technology doesn't provide enough support for complex books.
I do argue as much as I can against DRM, but so far I have lost that fight.
I don't think that's always true. The cost to print and ship hard cover vs paperback books is less than the price difference between the two.
I'm surprised about ereaders not supporting what you need for complex books. When I looked at Apple's version of epub it I thought it was pretty impressive. The Kindle format is more limited, but if you can represent something with html, css, and javascript, iBook should work.
When the market structure of a good results in full competition, then the cost of a good is going to tend toward the cost of producing the good plus basic profit (if a company raises prices past this, another company can enter the market to produce the good more cheaply).
When the market structure of a good involves an effective monopoly, the cost will tend to whatever price the monopoly thinks will generate the most total profit (and that depends on the supply curve).
Naturally, you have markets that inbetween these two poles (economists talk about oligopolies and "monopolistic competition").
As far as what the price of books should be, if you think of a publisher as naturally having monopoly since each book is unique, then it makes sense for ebooks to not cost less. But if you imagine a look of books could be substituted for other books (one c++ manual versus another) then it makes sense for the price of ebooks to be less than that of regular books.
http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=olig...
Of course, goods fall on a commodity range. Some things are entirely fungible, others less so. The less fungible a good is, the more the cost can move away from the cost to produce.
Books sound like they aren't fungible - after all one title isn't an exact replacement for another. But, they are quite fungible in the sense that one murder mystery can in some sense substitute for another.
Very few things are not fungible at all.
For me, I'll pay more for an ebook than a paperback because it's a more valuable format for me. Aside from being more compact and searchable, I can select a larger font. If it's more valuable, why shouldn't it cost more?
One thing we do agree on though is that DRM on books should be banned. At the absolute minimum, it should have a failsafe built in so that users never lose their books and when copyright expires, all protection is removed.