This sort of attitude works all right in the music business, since with digital distribution of music online nobody really needs the record companies any more. Many artists are putting their music on the Internet and making their money through live performances and direct sales of CDs or downloads. They're cutting out the middleman. Unfortunately, that model doesn't work so well for authors. The promotional tours that authors do for their books aren't the money generators that concert tours are for bands, and there's no easy way for an author to burn off a few dozen copies of their latest book and sell it out of the back of their van. Sure, genre authors are big hits at conventions, but by and large the fans aren't paying $30-$50 each just to see the authors and go home.
The MediaBistro article cites HarperCollins as being heavily into using the Internet and helping authors connect with their readers, but this is a pure marketing approach. Perhaps a better model of the future is Simon & Schuster''s Baen Books imprint, which has aggressively marketed its authors and their works through the use of free e-books, sample chapters of books online, an online forum where fans and authors interact, and supplemental media provided as an incentive with hardback editions. This has given Baen a healthy boost in sales as readers sample the product online and then go on to buy the books, and also establish personal connections with their favorite authors.
In the long term, I think Google's attempt to digitize the world's libraries is doomed to failure. Authors require more time to produce their novels than musicians do to turn out a song, and therefore want a larger return on their investment. Google seems to want to become the iTunes of the book publishing world, but just as musicians realize that they don't need Apple to sell their music to iPod owners, authors and publishers know that they can sell their books (digital or paper) to readers perfectly well without Google's help. There may be fewer superstar authors from here on out, but there may be a lot more mid-list authors making a kilobuck or two off their writing, and that's a good thing.