Wall Street Journal:
Priced much lower than hardcovers, many e-books generate less income for publishers. And big retailers are buying fewer titles. As a result, the publishers who nurtured generations of America's top literary-fiction writers are approving fewer book deals and signing fewer new writers. Most of those getting published are receiving smaller advances.
E-books have been good to me (see PainScience.com, which I make a decent living from). But, then again, I actively avoided publishers because I knew working with them would probably suck.