I don't have any substantial answer to your question, but I have been thinking hard about it over the years.

Let me summarize some dynamics of ebook pricing and then talk about "fair price."

Ebook production is a very speculative business. You have no idea whether there even exists an audience for your product.

Pricing for digital goods is elastic. You have very little capital costs (the supply is unlimited), and you can price it at whatever you want.

Marketing and promotion is the most significant cost here, and there's some debate whether money spent on marketing and promotion even is cost-effective.

I wrote elsewhere, (NAGLE’S FIRST LAW OF EBOOK PROMOTION AND DISTRIBUTION: Comparatively speaking, it requires more effort to persuade a reader to invest TIME in an e-book than MONEY).

Big 5 have two reasons they can justify increased marketing expenditures: 1)selling the publishing brand and 2)subsidiary rights (movies, translations, TV shows, etc). For most books though, these potential revenue streams don't exist; therefore there's more shoestring marketing involved.

An indie author could spend a lot of money on promotion and it might work, but it might make little difference. Publishers have more capital to spread the risk.

Should the author be entitled to a fair price for his labors (in much the same way as a fair-trade coffee grower should be entitled to a fair share of the profits)?

The more fundamental question is whether the author should be entitled to ANY profits. In other words, some profits are better than none.

Is the author entitled to a fair contract with a publisher? This is harder to pin down because an author wants the publisher to have a substantial enough stake in revenues to have an incentive to promote the ebook. If a book contract gave an author 1% of royalties, in some cases that could be a good deal if the publisher could bring substantial volume.

What attitude should the author have about promoting a "fair price" for the ebook?

In 2005 (before the Kindle) I wrote this article about ebook pricing:

DRM doesn't really matter for the little guy. It matters mainly for mega media companies who have made significant capital investments (in thousands, if not tens of thousands of dollars) and need to recoup their investment by selling tens of thousands of copies. The pricing strategies of big publishers have pretty much been "anti-chump change." In other words, set a retail price that no one seriously will pay (aside from library institutions) and then gradually lower the price until the merchandise starts moving somewhere (even if it is only to the remainder table). But for the independent content creator (say a popular litblogger who is selling ebook novels on his website) the pricing strategy is different. His strategy is not necessarily to maximize price, but to maximize audience. His strategy is to guess the price point readers would regard as "chump change" (so insubstantial that people used to getting things for free won't be bothered by paying it). This may not be the route to becoming a millionaire, but publishing royalties now aren't much better, and at least the poet or novelist doesn't have to wait forever to convince a publishing company to take a risk selling his work.
www.kuro5hin.org/story/2005/5/16/143632/005
The problem here is that Big 5 publishers typically price ebooks at significantly higher levels than indies to pay for the marketing machinery.

But low price is also a significant marketing device! Part of Amazon's genius is giving authors maximum control over how to price their ebooks and just giving them a consistent share of the profits. Therefore, the author can decide for themselves what is fair.

Now that I have put these thoughts down, I have concluded that a "fair price" is whatever an author determines is the best way to receive a consistent stream of revenue over time...

If an author prices a 1000 page novel at 99 cents,then that is a fair price (because the author assumes that the lower price will make you more likely to buy it). The author might be banking that you will buy future ebooks as well.

One final thing. Places like noisetrade (and even Humble Bundle) let the buyer decide. There is some debate about whether this works (I think it works when you already have some visibility), but the advantage is that some people can compensate the author according to their subjective estimation of value. That might result in more revenue, or it might not.

There is no magical formula, and every author and publisher is trying something different. I've learned not to dismiss any publishing or pricing model just because it doesn't resemble mine.

One final thing. Every year on his Smashwords blog Mark Coker reports on what price has been shown to maximize revenue. I think his most recent survey revealed that .99 seems to be the most effective price for a new ebook-- and one might argue that empirically, this is the current "fair price" according to prevailing standards.

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