Charlie Stross (cstross here on HN) has an interesting post on this:

By driving down the unit revenue, Amazon makes it really hard for publishers—who are a proxy for authors—to turn a profit. Eventually they go out of business, leaving just Amazon as a monopoly distribution channel retailing the output of an atomized cloud of highly vulnerable self-employed piece-workers like myself. At which point the screws can be tightened indefinitely.

http://www.antipope.org/charlie/blog-static/2014/05/amazon-m...