A couple days ago, Joe Konrath, a bestselling e-book author, admitted:

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.

Kevin Kelly does the math:

2.99 x 40 = 119.60

.99 x 620 = 613.80

When Kelley factors in Amazon's cut on low-priced e-books, the profit drops dramatically for the author. Kelly clarifies:

I am not saying this is good news for authors. 99 cents is not. It is good news for READERS.

J.L. Wall adds his throughts.

(Hat tip: Mark Frauenfelder)