I think one thing people are missing is that books aren't widgets. The #1 thing that makes a good book is a good writer. The supply of GOOD writers is limited. ( The supply of crap writers seems to be near infinite, as any trawl of Smashwords makes clear).
Good writers don't HAVE to write novels. They can go into journalism, write theater plays, write screen plays, games-hell, they can write advertising copy.
If we don't make it worth their while to write novels, i.e. pay them and protect their IP rights, you may find GOOD writers drifting on to other fields .
I sure as hell don't want to end up with a world of cheap, crap novels and superbly written commercial jingles, but I fear that we may be headed there...
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