We're working on a pricing model at my startup (BitGym) which should route around this problem and both pay or partner developers more than 1.99/game and not make us kingmakers. It's different, but very fair and will earn developers above the median of their releases on steam/app stores. This race to the bottom in other spaces should only serve to help us find more developer partners.

I realize that sounds like a plug.. I guess what I'm trying to say is read the landscape and adapt!