A pretty good summation of the e-book pricing squabble at POD People, which spurred some thought about how much prices can be driven down. My quick answer: not much.
If a hardback book, as an example, is priced $26.99 retail, and the subsequent paperback is priced $15.99, regardless of windowing, is the publishing company saying the author’s words are worth less? Of course not. Between the two editions nothing has changed as far as content, editorial services, cover design, etc. So why is one priced lower than the other if the content is exactly the same? In the simplest of terms, the packaging has changed.
There's a problem with the idea that the packaging alone dictates the price — one which I've recently had explained to me, and which is in fact a mirror of how things work in the anime industry in the U.S.
For a long time — and to some degree right now — the standard model for releasing an anime series in the U.S. went something like so:
1. Release individual volume sets.
2. When those sell out, release a slightly priced-down box set.
3. When those sell out, release a thinpak box set.
(This is of course ignoring things like TV licensing, streaming, etc.)
Why do this? Because selling individual volumes first at MSRPs of $25 or so provides two things: 1) that much more of an upfront recoup of costs, and 2) it sets a premium price on early access to a keeper version of the material. You could watch the whole thing on TV, but the quality wouldn't be the same, and you wouldn't get those extras and multiple language tracks. By the time you get to the $50 (or even $40) box set, the basic costs for licensing the series have been paid off, and nobody except for the die-hard collectors cares about the individual volumes anymore. The early-access cost has been paid.
Hardback pricing seems to work the same. You're charging that much more for early access to the material, since a bestseller almost inevitably comes back out in a priced-down TPB edition anyway — and you're trying to quickly recoup as much of your investment in developing the product as you can.
Another thing that gets tossed around a lot about e-books is how the manufacturing costs for backlisted titles approaches zero. That's true, but I'm skeptical how much of backlist sales alone, even if it's 98% pure profit, would be enough to subsidize even a moderately-sized publishing house. The people who keep the wheels turning — the folks who acquire new content, promote the existing stuff, sign the contracts and put together the ad flyers — all have to get paid, and the best way to make sure they get their checks on time is to keep looking for and producing new material.
Same in anime: those lawyers, dub actors, translators, copy editors, and managers all have to get something for their work. And the more people you leave out of the equation, the less professional a product you end up with — and the less likely you'll be doing business with that licensor (or those retailers, or those fans) in the future.
The other implication of e-books seems to be that the more you rely on them to drive your sales, the less you need to pay for the overhead associated with physical merchandise. That could well be true in ten years, when e-books make up enough of a chunk of publishing that a new company could open its doors with electronic-only titles and no one would bat an eye. Today, that would be like operating an airline with a 2,000 plane fleet — but which only flies between Denver and Salt Lake City.
I've had my own experiences with anime fans who don't seem to be terribly aware of how the economics of the video industry works, and I'm realizing there may be just as many readers who don't know much about publishing. Me included, as for a long time I thought it would be in the publishing industry's best interest to nix hardcovers altogether. Now I realize it's one of the few things that keeps them afloat — and that the early-access / premium-cost model may have to follow in the e-book world as well.
You know what I see here? A time-bomb effect, one which the publishing industry may have to fall back on plain old print to circumvent — either by keeping e-book pricing that much higher, by releasing e-books that much later after the print version drops, or by offering some kind of premium e-book version (akin to the hardcover) which will better justify the higher pricetag. I can't think of what such a thing would consist of while sitting here typing this, but I can say that the rule of "What If Everyone Did That" certainly applies. You don't want to give everyone an incentive to simply wait (and buy nothing); the last person you want to undercut is yourself.
For a long time, the music industry was content to maintain three formats for everything: LP, tape and CD. The first format became a boutique/specialty offering — marginalized, but still alive. Commercially-produced cassette tapes are all but dead, and the CD is still very much a de facto standard format but has been flanked and eaten into by (legit) downloads.
The difference between music and books is, you don't need electronics of any kind to read a book. There's a part of me that would really rather keep it that way.