Re: It's really simple
Before the advent of the ebook, the pupblishers themselves thought that books were pretty much interchangeable. Whenever I read stuff about marketing books, they mostly seemed to say that hardback books sold very few copies, except of the really big authors of course, and that a lot of paperback sales were pretty much down to the cover. Obviously you can't over-stress this. People have favourite authors. But I almost never bought any hardback, unless I was truly motivated to read their latest, and even then, only if it was around a tenner. I'd never pay £20 for a hardback. Most of my books were bought around the £5.99-£7.99 bracket.
Even in the days when I commuted, and got through 2 books a week, there were more good books than I had time to read. And I'm quite choosy. A lot of people apparently do just buy an interesting looking paperback, based on the cover.
But the mistake you make, and the seemingly the publishers too, is to assume that substitution can't happen, because people love a certain author. Firstly people can wait. There might be a sale on, the book isn't going to go away, just because they don't get round to reading it until next year. Secondly people can buy other books. Thirdly, people could spend their commute reading The Economist, or the paper, or playing silly games on their tablets, or listening to music/podcasts. Or as the article suggests, the cheapest leisure activities of all talking to each other or shagging, or even just playing the five knuckle shuffle. Hopefully not on the train though...
This is where you introduce price elasticity. Petrol is quite price inelastic. People regard it as a necesity. If the price goes up, they'll cut other things out of their life in order to keep on using it. Demand will drop a bit, but if there's no easy substitute to driving your car, you'll keep on driving your car. In the long term alternatives may appear, if prices remain consistently high it's true. Water is another one. If the price of your tap water doubled overnight, you'd grumble like hell, but you'd keep on paying it. And you'd use about the same amount. But probably buy fewer books, or cut your Sky sub or something.
Books are part of the leisure market. Not part of the book market - which is only a small sub-set. And leisure spending is very price elastic. Double the price of a cinema ticket and people will buy DVDs, or go the pub or restuarants more. Or buy more books or whatever floats their collective boats. Double the price of your books, and your readers will get cheaper books, or spend more time doing other things.
Seeing as we're talking economics, a monopoly buyer is called a monopsony. So Amazon is getting dangerously close to a monopsony position, and so the publishers are rightly worried. Even resorting to an illegal cartel themselves at one point. The thing is though - they're actually getting less money now, than when the nasty people at Amazon were responsible for pricing. I suspect they're trying to maintain their previous wholesale price, but without printing and distribution costs that amounts to having a quite chunky price rise. Whereas Amazon are presumably trying to maximise their revenues, so want the ebook price below the paper price, so they have to do less expensive stock/shipping stuff. Depending on price elasticity, they may actually make more profit if they sell ebooks for less than paper books. i.e. they should sell more units, for less profits - but costs are the same whether they sell 100 or 100 million.