It seems like a million years ago that Mary W. Walters wrote her "Talent Killers" post for The Militant Writer. Two years and 420 comments later - she's still getting hits and comments. I know because I get the RSS feed.
I'm absolutely positive that she didn't realize that we were on the cusp of the e-book revolution. Naturally she (and thousands of writers like her) were frustrated, in stead of a clear path to the Big Six of publishing - there was a locked gate. No one had a clue at the time but the publishing industry 'gate-keeping' system was about to be blown out of the water.
Look where we are today. Times have changed to the point where a well-known mid-list writer with a sweet deal on the table will look at 25% of e-book sales as a deal breaker. Instead of leaping on the deal, the writer said to his agent 'Are you kidding? I can publish this myself and do better.'
Exit writer, door closed.
Publisher is out 75% of potential sales and agent out 20% of writer's cut in commission.
There are still authors who will go to any lengths to get rejected by an agent. There are still agents who will MAKE writers jump through hoops and go to all kinds of contortions to get rejected. Occasionally there will be hook-ups, contracts and even sales.
However, most of the writers I know have decided they are better off with DIY publishing.
I don't know if the rise of e-pulp fiction has impacted the bottom line of agents or publishers. I don't know if the slush pile has been affected - there may be no difference. I'm not even sure that it matters in the long run - except to the writers who have turned rejection into cash.
Readers seem to be happy - they have access to cheap books in hard times. E-readers are a great investment. I love mine.
I'm reading more than ever, cheap books, free books - first run books that I could never afford in hard-cover. Books by friends in the UK and Australia that I never would have seen otherwise.
The fact that I got a couple of bucks from both Amazon and Barnes & Noble didn't hurt either.
PS - this is a link to the Smashwords blog. Mark is all fired up about the 'Publishing Revolution.' I think you will enjoy it.