Mac Slocum asks authors, "Are Publishers still useful?" (http://radar.oreilly.com/2011/03/future-of-publishers.html)
As he hints in that piece, the question is muddled by a sense of publisher self-worth. The question for authors: "Is publishing useful to me today?" Publishing, not Publishers. Usually the answer will be yes. Why that's tricky for existing publishers is that authors hire publishing services. It's tricky because the economics of that decision are suddenly changing.
Wait, authors hire publishers? That doesn't sound right. Publishers are in charge, right?
Well, not really. Publishers like taking that posture, because the supply/demand situation from an author's perspective has meant that they're willing to concede a lot in return for getting their book published. There's traditionally been large supply and low demand for authoring compared with low supply and high demand for publishing. It's been good for business to perpetuate that situation, and altogether publishing is really hard, so skilled people in the industry haven't had good reason to mess with the tradition.
Outside disintermediators are the ones changing things. Tech companies who know how to mechanize activities that were traditionally crafted by thoughful people. Activities like sales, logistics and printing.
Those changes are undermining the economics of publishing houses that had until recently found the correct set and scale of publishing services that allowed them to be viable businesses. Viable businesses employing thoughtful people.
So what should Publishers do? Long term, who knows. But short term we can see where it's headed, just in Mac Slocum's article and the comments. The value of all the commodity services is going toward zero, while the value of skilled services that cannot be automated and that are still useful is going up. Anyone who wants to run an integrated Publishing House needs to figure out a new combination of viable scale and services, and automate or outsource the commodities. Anyone who wants to go independent needs to figure out how their vocation fits into a publishing industry free agency network.
Authoring, editing, instigating, commissioning, market research, publicity, design, co-authoring, coaching, curating are all valuable. Printing, distribution, sales, accounting, capital, copywriting are becoming commodities or automated.
It's becoming obvious that the creator of the work decides who and how those things are done. For books, authors are the creators; for films it's directors or producers; for software it's ...changing but probably programmers.
The question for publishing houses like O'Reilly is how much they want to be the author of their creations, and how much they want to be a preferred supplier to authors. I suspect O'Reilly's secret is that they've always known that and will continue to be successful because they're ambivalent about their choice.