What you are missing from the argument is that the reason the publishers existed was not for the ancillary services, but because of the huge capital costs of running a printing press and moving that object down the production chain to the network of distributors and retailers.  If we can accept that the printed book is no longer the primary artifact, we can accept that we no longer need huge publishing houses to wrap all of the costs in.<p>The cost differences between producing a paper book and an eBook are striking to me. I read the linked article and it makes some imaginative leaps in assigning all costs to the eBook venture, resulting in some ridiculous numbers.  If you compare the costs of physically printing the book to publishing an eBook, there is obviously a huge difference. Look at lulu.com for starters on this.<p>On the other hand, his argument for flexible pricing is quite sensible.  The difference as we go to eBooks will be that the popular books will cost more, and the less popular books will cost less, as we get the physical production costs out of the way and the overhead is greatly reduced.<p>Just like recording artists and labels, authors will separate from publishers, as publishers fragment into the the physical production, editorial service providers and financial risk backing operations.