Richard, in some ways I agree with you and in some ways I don't
I do think authorship is going to *change* in the digital age. But I think most media will. Let me give you an example, people in television paid a lot of money for rights to air the Olympics and how did I watch the opening ceremonies? Not on TV! I got home an hour late from a party, turned on my computer and found a streaming feed on-line---and someone had helpfully put in markers at all the key spots. I flipped from marker to marker and watched all the good parts, in about half an hour.
Regarding your point about free content, I think one has to consider that there are simply a lot of entertainment options these days. I don't even have cable, yet I can watch three of the four shows I enjoy just with the two channels I get over the air. The other, I can watch for free off the website of the network who airs it. I also have free access to a community centre right across the street complete with skating rink and running track, I am thinking of getting the wii so I will have another 'active' option in the evenings, the internet can fill a lot of time---and then, book-wise, there are freebies galore at Project Gutenberg and here, there are hundreds of author promo books or free samples I have downloaded and not gotten to yet, there are books I have *bought* and not gotten to yet...
I went through a phase of micropay hoarding at Fictionwise and spent it on tons of little cheap books I now regret having to slog through to clear out my TBR pile, and I have made a resolution this year to only read quality books. If I start it and it doesn't grab me, I am shelving it and moving on. It's not that people don't like reading or don't like books. It's just that there is so much competing for their time and attention! If you think this is unique to the digital age, just check out the TBR pile at my parents paperbook house---she buys something, reads it, puts it on his bedside table in case he wants to read it next. He buys something, reads it, puts it on her table etc. Meanwhile, he's already bought his next one. And the cycle repeats. They each have a stack an arms-length high!
I think authors are just going to have to accept that pure *writing* is not going to be the only part of the job if they want to make money at it. Plenty of authors have said 'it's not fair to expect authors to take time away from writing to do PR work' or 'not every author is a self-promoter and it doesn't mean they are a bad writer.' But that is not going to be good enough anymore. If people want 'being an author' to be their *career* and support them for bread and butter, they are going to have to be shameless self-promoters to get themselves noticed and make their book stand out from the crowd. Otherwise, it'll be a hobby, I'm afraid.
In an ideal world, maybe authors would be able to 'just' write. But in an ideal world, daycare workers would make more than minimum wage, and ticket-takers at the subway station would not be along the highest-paid civil servants in my city...