Having worked at Warner Bros. for over a decade, I've witnessed the global transformation away from physical media. Having forever changed the music and movie industry, the shift is now changing the model in which people receive the content they read.
I realize that most people still prefer to read a physical book. I had my doubts when I bought my first Kindle. Now it's frustrating to read a physical book because it's so much harder to look up a word you don't know. You can't just point to the word to get the meaning.
If we look at what is happening to film and television right now, we see that box office numbers are declining (DVD sales are plummeting) and we see that people are starting to give up on cable tv. I now watch Sling TV, which gives me several channels (like ESPN & CNN) to my television, from the internet, via an Amazon Fire Box. Besides watching regular TV channels, I get movies via Netflix and other movie apps. There's an app for PBS, for Western movies, for PopSci. The future of television will be apps, not channels bundled via cable. Right now, I'm listening to a rock station from Switzerland, through my TV, from an app. Once you immerse yourself in this new paradigm, you quickly realize that it is the future.
Which brings me to the all important question at hand: what is going to happen to all the book publishers that dominate the scene today? In ten years, there's not going to be a great majority of people still reading physical books. The dominant distribution method, like in the music, tv, or film industry, will be the internet. An author doesn't need a distributor to upload a novel to Amazon.
I feel that large publishers will still have a role to fill. They'll have the marketing muscle to push their product. They'll be able to get physical books onto shelves in the limited space where they are still needed. Besides that, I'm not sure what their purpose will be.
What I'm pretty sure of is that Amazon won't be as dominant in ten years as it is today. There will be a selection of viable options (like apps) in which we'll gain access to our books. Publishers, in most cases, will die off, because their middle-man purpose will be no more. Authors will have control of where and how they sell their books.
We're already seeing this. This is just one of many ways in which the internet has reshaped the world forever. The content producers are still needed. They will be forever needed. It's the content delivery specialists that are becoming dispensable.