As with other similar industries (music, gaming, movies, etc), the publisher provides the content provider with one VERY vital service: marketing. And if you don't think that's a valuable service, go look at the App Store and tell me how many of the top 10 games are made by indie developers not going through a publisher. (http://iphone.ezone.com/?p=984)

Before the internet, when media was physical, you needed a publisher to help you manufacture the book as well as market it. In the internet age, people can produce their own product now. Anyone can make their own ebook and put it on their website for download, but no one is going to download it without substantial marketing efforts. That's why publishers are still needed.

However, I think it's BS that ebooks sometimes cost more than physical books.