Obviously providing the means to download relatively small files is cheaper than manufacturing and shipping books, so good thing something might be done about it.
The fallacy here is that the physical cost of a book (printing, storing, shipping) is the largest contributor to its price. It's not*. For mass market books, print runs are done in such large quantities that the economies of scale bring the physical price down to pretty much nothing per book. The real cost of a book comes from people -- the author, editors, proof readers, cover artists, marketers, agents, researchers, people doing layouts, etc. That and marketing, of course, because nothing will sell if it doesn't have a million dollar marketing campaign behind it. All of the rest of that is needed for ebooks just as much as it's needed for paper books, so the net result is that from a pure cost perspective a paper book and an ebook should cost about the same (assuming the mass market paperback print copy here, not the limited-run hardcover). Also, at least currently, the big publishers are still very much stuck in a print mindset and all of their processes are geared toward a print world. This has obvious repercussions for ebooks, but less obvious is that a lot of editing that happens for a print run is done on copies other than the original manuscript, in formats that are difficult or impossible to convert back to a proper ebook (mobi/epub, not PDF, as PDF is not a valid ebook format). This is why we end up with so many poorly-edited ebooks from major publishing houses, some of which are very obviously OCRed rush jobs without even broad proof reading for obvious mistakes.
The investigation here is whether or not price fixing has taken place, and at least from my perspective it very obviously has. The agency model prevents retailers from setting their own prices or running sales. If you want to sell a book under the agency model, it can be no more and no less than the same price your competitors charge. That removes competition, and that's the problem. The funny thing is that agency pricing was just the first step in Apple's evil plot for (ebook) world domination -- first force everybody to sell at the same price as Apple, and then for step 2 charge ridiculous fees for in-app purchases of books such that Amazon et al can no longer viably work on your platform (if 30% has to go to Apple and 70% has to go to the author, and the price cannot be more than the price in the iBooks store, how can Amazon make money selling on iOS?), thus driving everybody to buy their books from the iBooks store (muahaha!). Of course step 2 failed, with 3rd parties finding loopholes or simply abandoning the platform for greener pastures, leaving Apple in a tough position. Nobody wants to buy anything from the iBooks store, and Apple can't run sales to entice new readers to buy because they're bound by the agency pricing agreements. Oops!
* This applies to large-scale publishers, not smaller houses or vanity presses. In the paper world, if you're not guaranteed to sell several hundred thousand copies you're not going to get a contract with a big publisher because they can't afford to do a small print run. Smaller presses afford it by charging more per book. In this scenario, ebooks are a huge win for smaller/independent authors because the huge cost of a tiny print run is no longer a factor. And of course let's not forget the ability to cut out the middle-man entirely. Ebooks make it much easier for authors to self-publish, depending on how much effort they're willing to put into the process beyond simply writing a book.
