Amazon on the other hand has always been about changing the model. It tends to be a slow burning process that erases small chunks of the model at a time but over time (and Amazon has had time) those chunks add up. It is a direct and fierce competitor of physical bookstores and ideally would probably like to see them all disappear. But it is the physical bookstore that has supported the current model of book publishing and without it, trade publishing at least, will be severely damaged, even if the numbers drop below a certain level.
To dismiss AmazonEncore, and the latest imprint AmazonCrossing which will translate foreign language titles into English and sell them on the same basis as Encore, is to underestimate the change that can be wrought to a model over time by patient and gradual action, such as that engaged in by Amazon.
But it further underestimates the huge value that Amazon has built up in customer and reader feedback. I guess that is natural enough for trade publishers who have never valued that relationship, having always gifted it to others.
Right now, there is nothing to prevent Amazon ramping their publishing schedule up until they are publishing hundreds of books a year either within Encore or by launching new imprints. All the need to do to attract bigger, more high profile authors than those already on board is show solid rewards for their current crop and with JA Konrath happy to talk about how much he makes from just ebooks, I'd expect that part to be just around the corner.
For authors, that may well be great news, it might even be great news for readers. I'd warrant that in the long run, it is somewhat unavoidable. But for publishers, the sad truth is that, that if this continues, Amazon will have eaten their lunch.