E-Books - where do the profits go?

From the NyTimes

"Amazon sells most Kindle books for $9.99 or less. Publishers say that they generally sell electronic books to Amazon for the same price as physical books, or about 45 percent to 50 percent of the cover price."

Seems odd that the publishers would get all of the profits. Another interesting point in the article was that purchasers of the kindle *thus far* have continued to buy physical copies at the same pace as before.