eBook pricing: what's fair / what will fly?

Till now, eBook pricing policy discussions have been theoretical at best, most proposals prefaced with a flippant, "Of course, it doesn't really matter all the time there's no market." The ground has ever so slightly shifted in 2008: a subtle combination of the Kindle launch in the US (it didn't light the world on fire, but on the other hand it is generating a not altogether insignificant sideshow for many US publishers) and a general sense that maybe, just maybe, a small but growing percentage of the reading population would quite like to read on a screen after all. Whatever the truth in that, publishers are currently faced with the challenge of setting eBook list pricing in a very nascent market. There is the instinct to protect future revenues, to prevent cannibalisation of print. That instinct leads to pricing that floats at or around comparable print product pricing, which from a consumer point of view, simply appears nonsensical - there's no palpable 'product', no physical warehousing or distribution required, so why the high price? But will this instinct also ultimately turn out to be nonsensical for publishers? I think there's a very real risk that publishers price themselves out of the market altogether, allowing new, tech-savvy companies to move into the content delivery space, develop a pricing model that appeals to consumers, develop direct relationships with authors on the one hand and consumers on the other, and wipe the floor with all the traditional players. Seth Godin's post about how much the movie studios should start charging for digital movie downloads, strikes a chord with me:    

 "It's important to charge something, because the act of paying fundamentally changes the dynamics of the relationship. The question is this: at the start, is your goal to maximize profit or to build a platform that scales? The fact is that the market is too small right now for the price to matter. What matters is whether you can build an audience that is in the habit of paying you, an audience that wants to hear from you, an audience that you can build a business on.

At fifty cents a rental, all desire for piracy goes out the window, replaced by convenience, ease of use and a clear conscience. More important, entire new services show up, habits are built and the studios end up with a direct relationship with consumers who want to hear from them. If they don't get greedy at the start."