Amazon and WalMart Book Price War

Yesterday I saw a e-mail report on Publisher's Lunch from Publisher's Marketplace saying a price war is going on between Amazon and Wal-Mart. They're offering hardcover books by well known authors for $9.00. The book price war even made the news on TV.

This move has me worried. Where does this move  leave the midlist authors published by the big houses? If these authors have hardcover books out, they'll most likely be left in the dust by readers grabbing the lesser priced books by popular authors.

Small publishers will have an even more difficult time. How can they possibly pay expenses and still compete in such a market?

What are your thoughts on this? Does it seem a good or bad thing?