I would direct you to this article and this post by a small press publisher for a rebuttal to the idea that e-books are significantly cheaper than physical books, or that publishers make anywhere near the cover price on their products, or that Amazon is the good guy in this. Currently Amazon takes 50% of cover price for books sold on the Kindle; publishers have what's left to pay everyone, including authors. It may appear that Amazon is going to bat for consumers, but they've been using e-books as a loss leader from the beginning; now they're asking publishers and authors to treat them that way as well. If that becomes the norm, even the tiny fraction of authors making a living from their books will be scrambling for smaller advances and royalties. Amazon knows this, they're just pretending it won't be their fault if it happens.