The idea that information, such as ebooks, should be priced based on consumer utility rather then marginal cost is something that is a naturally attractive view

The idea that information, such as ebooks, should be priced based on consumer utility rather then marginal cost is something that is a naturally attractive viewpoint for the seller but not necessarily for the buyer. When you have a relatively high initial sunk cost and a relatively low marginal production/distribution cost, a lot of sellers will be trying to work very hard to push value based pricing since the alternative, of a small profit over marginal cost, scares a lot of them since the marginal cost is 0. I think that consumer acceptance of this is based on a sense of fairness combined with knowledge of the sellers cost. A lot people have no problem paying 10c for a text message, because the amount is tiny and few know that the marginal cost for the carrier is practically 0. The lack of knowledge as well as the low price (even lower for bundled plans) makes it just easier to pay rather then protest. For ebooks a significant amount of people might have an intuitive (though possibly flawed) understanding of the marginal cost and have a reason to spend time protesting, because the amounts are significantly higher then 10c. As with any such technology driven changes in the past, I think in the long run the price will still trend more towards the marginal cost, ie 0, in the long run. Given enough time, I think that publishers and authors will realize that given the ease of distribution for ebooks they can maintain or even increase their profits by lowering unit costs and making it up on volume. This will happen whether the producers want it or not, as they will be forced to lower prices by rampant piracy. P.S. I have to give credit for a lot of the above ideas to a great book, Information Rules, that has been around for 10 years or so.