Let these words be carved in stone:

a multi-niche publisher has a big advantage over a general publisher, just as it does over smaller niche players. But the ground for the general publishers is about to shift in ways that will be even more challenging.Because “book publishing” in an increasingly vertical world is less and less about content sales in the unit of “books” (although that will be the lion’s share of revenue for a long time) and more and more about sales bigger than the book (databases that stretch across many books and other things too) or smaller than the book (chapters or fragments that naturally stand alone or which address a particular content need.) The iPhone app as a unit of delivery is accelerating the latter trend. The value of a database across titles has long been demonstrated by O’Reilly’s “Safari” offering, which generates more revenue for them than all but one trade account.

As the percentage of a publisher’s revenue that is generated by fragments and aggregations rises, so does the value of being vertical and, especially, so does the value of a direct relationship with the end users. The fragments piece is especially important, especially challenging, and requires new ways of thinking (and perhaps new contracts.)

I’m more convinced every day that passes that the real revenue for publishers will be in everything that surrounds the book more than in book sales as-we-know-them. Not only fragmentation and aggregation promise new landscapes that may be exploited in creative ways, but for example I may think to communities built around editorial content, user-generated content and books – maybe a selection of a publisher’s books that focus on the same topic – given away for free or almost, where the revenues are not generated (necessarily) by sales, but in other ways. If a publisher (if any firm, in fact) can aggregate a tight community of people bound by similar interests, plenty of ways to capitalise on it will present – and advertising is just one of them.

But for all this experimentation, as Shatzkin says, a new thinking and new contracts will have to come up.
And contracts will be particularly difficult to change, because right now protection seems to be what everyone is searching for, and every right is given with great caution, keeping extreme attention in preventing ways of exploiting content different than those explicitly granted.
In fact, I cannot really believe this can go on for long, as in the extremely fluid space of the net there is more space for creativity than you can think of, so contracts will have to become a bit looser – or, better, wider-encompassing.
In a new model, content may just be something to gather people round, and not only the final product. It may not only be an end, but a mean.

Anyway, this is sci-fi, for now.
For now publishers are planning to sell the same book you’ll get in the bookshop (well, probably with a far worse layout) at 12 bucks. Good luck with it.