Amazon vs. Macmillan is missing the point

April L. Hamiliton of the "Indie Author" blog has an interesting run-down here of the Amazon vs. Macmillan.  In a nutshell, the battle between the online store Amazon and the large mainstream publisher has boiled down to who has the right to set the prices for eBooks on the Kindle.  Amazon, interested in attracting readers to its Kindle device, had wanted to maintain a price point of $9.99 while Macmillan has wanted the right to charge more for their titles, upwards of $14.99.  To wit, Macmillian has won.  Amazon has conceded and will allow Macmillan to sell books at a higher rate.Indie Author argues that this is a huge loss for both writers and readers as the higher price point will not serve readers who might be interested in gettting into eBooks or writers because the higher price point will significantly reduce their market.  I believe the bigger problem is not who has the power to set eBook prices, but that eBook prices are still way too high.  I find it ridiculous that publishers are trying to sell an electronic version of a book, a file that takes only a few thousand dollars to produce, at high the price of the hardcover version.  Hardcovers books are a physical product that you can hold, that you can give to others, and hold in the family library for generations.  They are valuable.  An eBook is a data file that has no pictures, no video, and no interactivity.  They are simply less valuable.  But that's what makes them attractive.Because an eBook has significantly reduced production costs than a mainstream published manuscript or even a POD, the purchase price can be reduced to a point where they can become an impulse buy.  Just look at the success of 99 cent apps in the app store.  Small development teams have been very successful making cheap applications because the resistance to buying the app is none existent.  IfI buy an App for my iPhone and I don't like it, then "eh, it was only a buck."  This type of price point is the critical enabler for eBooks to take off and stabilize as a content delivery system like music and movies before it.  But this won't happen when Macmillan is charging $14.99 for what is essentially a text file and it won't happen even with Amazon's lower $9.99 price point.  If these remain the standard price points, then electronic publishing will remain a pipe dream.So what is the correct price then?I think that April L. Hamilton has the right idea.  She sells her novels for $4.99 apiece.  Now that is about right.  $4.99 is still low enough to encourage impulse buying while high enough to allow differentiation between novels, novellas, and short stories.As I plan to publish short stories, novellas, and full-length novels, I'll be using the following pricing list:Short Stories: 99 centsNovellas: $2.99Novels: $4.99As a consumer, these strike me as fair prices for the amount of material.  If I'm paying $60 for a video game, $30 for a Blu-Ray, $20 for a DVD, $10 for a downloadable game, and 99 cents for a song, then $5 for a full length novel is just about right.  It just makes a lot more sense than $15 or even $10.What will be really interesting to watch over the next few years is to see if short stories come back in a huge way.  With an absurdly low price point and short duration, they would be perfect for impulse buyers who read on their way to work.Electronic publishing has the potential to dramatically change what we read and how we read but the prices have to fit the technology and competing forms of entertainment.  At this point, it seems that neither Amazon or Macmillan understand this.