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I know next to nothing about publishing but more than I did before ploughing my way through this thread start to finish.
In terms of business models it seems to me that a marketing approach should be at the core of the model. In other words marketing not sales. Determine what the market wants and find a model to supply that rather than designing a product and then trying to sell it to the market. Basic business stuff really but it works a lot of the time and it is being ignored as far as I can tell.
You can come up with the most fantastic model that pleases publishers and authors and retailers but so what if no one spends any money. The product needs to be clearly defined in terms of what it is selling and what the Unique Selling Points are (USP). It is not a book, it is information and entertainment and there are clear USPs to selling this in an electronic form that could be communicated much more effectively than is currently the case.
Design the product and that will define the publishing model. DRM and all the rest of it is not the hurdle. I think the hurdles are the needlessly complicated world of formats, conversions, device functionalities and the rest of it that make it easier to simply pick up a book.
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