On his Technium blog, Kevin Kelly wrote:
I am having trouble convincing myself why digital books will not cost 99 cents within 5 years. All books, on average. Just as the price of music does not in general change on the length or quality.
Here's a reason why they'll be as inexpensive as music. The other day Joe Konrath, a genre writer, and avid self-publisher of ebooks, said:
Eighteen days ago, I dropped the price of my ebook, The List, from $2.99 to 99 cents on Amazon. I was selling 40 copies a day prior to that. Currently, The List is #37 in the Top 100 Bestsellers on the Kindle. It's selling 620 copies a day on Amazon.
Do the math:
2.99 x 40 = 119.60
.99 x 620 = 613.8
I don't think publishers are ready for how low book prices will go. It seems insane, dangerous, life threatening, but inevitable.
I predict we'll be there in 5 years, (before the marginal price drops to zero, but that is another story.)
Also, as others have noted, $1 is near to the royalty payment that an author will receive on, say, a paperback trade book. So in terms of sales, whether an author sells 1,000 copies themselves directly, or via a traditional publishing house, they will make the same amount of money.
I am not saying this is good news for authors. 99 cents is not. It is good news for READERS.