There has been a great deal of dissent in the ranks on this topic, with everyone from first time authors to heavy hitters like Stephen King, James Cameron, and others of their ilk weighing-in on the idea of price-fixing for e-books, and Amazon's penchant for playing fast and loose with their authors' profits by using underhanded tactics of negotiation and promotion.
Some may see the authors' views and concerns as unquestionably justified, while others may disagree entirely.
Would you choose to publish your book on a smaller independent publisher vs. Amazon? Why or why not?
Great question.
Before the Kindle and other e-readers, your options for publishing your book were limited to hard copies printed through a vanity press, usually a few dozen copies to give away to friends and family because you had zero opportunity to have your book on the shelf of the brick and mortar stores like Barnes and Noble and Borders, until the launch of the Print on Demand publishers.
Around 1997, the launch of Print on Demand publishers tied in with the open marketing aspects of the Internet made online publishing viable. Then came the juggernaut Amazon...
Amazon, and other companies since, have streamlined the process of independent publishing. Now, I think it's just a matter of what benefits any specific publisher offers.
Amazon has an incredible reach and through their review system, the opportunity to get your book in front an enormous number of potential readers who have already purchased on, or are preparing to purchase from their site. ( See: Other's who bought this book also bought... ). But they are also embroiled in that nasty bit of negative publicity about price fixing on titles.
It is getting very competitive in the self-publishing world between all of these POD and online ebook publishers vying for your dollars ( for publishing your work ) and the consumer dollars that are buying your work.
I would suggest that the difference between the smaller independent publisher vs Amazon comes down to the author's goals and how they feel about the monster names in the self-publishing business - Smashwords, CreateSpace, Lulu, AuthorHouse, Xlibris, and iUniverse.
It's still possible to find small independent publishers that actually work the traditionaly way - they buy your work, and take on the expenses of publishing on the expectation of turning a profit of some kind on sales. There are still a thriving number of these small publishers, and if the author's goal is to be able to say they have legitimately been "published" - an editor read and bought your work - vs "printed" - you paid an epublishing company to list, print and distribute your book - that's just another factor in the equation.
Even with a small publisher, your work can still be sold through Amazon and other online distributors.
Ultimately I think you need to list your goals, review what each alternative offers, and choose the one that you will feel best about in a year or two when you look back on your decision - and the work you published.