I really enjoyed this CNN article on the new self-publishing/print-on-demand trend. I think authors have to really question the pros/cons of going with a big mainstream publisher these days. Sure, if you're lucky, you can get a nice advance, but you wind up sacrificing so much control, not only of the content, but of other things like the cover, marketing, and the timing of the release -- all things that are crucially important concerns if you are trying to build a brand as an author and want to maintain consistent contact with your audience.
The other thing is that you have to ask what a mainstream publisher can really do for you (again, aside from fronting some needed $$$) in light of major changes that are occurring within the industry.
1) JOB CUTS: For years, midlist authors have been complaining that they don't get enough attention from the people assigned to their projects at their respective publishing houses. This is not necessarily because the people don't care. It has more to do with them being overworked and forced, by economic necessity, to spend more time and energy on high profile books by celebrity authors. I can imagine that this only going to increase with all the job cuts that have affected most major publishers. What's the point of being with a mainstream publisher if it doesn't have the staff resources to effectively deal with your book?
2) THE DEMISE OF PRINT REVIEWS: There used to be a time when it was important to be with a mainstream publisher, because you couldn't get reviewed in major outlets if you weren't. But now, many major newspapers and magazines have gotten rid of their book review coverage altogether. (And who knows how long the remaining ones will last? For that matter, who even knows which newspapers and magazines will be in business, say, a year from now.) Most book coverage has gone to the web, and book bloggers, in general, seem a lot less snooty about the press a book is on. Also, unlike writers and editors in the mainstream press, book bloggers don't tend to mind receiving inquiries from writers themselves. There is no need to go through a publicist. So, again, what's the point of a mainstream publisher?
3) THE DECLINE OF THE BOOKSTORE: There was also a time when it was important to be with a mainstream publisher in order to get into major bookstores. But now even the biggest book chains are having problems. (In Chicago, where I live, Borders is closing its flagship, downtown Michigan Ave. store.) Plus, the space that these stores give to up-and-coming and midlist authors is very small. The idea of someone browsing through the store and somehow stumbling on your book seems increasingly unlikely. Many authors now rely on reaching their readers through Amazon.com, and according to the CNN article, you can get your print-on-demand book listed on the site for about $300.
So, while I'm not trying to completely knock mainstream publishing -- and personally, I've had relatively good experiences with the companies I've worked with -- I think the publishing game has changed so much that you can no longer simply assume that going with the majors is the best route for your book.