How the Publishing Industry works (or… you know… doesn’t)

Kate’s been posting some interesting stuff about the way the publishing industry is, and how it’s possibly changing in the future. Today’s post is a chunk of Google Talk conversation that she and I had on the subject, about which I am more than a little opinionated — said opinions grown partly from my dealings with the industry, but mostly from simply watching what Kate and her peers have to go through simply to keep the whole bloody, broken mess working.
The post is here, and links to yesterday’s post as well. By all means, check it out, post your thoughts, and tell me if I’m a Big Stupidhead.