Some new company acting as publisher/middleman isn't solving the problem, it's replacing the old answer.

Of course. I was thinking of a startup that helps authors self-publish, as (I presume- I've never done it) some blogging software is dead-simple for non-tech bloggers to use.

By getting rid of the middleman, the authors will be taking on the new challenge of marketing their books- by no means an easy task, especially if you are unknown and not tech-savvy.

I've considered it, but automating all formatting is still troublesome and dealing with documents written in Word, of all things, is already a mess.

We (lulu.com) already do this, including printing from Word docs. And, putting a print book or ebook up for sale is free (including going to the iBookstore and the Nook store).

Note that while I work at Lulu, I don't officially speak for them.

There's enough ideological fervor about reading that someone is likely to provide this service for free.