Why do ebooks cost so much?

Amazon says its ebook prices will fall after three book publishers agreed to change their model of pricing. But why do many ebooks cost almost as much as their physical counterparts? 

Many ebooks cost as much or more than physical books, despite there being no printing or distribution costs. This may seem strange, but in fact only 10 to 15 per cent of a book's price reflects its printing cost. However, there are other differences in the way that physical books and ebooks are priced.

Ebooks have VAT charged on them, while physical books are exempt, and the different formats have different pricing mechanisms.

The opening of Apple’s iBookstore in 2010 changed how ebooks were priced. Prior to Apple entering the market, most ebooks were sold via the “wholesale” model, in which retailers would pay the publisher a certain amount per book sold, but set the price themselves, sometimes making a loss. This is the same model as printed books have.

When Apple released the iPad and iBookstore in 2010, they offered publishers a different “agency” model, which allowed the publishers to set the prices of ebooks, 30 per cent of which went to Apple. Many publishers then forced Amazon to adopt the agency model.

Steve Jobs is quoted in Walter Isaacson’s biography of him saying: “The publishers hated [the wholesale model] - they thought it would trash their ability to sell hardcover books at $28.

http://www.telegraph.co.uk/technology/9216138/Why-do-ebooks-cost-so-much.html