Have you stumbled across any of those Kindle owners who get angry anytime they see an ebook price over $9.99? How about publishers who insist on maintaining their print list price for the e-version? Btw, for the record, where I work we typically fall somewhere in between; our "digital list price" is generally less than the print list price and, of course, Amazon is free to discount to an even lower price. As a consumer, when I see a Kindle price over $9.99 I'm highly likely to skip it.
Whether we want to admit it or not, Amazon is carefully training us to think of $9.99 as the "right price" for a Kindle book. We can jump up and down and scream at the top of our lungs that "the intellectual property is worth far more than $9.99" but that doesn't change the perception that $9.99 is a ceiling for a lot of people. So should we all just hunker down and figure out how to make money in a $9.99 (or less) ebook world? No!
Here's the problem: In 2009 Kindle editions are nothing more than quick ports from the print edition. As a consumer, I see no value added and I rarely (if ever!) see how the publisher is taking advantage of the medium to offer me something that's better than the print edition. In fact, the DRM that's wrapped around most Kindle editions means I can't pass the book along to someone else, so that makes the product worth even less to me. (Also for the record, at O'Reilly we're proud to say that we sell all our ebooks DRM-free.)
So what's the solution? Figure out how you can add value to the ebook. Leverage the medium! As long as you keep looking at ebooks as incremental to the print business you're much less likely to make the investments there that are required. Quick p- to e- ports will cast off revenue that's nothing more than a rounding error to your print business. If you're OK with that, well, that's your problem!
I'm convinced that one day we'll look back at this $9.99 ceiling and the limitations of the early e-reader devices (current generations of Kindles, Sony Readers, etc.) and chuckle. Rich products that fully leverage the platform they're delivered on could be priced much higher than $9.99 and potentially even higher than the current print pricing levels. The future belongs to the publishers who are willing to invest in products that aren't just quick-and-dirty p- to e- conversions.
P.S. -- Amazon hasn't exactly developed an "insanely great" platform for us to make excitingly rich Kindle editions for, have they? And although that platform has been around for about 18 months now I can't say I've seen much progress on this front. That's yet another reason why I wish they'd open things up like Apple has done with the iPhone. Sure, Apple still controls the platform but look at the awesome lineup of third-party apps that have resulted from their approach. And I'll bet the iPhone OS 3.0 update due later this summer will live up to all the advance hype. How come we never see sexy platform updates like that from Amazon?