I believe that the old models of publishing are becoming as obsolete in literature as they have become in music, journalism, film, and visual art.
It is impossible to commodify a piece of art once the physical component has been antiquated. Once the record, magazine, book, film, print, etc is not necessary and the work is translated into easily replicated and distributed ones and zeros, our capitalist model fails. The model of supply and demand cannot be applied to an economy of ideas.
If it will be possible to make a living as an artist in the future, we will not be able to make much money by "selling" our product. Money will need to be made by corresponding appearances, commissions, and gigs booked around either free or very low-cost product.
Even most traditionally published writers have not made the bulk of their money from the books themselves, but from these appearances, commissions, and gigs, just like most traditionally signed bands don't make much money from the music itself, but from the whirlwind of opportunities that come with being a RockStar.
We used to need publishers or record labels to generate these opportunities. Now we do not. We've seen many indie musicians circumvent the record labels over the past five years. Publishing on the other hand is older and slower to let go of tradition.
Regardless, the publishing industry as it stands will not be able to sustain itself for much longer. The modern reader lives half of his or her life in an abstract digital world. Paper books alone cannot reflect this world accurately.
If we look at it the right way, we are living in an extremely exciting time for artists. It's almost like being the first generation with access to the printing press. What we do with this magnificent gift from thousands of preceding generations is now up to us.
I'm up for it. Are you?