What difference there is between an iBook and the same Kindle book?
I recently attended a writing conference where the differences between various ebook formats were discussed, at least in very general terms. The analogy used was the old VHS vs. Betamax one.
The proprietary format that Kindles have used has the lowest feature set out there. My understanding is that new versions have been released to address some of these shortcomings, but the newer formats used by Amazon's competitors are superior. Kindles weren't originally meant to be "media-rich" e-readers. Children's books, for example, were a problem because text flow and placement was troublesome and fonts limited (to retain all formatting and text one would have to release a book as a .pdf, and then all font sizing/customization gets thrown out the window).
Development has been a bit slow on the Amazon side because there has been very little incentive to make major improvements to its proprietary format. It is estimated that Amazon currently controls upwards of 70% of the entire e-publication world. If the golden goose is still crapping out golden eggs by the truckload, why change things?
With regard to price, Amazon has decided that there IS a discount to be had when the price of physical book production (paper, ink, assembly, warehousing, transportation, etc.). They've more or less heavily incentivized what they consider the "sweet spot" purchase price: $2-$10. As a writer, if you price your ebook in that range, you earn 70% of the retail price with every copy sold, and Amazon keeps 30%. Any ebook with a retail price cheaper than $2 or more expensive than $10 the commission reverses to 30% for you, 70% for Amazon.
Conventional booksellers hate this, because they'd like to keep the price the same for both versions so that ebook sales don't cannibalize hard copy sales. Still, there are plenty of ebooks for sale online @ Amazon at the same purchase price as the hard copy even though the publisher makes far less per unit by doing (so to avoid this cannibalization), but that is the seller's prerogative--the seller sets the price of the book, not Amazon. Beros only incentivizes pricing in the $2-$10 range by making the seller's royalty cut substantially larger.
Independent writers benefit greatly from Amazon's current business model, provided their writing doesn't suck. Putting out a bad book with an ugly cover design on Amazon doesn't just doom that book--it can permanently destroy the writing career of the author. That title never goes away, nor its one-star reviews, and all of this is public information. A prospective publisher might like your book idea, but you're a leper to them if you bombed on Amazon.
So, to answer the original question, formatting is different, and so is the pricing model. Amazon has little motivation to change either, as they are burning down the publishing business as it is.
YMMV--If any of this is inaccurate, misleading, poorly characterized or has fundamentally changed recently, I'm sure I'll stand corrected.
