Re: No surprise here - It is DRM that increases piracy
Hmm, I should've chosen my words more carefully. I didn't mean to suggest that there's absolute parity end-to-end between ebooks and printed books, necessarily - I was trying to suggest that it's a fallacy to think "Ebook = no production costs, physical book = enormous production costs". Ebooks increase the workload for layout and platform proofing. I referenced Stross because his article is the best expression of the number of things done by a publisher as part of publishing a book that don't involve either the book being written or the words being put onto paper; the vast majority of those things apply regardless of format.
It's also relevant to mention that while I happen to know a bit about self-publishing and small press, I generally defer to people working full-time in the field when it comes to what is or is not true about that field.
I'm not sure you can ignore 16 and 17 For "shipping", you can substitute "file hosting & distribution", and for "invoicing and accounting" you can substitute...errr... "invoicing and accounting". Unless you are exclusively selling your ebook through your own channel (which reduces your reach substantially), you'll be dealing with partners. Ergo invoicing & accounting.
(You may be interested in CMAP #9: Ebooks, incidentally - not least for Stross's prediction that ebooks will end up replacing mass market paperbacks. A prediction that I don't like but suspect is going to be correct.)
I'm not convinced that your volume argument is entirely correct - it assumes that there are no per-transaction costs, for starters, which is generally not the case. On top of which, there's no guarantee that simply cutting the per-item revenue (presumably by slashing the "profit" bit) the total number of item sales will increase enough to keep total revenue standard, never mind increase it. There's so much content out there that price alone isn't the main determinant, especially when you talk about material in which you the reader may be interested, but of which you aren't aware - because the solution to that is marketing (either word-of-mouth which takes ages or the traditional kind which takes money).
I do agree that book publishers want to get reader's loyalty, which is why they tend to want to retain first refusal rights to a given author's next book.
It's worth noting that some publishers are still doing very limited edition high-cost items (eg small runs of individually-numbered signed books, and even smaller runs of individually-lettered signed books - I heard about this when reading about China Mieville's books, but I'm sure he's not the only one). As with the music industry, I suspect that the way to go is to use different formats to target different audiences. (Why turn down the extra money to be made from rich fans who want a unique physical artefact just because casual readers want a cheap ebook, when you can do both?)