The problem becomes apparent for existing authors with publishing contracts - who see that now they have a following, they don't necessarily need to take the lower percentage of royalties compared to self-publishing. So, some negotiation looks to be in order.
This below article says that social media is the new sauce for the mix. And by an author working on their own "platform" as Rosenbaum calls it, they develop a following and perhaps might not need the traditional model. The wild thing is that only about 4% of all authors who submit (which is an even tinier percentage of people who want to write or have a purpose down that line) - ever get a contract at all. And this isn't based on quality of writing, it's based on a risk assessment of how much income can be produced based on the popularity of that author's work.
Copyblogger worked out the 7 secrets anyone should know about getting a book published - and rejection is one of these - but it's also that a person should simply get going and do the job they're here for. Especially if it's writing.
One fascinating point is that the publishers have started to reverse-engineer this to a degree. Forbes points out that some publishing houses are picking up successful authors to their contracts after they've already proven themselves successful.
Another article points out that the usual backroom deals aren't able to work anymore, either. Price-fixing in order to maintain ebook profits won't cut it any more. Just too much transparency compared to the "old style" hardcopy publishing.
But the funny part is, ebooks are improving actual hardback sales - when the heft of a properly designed and printed book, dust jacket and all, is more valuable because of the ebook sale. (Other than coffee table books, of course.)
The kicker is in the summary of this below article: "Three Key Takeaways: 1. If your goal is to write books and make a living from them, build your audience before you need it. Start today. 2. Don’t think self-published. Think publisher. Better yet, digital mediaproducer. 3. Accelerate. Once the audience is on your side, books are only the beginning. Be more like Jay-Z than James Patterson."
The kicker is this: the money and profit is in the list - the audience is the factor which traditional publishers don't understand. Their "old school" thinking puts the marketing squarely on the author, just like always. Essentially, you hire their assistance to copy-edit and cover-design a book which the public will love. You, the author, still has to produce the public to buy it. So taking charge with marketing which builds that public is the action which makes your bestsellers. Sure, it's probably a complex bit to master - but so is writing in English.