I think the other side of the DRM elephant is piracy. Books are so small compared to movies, a few hundred meg can provide years of reading material.
It can be hard to find a pirate copy of a single book, but it's fairly easy to find a huge package of hundreds of fantasy or science fiction books.
I think there are some interesting opportunities for startups to explore new publishing models. I think authors should be looking at what is happening with free to play games or crowdsourcing.
It might be hard to convince investors there is serious money in fiction, but people like to be entertained and I think there are ways you can get people excited about, and spending money on, written stories.
Actually, if anybody wants to toss ideas around I'd love to chat some more.