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What happens today, though, is that the shelf-life of a hardback novel is very short. It soons drops out of the publisher's catalogue, and if there's no paperback edition then the book's career is over. At that stage the publisher should "revert the rights" to the author -- send a letter confirming that the original contract is now void. A conscientious literary agent will ensure this happens for her (most agents are women) client; an un-agented author should press for such a release himself/herself.
Once the rights have reverted, the book can be sold to another imprint, made into an ebook, or whatever.
There should be hundreds or even thousands of published authors out there with good, valuable, already-published work which is just sitting around doing nothing. By now even most library copies will have fallen to bits.
Such work could and should be made available again. Electronic distribution is the answer. The model the writer chooses for payment, if indeed payment is required, is a personal matter. Writers tend not to write primarily for money: their principal aim is to be read.
I think we're seeing the start of something remarkable here. The ebook-display is a seminal device, as important to literacy and the spread of knowledge as the printing press.
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