Christine, as you say, Samhain has a ready income source through their e-books, but say those 1,000 copies come back via returns. You multiply that times enough authors, and you're in serious trouble because you still have all those printing costs. So on one end, it looks to be the best of both worlds. But on the other end, they have opened themselves up for more risk; the same risk trade publishers have, and I think they're having some real problems.Samhain uses digitial printing, or POD technology.
Why? Because they have a) catalogs, b) distribution, c) marketing. They DO use the POD machine to print and not offset, they don't have the demand of a Scholastic or Scribner, but they get orders and print books in advance. If they get orders for 1,000 books, they print 1,000 books and some extra. The books are reasonably priced and fully returnable. If stores want more, they can get them in days.
Returns can kill a publisher faster than anything. Mundania (trying to drag this back on topic) understands this, and that's why they are POD. They can operate on far less money. Since they can't get shelf space, they aren't beholden to large print runs unless they are a guaranteed sale - like Amazon, for instance. This reduces their risk. It keeps them in business, but it's not good for the authors who are looking for distribution and shelf space. Unfortunately, the Mundania site is so tightened up, it's impossible to discern they are POD, which authors discover after they've signed the contract.
I have no problem with POD provided they are up front about who they are and what they can and can't do for their authors.