I'm actually trying to make the opposite point, which is the physical cost of a book is relatively unimportant.  LuLu actually throws you way off.  They quoted me $7.95 for the cost of a 300 page perfect-print edition.  They are a small volume printer, &#60;1000 copies.  At Volume (2000+ copies), a perfect-print 300 Page book can cost as little as $2.50  - And there are, and always have been, a lot of printers that could that work for you.  You are correct in indicating that the big publishing houses have access to scale and vertical integration in which they are probably paying around $1 for each book - but, at 2000 copies, $5000 vs $2000 doesn't matter very much when you consider all of the fixed costs associated with a book.<p>Where a big publisher CAN take advantage of their scale, is in spreading the risk over thousands of books.  Sure, a lot of their $5K advances will yield a grand total of 75 books sold.  Or, in fact, be completed but not published (Seen that happen).  But, many of those books will break even, some will make a profit, and every so often, JK Rowling will show up.<p>Note - a private publisher is risking everything.  If their 3-4 months worth of heartfelt effort turn out to sell 70 books at $10, and they get to keep all of it, well, 100% of $700 is still less than an advance of $5,000.<p>Almost all of the time, energy, risk(!) and money associated with creating a book come before the actual physical creation.  I'd be prepared to say that for a 5000 book run, (which is considered a success, for most authors), approximately 90% of the cost is associated with the creation of the book, advertising, marketing of the book, and only 10% in the manufacturing of it.<p>Now, where we can reduce costs is in the marketing/advertising - with eBooks, you don't really need shelf space.  And Social Networks/intelligence engines can do a better job of getting me the book I'm interested in anyways.<p>But, to create a great book, requires a team of professionals.  And those people have to eat....<p>[edit: And, to steal a point from retric above, "What publishers focus on is not high quality books but rather figuring out how to convince people to buy crap books that they will not actually read." - That's true, the other strength of the Publisher is controlling the channel, aka the bookshelf in the past.   But, given that there is no "bookshelf" to control anymore, hopefully great content will rise to the top, and that is yet _another_ inefficiency that we will be able to eliminate ]