According to anonymous sources speaking to the New York Times, the agreements with publishers include provisions to discount book prices on bestsellers, similar to the practice used in brick and mortar stores such as Borders. Furthermore, prices for e-book editions of titles that retail below the typical $26 price for a hardcover would be sold below $14.99 as well.
We likely won't know more details until the iPad ships and the iBookstore is open for business, but it seems like the agreements between publishers and Apple offer something for both groups. Publishers get more flexibility in pricing, and Apple gets to offer some titles at comparably discounted prices.
Source: Arstechnica.com
