foobar, you completely miss the point with your Economics 101 post. Jeff was pointing out that this particular corner of “the market” (himself, and also me and evidently a few others) will not bear full retail price for downloadable software. We are perfectly free to reason what prices we personally wish to accept, and we are also perfectly free to include the estimated production and distribution costs in our reasoning.
You are confusing statistical evaluation of market behavior with the individual actions that create this behavior in the first place. You are also confusing the theory of an efficient overall market with perfectly efficient pricing of every single individual product, which is obviously not the case.
Downloadable software at high price points is clearly not a sustainable business by itself, as evidenced by the fact that Microsoft, Valve etc. still try very hard to push the same products on retail shelves. It’s merely a little extra profit from rich and impatient people, as Jeff pointed out. The publishers did not even select this price point; as others have pointed out, they are forced by brick mortar retailers not to undercut them. Hence, the download price is not actually the price the publishers would have chosen in their own evalution of what the market will bear.
Back on topic, I think it’s enlightening that the BM retailers themselves feel that they add no value whatsoever to the downloadable product. They fear their business would go away entirely if the downloadable alternative were significantly cheaper. That more than anything else suggests that they are truly doomed, just like any stores still trying to sell pop music CD singles.