While some in the book business are expressing alarm at the revenue opportunity lost with ebook prices as low as 99¢, these prices are not unprecedented in the history of books. A century ago, the price of a dime novel was, as you might guess, ten cents. Some of the oldest paperback books in my collection have prices like 50¢, $1.25, and $2.95. It is not so hard to imagine that, with advances in technology, books might sell for those kinds of prices again.
I am not so sure that lower prices will imply lost revenue for every kind of author. It has always been the case that some authors sell better in hardcover and others fare better in paperback, with the very different price points being part of the reason. Ebooks provide the possibility of price points that may actually be less than the cost of the paper used in a printed book. These lower prices will surely be an advantage for whole categories of authors.
Lower prices do not mean that there is a new opening for low-quality books, however. Consumers are more pressed for time than ever and won't have much patience for poorly conceived and unedited prose. But there may be tens of thousands of skilled authors who are able to connect to an ebook audience even if their appeal is not broad enough or strong enough to stand up to the prices of printed books.