Well, that's all well and good until everyone prices their e-books at $9.99 or lower, at which point we're back to square one. No. At least not according to OP

Well, that's all well and good until everyone prices their e-books at $9.99 or lower, at which point we're back to square one. No. At least not according to OP. They suggest that books compete against other forms of information and entertainment and that below $9.99 a larger share of that market would be occupied by ebooks.