At the risk of biting a hand that fed me a tiny morsel, here's an interesting take on the Amazon/Hachette book fight. To me, the interesting piece here is the question of value-added. What value does the publisher add to the publishing process?
In the traditional book purchasing paradigm, when a reader bought a book at the store there were two separate layers of middlemen taking a cut of the cash before money reached the author: a retailer and a publisher. The publisher, in this paradigm, was doing very real work as part of the value-chain. A typed and printed book manuscript looks nothing like a book. Transforming the manuscript into a book and then arranging for it to be shipped in appropriate quantities to physical stores around the country is a non-trivial task. What's more, neither bookstore owners nor authors have any expertise in this field.
Short story: When I wrote my first book in 2002 (actually wrote it from 1995-2001--you can still purchase a copy here) I was surprised to learn that: 1) We had to submit a camera ready copy of our book, and 2) we had almost no control over the price that would be charged. On 1), the publisher added no value--no content, no editing, no nothing. On 2), we digned what we were told at teh time was the standard contract, with 5% royalties. I have no idea if that was standard; we might have been really bad negotiators. The book originally sold for $100. Somehow, buyers were paying an extra $95 for...what? A nice cover? A little marketing? For a first book, the marketing was probably pretty valuable. But, for the next book I write (whenever that might be), I'm thinking I am just going to post the .pdf to a password secured website and sell passwords for $10. Sure, I risk piracy, but is that risk really going to be $90 per book? At $10 per book, everyone is better off--except the publisher.
Back to the story--which kinda makes my point.
Digital publishing is not like that. Transforming a writer's words into a readable e-book product can be done with a combination of software and a minimal amount of training. Book publishers do not have any substantial expertise in software development, but Amazon and its key competitors (Apple, Google, and the B&B/Microsoft partnership) do.
Publishers would like writers to believe that the pressure they are feeling from Amazon will trickle down and hurt authors as well. But there is a big difference. Even in the brave new world of e-publishing, authors are still making a crucial contribution to the industry by writing the books. Publishers are getting squeezed out because they don't contribute anything of value.
One thing missing from this argument is that publisher do add value in terms of editing, screening and signaling to readers. Getting a book published requires passing some threshold of quality. Publishers can judge whether a book will sell. This gives readers a signal that someone thinks the book is worth reading. Unfortuantely, because publishers/editors are not typically subject matter experts, these signals are very noisy. What a publisher thinks will sell is not necessarily a valuable contribution from teh readers' perspective. Once a book is published, the cleaner signal is word-of-mouth--do readers value the contribution of the book?