That's a very good analysis, I think, but it overlooks that an internet attention economy is a better state.
In the field of machine learning, it has already come to pass. All the top publishing venues (the Journal of Machine Learning Research, the conferences NeurIPS, ICLR, ICML, ...) are already free of charge and open access for everyone. There are many problems with reviews in those venues (mostly growing pains from the rapidly increasing number of submissions, and problems stemming from the fact that there is 1 single round of review), and indeed the conferences, JMLR and Twitter are now the "attention economy" of the field.
But it has massive positive externalities, namely, you don't need to pay (or have your university pay) for access to the research anymore. The system works as badly (or as well) as it would with the publishers, but without giving them a cut.
As for why people keep paying, the answer is industry lobbyists. Whenever there is a movement to require open access of research, industry lobbyists shut it down. Although in many fields like physics and mathematics, people are bypassing journals (closed or open) in favor of preprints.
If that is all publishers are now, then they are no longer what they once promised to be. Initially many respected journals were published by non-profit learned societies. (In some fields, like certain branches of linguistics, they still are.) For-profit publishers originally told those learned societies that if they handed their journals over to the corporation, the corporation could perform more high-quality editing, proofreading, and typesetting and do it more economically.
Fast forward a few decades, and the for-profit corporations are no longer providing those things. Proofreading and copyediting is now all on the unpaid editorial team (or even on the individual authors). Typesetting is often on the unpaid editorial team, and the publisher wants the unpaid editorial team to simply provide a camera-ready PDF.
So, yes, in the end the for-profit publisher is just providing printing and distribution (which even the non-profit learned societies managed to do just fine) and a vague “reputation and attention”. Sounds like a raw deal.
USENIX is open access I believe, which is great, and I even think some of ACM's SIGs - SIGCOMM for example - make their publications, such as CCR and conference proceedings, available immediately via open access. (I think they are no longer published in print format, so that may save money.)
Hopefully many other SIGs (as well as IEEE societies) will follow suit, and hopefully government open access requirements will improve the situation as well. It doesn't make sense for taxpayer-funded research publications to be locked behind a third-party paywall.
In my view, it would be ideal if in an open-access world some editors and/or organizations endorsed and vouched for particular papers, and academics competed intensely for those endorsements, if those endorsements were career-making or career-killing, and those editors/organizations made a living from charging scientists for their consideration and review.
That's not the bad part. If the output is available to everyone to read, I don't see the tragedy.
Because by copyright law they hold the keys to the kingdom (of scientific literature)
In a world where scientists careers didn't depend on publications, you'd be right.
The problem with scientific publications is that there has not been a Spotify, Steam or Netflix disrupting company that provides the same service in a better way.
EDIT: Thinking more about it, I think such a service would be fair to say have a raw collection of journal articles (it could even be based on Arxiv) and charge for the "curation" layer on top of it. Now the only question is how to kickstart that curation layer in a matter that is trusted by scientists. Maybe it could be something more distributed where also curators (reviewers) and writers get some profit.
The authors can choose to publish wherever they want - but there is value in publishing in Science, Nature. And their academic overlords acknowledge it too. Who gives a shit if a professor publishes a dozen papers in some obscure journal no one reads?
If you want to solve this issue stop violating the journals copyrights and start attacking the academic leaders who demand professors publish in them.
In the most basic sense what a publisher is, is an institution that sells reputation and attention. Being on the cover of reputable journals for a scientist is like being on the cover of Vogue for a fashionista.
When people in India rip off scientific articles using sci-hub they don't compete with the core business model of publishers, they just want knowledge. But journals aren't really in the business of selling knowledge in the first place. Journals survive sci-hub for the same reason Harvard survives free lectures of YouTube and Hollywood survived ripped blue-rays on street-markets. Because these institutions are not in the business of selling textbooks or movies, they sell celebrities and status.
So assuming for a second that the publishing hegemon is destroyed, what will happen next? Will all the up and coming star scientists happily publish on undifferentiated internet platforms where all that matters is science? Some maybe, but my more cynical guess is that a thriving internet status economy would soon emerge that would inhabit the exact same niche that publishers have now. Because the exclusivity of publishers is not the tool they wield against the public or scientists, it's the very commodity they are selling.