I am curious to see what will happen to the major publishers in the next 5 years. I'm not saying that sales of physical books will plummet to their death (I don't see this ever happening), but perhaps the publishers will be forced to offer the authors a much better deal than the current 30%.
One thing that might happen is that the volume of books being printed will decrease dramatically. Maybe they'll implement a JIT inventory strategy.
[edit: Although such an inventory system would only be plausible online. Print on-demand.]
That's already common for small press (usually via Ingram's LightningSource[1]). As for brick-and-mortar stores, there are already a few that are printing books on demand in store, with an Espresso Book Machine[2]; there'll probably be more now that they are available through Xerox.
(My local bookshop, the Harvard Book Store, has had an EBM for a few months, proudly placed so you can see it in the windows. They're doing a pretty steady business --- mostly self-published stuff, but there's also a steady run of academics ordering obscure out-of-copyright stuff through Google Books.)
Isn't Radiohead doing something innovative with there next album (besides the music)? I've heard that they will release it almost exclusively on iTunes/online and then charge north of $50 for the album but the cover art will include original works. I think the print world will probably go the same way (i.e. the Kindle will capture the low end and print will be left for the high end). Only time will tell.
Actually, while I can't remember the name, there are machines that have been built where you could basically tell it "I want book x" and it prints you a copy and you pay for it right there, in a reasonable amount of time, if it's in the machine's system.
I remember reading about ten years ago that authors were unhappy about print-on-demand systems because quite often, their contracts included rights reverting to the author a number of years after the last printing date. With POD, that can just keep dragging on as people snatch up a copy here and there.
One thing that might happen is that the volume of books being printed will decrease dramatically. Maybe they'll implement a JIT inventory strategy.
[edit: Although such an inventory system would only be plausible online. Print on-demand.]