"I don't think publishers fear discounting in general," says Michael Cader, who runs the influential PublishersMarketplace.com. "Indeed, the discounting of fast-moving hardcovers has probably significantly increased the market for a small number of titles."

Cader goes on to point out that publishers freaked out about Amazon's attempts to establish $9.95 as the retail price for ebooks even if—or especially if—they're willing to sell those ebooks at a direct loss (below their wholesale cost). Publishers also now know through some sleuthing in the press that Amazon is making a decent gross margin on the Kindle device itself, a fact that was reinforced by Amazon's decision to cut the price of the Kindle 2 by 16 percent last week.

So nobody likes to see his product sold as a loss leader. "Though retailers often use very particular products as loss leaders," says Cader, who thinks ebooks should and will sell at a discount to printed books, "it's rare for a retailer to sell such a wide swath of merchandise at a loss. There are plenty of manufacturers beyond book publishing who get worried when a given retailer offers their high-value product at an irrationally low price."

Finally, there's a bigger question than the price of ebooks that really gets under the publishers' collective skin. It brings us back to that pyramid with the eroding base of backlist titles. "Recent data show that a small number of the biggest new fiction titles are the ones experiencing the biggest sales spikes on Kindle," Cader says, "and the biggest 'conversion' of print buyers to ebook buyers within Amazon's customer base."

"These are often the very titles that draw customers in to bookstores," Cader continues, "and drive book sales at other retailers that carry books. All the book chains have attributed sales declines primarily to declines in foot traffic. They have fewer customers, period. Margins for physical bookstores are perilously thin even in good times, and for the first time we are seeing a decline in the number of bookstores nationwide: Take away the small subset of product that draws in customers (and the inventory that turns quickly), and you make things harder for any bookstore."