Avoid Digital Publishing Mistakes by Thinking of it as Investing"fight" or "coming civil war" between DIY (or VIP or whatever) writers and the establishment (agents, publishers, all of the above). I'm not saying they're wrong - but it's far simpler than all that.
As Kris Rusch eloquently pointed out, traditional paper publishing worked on the "produce model". Books stayed on the shelves as long as it was "fresh" (or explicitly in demand), and then it became quite hard to find them afterward. 1
This explicitly means that authors had to create new works (save for the rare exception) in order to keep making a living.
Digital publishing isn't like that. Once a book is available for sale, it stays on sale as long as the author (or publisher) wants to have it there. No print runs, no warehouses, no "out of print". 2 Books no longer have to "go stale."
This change requires authors to look at their works as investments instead of as a product. This single change in viewpoint will help you decide what (if any) services you need, whether or not it's a good deal, and generally get by.
For example: I sock some money into a 401k from my day job. There's a company that handles investing it - I just put money in, and see quarterly reports out. They take a portion of the money in return for that expertise. Presumably, they want to make me money, because the better they do for me, the better they do for themselves. I could invest the money myself and not pay them any fees. However, in my particular situation, it wouldn't be worth it.
This is roughly akin to letting Amazon take their cut for the books I have at Amazon. Not only is the service valuable, but the more they promote me, the more money they make.
So far, easy. But here's where the mindset really makes it easy to avoid being "taken". I'll use three of the biggest problem areas in digital publishing to make my point.
It might be worthwhile to pay a tax preparer (or a program) to do my taxes. The time saved is useful, and it's $50 - $100 dollars. I do this. My mother doesn't - she knows how to do taxes well. Likewise, it might be worthwhile to pay someone to convert an eBook. My mother would have to (or spend the time to learn how). I wouldn't - it's something I do professionally.
I wouldn't pay someone a percentage of my yearly income AHEAD OF TIME to do my taxes. Neither should my mother pay someone a percentage of earnings to convert an eBook.
I would be very, very nervous if my 401k manager was buying stock in the company he works for. Likewise, you should be very, very nervous about an agent (or retailer, like Amazon) setting themselves up as a publisher.
I don't expect my 401k to suddenly turn into gold. Sometimes they might - if investments happen just right. But it's not worth betting on. Same with an eBook (or any book). Slow, steady returns for each investment. Keep putting more value (in money or books) into your investment, and see it slowly increase in value.
What traditional publishing (hell, anyone who gives an advance) has done was the equivalent of saying "we'll give you a lump sum payout for you signing your investment over to us."3 Sometimes that works in the author's benefit (every advance that doesn't "earn out"), sometimes in the publisher's benefit when it's a bestseller. DIY/VIP publishing is like investing your money yourself (or putting it under the mattress - and remember the last two bubbles before you laugh at that).
Some people would be more comfortable - or better served - by taking the lump sum payment. Others would not.
And that's what all this boils down to - being aware of the tradeoffs you're making. Perhaps someone would make more investing in a Roth IRA than a 401k - but we wouldn't talk about the "civil war" between Roth IRA advocates and 401k advocates. Maybe one person is able (or willing) to invest directly in the stock market, but another doesn't. As long as the parties involved know what they're doing and why, it's not a big deal.
To help guide you in your decisions about when, how, and why to digitally publish, think of it as an investment. There are pitfalls. There are scams. And there are lots of legitimate positions for people to take that are all successful.
1 There's actually good reasons for that model; if you're interested, she goes into detail about it on her blog.
2 That transition causes its own problems with contracts, by the way.
3 Well, sort of. You don't sign over everything with a traditional publisher, but this gets you the idea.