Image by jblyberg
Seth Godin recently posted on his blog about the Kindle ($359 from Amazon). He mentions publisher resistance to lowering prices on digital books, similar to studio or label’s resistance to lower prices on film, tv, or music. They all claim that lower prices would mean less revenue for the artists, authors, actors, etc.
If you eliminate the cost of physical products, you should be able to lower the total cost, raise the percentage that is paid to the content creator, and still make a profit. Unless the reason to keep prices high is to maintain the bloated physical distribution arm of a studio/publisher/label.
Maybe the idea is just to keep milking the connections that keep traditional distributors on top of the promotional game before an agile content aggregator/digital distributor/promoter comes along who doesn’t have to keep supporting the whole physical production and distribution department and can afford to simultaneously pay the creators more and charge the consumers less. Imagine what that would be like.