I was reading the techdirt blog at work today (I was making help files at the same time, which sucks up all my system's resources, so there's nothing I can do except surf and write emails to my sister) and came across a story about a band that is trying to put together an album. Rather than have a contract with a record company and an advance and all that, they are trying to get a minimum number of people to commit to paying up-front (I presume not actually pay yet, though I couldn't find the article just now to. UPDATE: it was this).
Someone should do the same thing with novels. If I could get a thousand people to commit to buying my novel for $5 each, I could distribute it as a PDF with no DRM and be probably better off this time around than if I found a publisher. Well, except that people sneer at people who self-publish, and I'm not so stupid as to think I don't need an editor. Then I'd have made $5K, and sold my novel, and if those people who paid me for it forwarded it to their friends, then it's all word-of-mouth marketing for me. Then I could charge more, or get a greater number of people to buy the next one before I put it out there, and that's how a band in theory would build an audience. Except with music, we accept that you don't need a middleman, whereas in literature if you can't find a middleman, then you must suck.
The other problem of course is that at least the writers I know are generally crap about marketing themselves, and depend on others (publicists, etc) to do that part. We're obsessed with our flaws and our process porn and the dispair being an integral part of the editing process, and we can't talk ourselves up for shit.
Maybe if I took improv classes, these problems would all go away.