Traditional publishing is hugely screwed up, but I'm not sure this particular point is irrational from the publisher's point of view. If they can get the author to promote a book --- and it's increasingly common for them to demand that authors do exactly that --- then promotion doesn't come out of their own budget.

Which raises the question: if the author's doing all the promotion to readers, what do they need the publisher for?

If you're trading in physical books (which were still more than 99% of the business, in 2009[1]), there actually is a sensible answer: most physical book sales are on physical stores, so you can't sell to readers unless you first convince bookstores to sell the books. That, in turn, in the U.S. means basically convincing the buyers for the major chains that they should give you shelf space --- there are as many Borders' as all independents put together, and Barnes and Noble is way bigger than that. And the big publishers have built up personal relationships with buyers for the chains, and expertise in catering to their whims. Which can be a big deal --- see [3] for an example of a book series that's being completely repackaged because the buyers couldn't figure out to do with the first cover.

So, it's not like the chains will take anything the big publishers dish out. But the conversation about what physical books get sold in physical stores is largely a conversation between their sales guys and the chain buyers. And the only way for a self-published author to break into that conversation is to somehow sell a few thousand units through some other channel.

On the other hand, if you're willing to forgo the physical stores as a sales channel, which is starting to matter, well... less than it did in 2009, then it really isn't clear that the publishers have much else to offer you. Their other services (editing and packaging) do have value, but not nearly enough to account for their customary share of the gross.

It may be that publishers' problem in the future is going to be justifying themselves to authors --- but I try to read up on this stuff, and I'm not sure I've seen any of them putting it that way to themselves yet.

A couple of references --- Charlie Stross on ebooks

[1] http://www.antipope.org/charlie/blog-static/2010/05/cmap-9-e...

part of a longer series on the publishing industry from a successful author's point of view, as of a year ago:

[2] http://www.antipope.org/charlie/blog-static/2010/04/common-m...

and the blog post on promotion I footnoted above:

[3] http://www.iantregillis.com/index.cfm?blog=164