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The "list price" issue is an interesting one since it's an arbitrary number based on perceived value more than manufacturing cost, like an $800 designer purse vs. a $20 knockoff.
Amazon's profit-sharing is currently very egalitarian: a borrow is a borrow, whether the list price is 0.99, 2.99, 7.99, 12.99, whatever. Depending on the number of borrows (in December 2012, Amazon will split $500,000 among all the books that are borrowed that month), an author might get more or less from a borrow than he gets from a sale.
I get $2 for a Risen sale, based on a $2.99 list price. If Prime members borrow 250,000 books in December, I'll get $2 for each borrow of Risen, the same as I get from a sale. If they borrow fewer than 250,000 books total, I'll actually make more per book from a borrow than from a sale, and I'd say that the subscription model is working great!
The author who lists his book at $9.99, who gets about $7 per sale, might think that a $2 borrow is eating into his profit. For him, the subscription model devalues his book.
If there are 5 million borrows and our royalty per borrow goes down to ten cents, no one but Amazon and the readers will be happy and we'll all feel that our books are being devalued.
And that's the issue with a subscription plan. Those who can charge $9.99 or $12.99 or more for their work won't want to settle for a smaller royalty and will perceive the subscription plan as devaluing their books. And yet, those are the authors you need to sell the subscription plan to readers.
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