Amazon (AMZN) had a rough go of it last week. It was revealed that the growing force in ebooks was able to delete titles from Kindle owners' accounts when a publisher uploaded editions of George Orwell's books that it didn't have the rights to sell. Ironic, yes, but scarier when you realize there's a patchwork of rights and territories that is obliterated by digital distribution if Amazon can't master it.

That came on top of numerous reports of publishers freaking out over ebook pricing. They're so pissed they're willing to forgo sales—and profits—to teach Amazon a lesson by withholding Kindle editions for weeks or months. (This is something we warned you of before.)

When it comes to ebooks, no one seems to be able to keep a level head. Publishers are in self-induced swivet; Amazon is being a shortsighted bully, and the press is entering the silly season when just about anything qualifies as news. But to understand why the scheduling of a few ebooks creates so much worry, it is worth understanding the current context of book publishing.

We'll know more in a few weeks when the Q2 earnings come through for the publishers and booksellers. But even if the quarter shows some strength—and that's magical thinking—it won't offset the beating all but one of the major firms took at the beginning of the year. Large publishing houses are like pyramids: Best-sellers are the pointy top and backlist is the burly base. Together they support the great mass of unmemorable titles in between.

Except that turns out to be the old publishing business. The recession and deleveraging and the death of retail have created a new business that looks more like a diamond with best-sellers on top and a smaller backlist on the bottom, you know, just the  perennials like 1984 and Animal Farm. (I've tried to outline some of those forces here and here.)

In between is a large and unwieldy cost structure—warehouses and sales forces and marketing staffs that are overbuilt for the streamlined retail environment of Amazon, Costco (COST), and fewer and fewer superstores; large staffs in expensive Midtown Manhattan offices; as well as a mass of books bought for wishful-thinking advances that are still clogging the publishing pipeline—that can't be brought quickly back into balance.