The Wall Street Journal:

At the heart of the U.S. government’s suit against Apple and some publishers over e-book pricing is something called “agency pricing.”It’s a term for a new way of setting e-book prices that came about as Apple prepared to introduce its iPad in 2010. Under the traditional “wholesale” pricing model, publishers had long charged booksellers around half the cover price of a book, leaving booksellers to discount the books if they wanted.When Apple entered the fray, it offered publishers the ability to set their own prices.

Good explanation of what the two different pricing models are and how the effect book prices.