Readers want books that are plentiful and cheap, publishers want to preserve their profit, and authors want a larger share of revenue. What this article misses

Readers want books that are plentiful and cheap, publishers want to preserve their profit, and authors want a larger share of revenue. What this article misses out entirely is the distribution chain. Publishers aren't distributors. Amazon is a distributor and a retailer rolled into one. Ingram is a distributor. The other wholesalers are distributors. The distributors take 70% of the gross revenue from a book, leaving 30% to split between authors and publishers. The reason the publishers are defending their margins is that Amazon are trying to increase the already-silly 70% cut that they're taking (by combining the retail and wholesale distribution stages into one entity). Amazon are also trying to bootstrap ebooks by cutting prices, and they don't want to run the whole process out of their own pocket. So the squeeze is on. The smart publishers would be setting up ebook storefronts and selling direct to the public -- establishing their own distribution arm, in other words. But they're not used to thinking in those terms (if anything, they've been moving in the opposite direction for decades, shedding direct sales forces and outsourcing printing and low-level production work like typesetting).