There is a serious question writers today are beginning to ask: what services are publishers providing? And are those services worth the cost? For a book published *right now*, today, probably the answer is yes. Despite the fact that contracts are getting worse, and regaining rights on a contracted book today is very hard (often impossible), right now publishers still have exclusive access to big bookstores. Big Bookstores (and smaller ones) are still a very large percent of all book sales, so *right now* its still probably OK to take a loss in longterm income in exchange for the benefits of immediate visibility being in a bookstore gives your other, self published books.
The problem is, that's quite possibly not true anymore for a book you *submit* today. It takes 12-24 months from contract to being in print. And maybe a year or more to get a contract. That's 2-3 years (or more). A lot can happen in that time.
Borders is closing a bunch of their stores, and even odds might not exist anymore by the end of the year. B&N closed a net 7% of their stores last year, and is expected to close even more this year. The big bookstore chains are failing. Some folks are talking about ebooks hitting 50% of the market *this year* - which would simply kill the big bookstores dead, flat out. B&N would survive as an online store in bankruptcy, and Borders would flatline. It's almost certain ebooks will hit 25% this year, which will cause a lot of bookstores to close AND cause a number of bankruptcies among publishers.
What happens to your book if your publisher goes bankrupt? They won't all go under, but some publishing houses almost certainly will over the next two years. If you're unlucky enough to have your book in production at a house when it goes into bankruptcy, then your book will be tied up in those proceedings for years more, before you're able to shop it around all over again.
What do publishers offer, once the big bookstore chains are gone in two years or less? Editing, which writers can hire out. Covers, which writers can hire out. Formatting, which writers can hire out. Um...
Yeah, that's about it.
A good book prep company costs you about $1000 to put a pro cover on a book and format it for you. On the cheap you can get that done for about $300, or less if you format yourself. Editing is expensive, with copy editing on a novel ranging from $250-$1000, and content editing being $2k+. But even if you go full out, you're looking at maybe $3-4k for production costs per book - to produce something every bit as good as any large publisher can make today. So the math is easy, then.
And it does not favor the publisher.
All of this means that publishers are going to have to reinvent themselves in the coming years. Writers can get editing, formats, and covers anywhere, and bookstore distribution will no longer be a big factor soon. So - what can they offer? I think we'll see publishers beginning to try to brand themselves. Something like what companies like Baen and Harlequin already have. Harlequin readers know what they are getting from a book. Many of them care less about the writer than about the label, knowing that a Harlequin book is probably going to be something they like. Baen readers are similar in SF. Baen publishes a specific flavor and style of science fiction, and readers know pretty much that if they like one Baen book, they will most likely like the next one too. Baen and Harlequin have build brands around their names, and if pushed a bit more this would add additional value.
I think publishers will be forced to move to 50% of net contracts for ebooks. Probably this year or next, we'll see that become the norm. Already, most small presses are doing this, and as bookstores fade small presses are going to have a lot of other advantages over large presses (smaller staffs, less overhead, more nimble/faster movement of books, less hide-bound). I strongly suspect that some of the more pro small presses today will be large presses in five years.
Beyond that, I really don't know. I know that publishers have some wonderful, creative people working for them. And I'm sure their brains are working harder on these issues than mine is. They'll come up with ideas. Some will work, some won't. The ones whose ideas work will still be in business three years from now.
Digital distribution of books *has* disintermediated consumer book publishers. It's happened. It's done. What we're seeing now is the scramble as people a) realize that and b) figure out what they are going to do about it