The power has shifted. There is no scarcity of products, and therefore they have no 'value'. One ebook can be copied enough times for everybody in the world to have a copy with negligible cost - a game changer.
We need to separate the morality and emotional issues from the facts. Were there similar concerns when Gutenberg invented the printing press? (and if you want to read an awesom novella about how it happened, read Mister B Gone by Clive Barker, but read a paper copy).
Authors and publishers need to work out a way to make money from their products in the digital age, but it will not compare to the way they make money now, no matter how hard they try. This may include the death of the novel in its current form.
Some great ideas have already been mentioned, and I'm sure authors will use their creativity to work out how to get our money
For example:
value-added items - products made of atoms as Moejoe puts it.
releasing books in small chunks - don't release part 2 until part 1 has made $X, release self-contained short stories for $1 (I think 'microtransactions' are the way of the future for e-commerce)
work on donations - the honour system
total free-for-all with ISPs charging for digital content per MB and transferring % to artists organisations who distribute it to artists
subscription models - pay $20 a year and get a guaranteed number of books/blog updates/emails from your favourite author plus a signed t-shirt or special fan club gift
But as for charging $20 for a digital copy of a book - forget about it. It may not be what authors or publishers want to hear, but people are not going to pay for what they can get for free with less DRM restrictions.
And it may mean that writers make a lot less money. It may lead to lower quality overall (as writers will need to produce more quantity and publishers can't afford copy editing, etc.).
The industry is going to change, but that change will be dictated by
technological possibilities and the desires of
consumers -
not by authors and publishers.