But what's really innovative about it, as far as where the market is currently, is that authors will have full control over pricing -- including the ability to offer their books free with no restrictions. Currently, free is problematic if you want your work available in the major online bookstores. First, I have to upload the book to Smashwords, with the price set to "free." Several weeks later, the files will hopefully be approved for Smashwords premium distribution, and sometime after that they'll show up for free on B&N, Kobo, etc. Then, Amazon's price-matching bots have to crawl around and find the book, and if they do, Amazon may, at their discretion, make the book free in their store. Kobo is the first major digital books retailer to allow authors to go free directly. Hopefully it will spur the others to do the same.
In the meantime, of course, the success or failure of Kobo's initiative will depend on customers. Currently, they don't have much market share. It will be nice if I can make my books available in the store more quickly, but only to the extent that readers go there to find books.