The Passive Voice has a bunch of stuff about the Digital Book World Conference today. (Apparently the conference motto is, "Learn Why You Aren't Profiting from Digital Ebook Publishing." Very up, guys, very up.) And it's all about how traditional publishers need to be more like self-publishers, what with getting books to market faster and building communities around books and lowering prices and selling short stories individually and not having crappy formatting.
And all that may be a good idea. But as traditional publishing becomes more and more like self-publishing, authors really, really need to ask themselves, Is it worth paying a premium to have a publishing house do what I can do myself for far less money? Because, hey, if the arrows in their quiver are labeled "sell short stories individually" or "toy with pricing" or "don't mess up the formatting," you have the exact same arrows in your quiver, and you don't have to pay for them.
It's not really any different than when some digital publisher asks your for half your royalties or $3,000 to do something that just isn't that complicated.
The problem isn't only that you're getting robbed blind (although that is definitely a problem), the larger problem is that you're getting locked into a business model where your books cost people an arm and a leg. Occasionally bringing the price down to 99 cents (and you really take the shaft) isn't going to help that much when the rest of the time, your book is $10 more than everyone else's.
One of the reasons why even writers who self-publish will take traditional-publishing contracts is because they perceive a value in the distribution networks and marketing programs traditional publishers have. But the vanishing of Borders and the downward spiral of Barnes & Noble means that that network is becoming less valuable (and apparently publishers are cutting sales forces, meaning they're not going to be in a good position to uncover new brick-and-mortar markets). Marketing of course costs money--the question is, can you do it yourself (or even hire someone to do it for you) for less than what a traditional publishing contract will cost you in royalties and lost sales? If you really, really think a particular publisher has excellent marketing, then you might want to go for it. But I think it would be wrong to assume a publisher has such excellent marketing that they can get people to buy $13 e-books, especially one written by someone who isn't a huge name, because evidence indicates otherwise.