Author royalties are usually based on Suggested Retail Price, not the actual retail price.

My impression is that Amazon is primarily fighting over the right to set actual retail price, like bookstores all across the country have done for ages. The publishers don't want that to happen because they believe Amazon will set them low enough to affect hardback sales.

But actual retail price has no effect on the money most authors make. A discounted book still pays the author a royalty based on full SRP.

At least that's how I understand this whole thing.