I am aware of and have used the strategy of pricing a book for 99 cents. Indeed, many of us authors and publishers have also offered a book for free. Obviously, the reason is to spread the word to spur future sales, or as George Pelecanos says, bring "them into the tent." He also says "It's a gamble." I don't think so. It's a business decision. Most readers who will buy it for 99 cents would not buy it at $12.99. There is no lost revenue as the amount those purchasers would have paid over the 99 cents can be looked at as an advertising cost. And the 17 cent royalty is better than no sale.
The article states Pelecanos never was a big seller. Me either, but I predict the article will generate many thousands of sales. It is about e-book pricing, but is also an effective advertisement for his new book, "What It Was." Good for George, but oh, if someone or newspaper would only notice my book is temporarily available for only 99 cents.