As Karp points out, the first strategy has generally proven popular, but I'm guessing that y'all are getting pulled in plenty of other directions, too. But you tell me—and feel free to elaborate in the comments section.
(And, by all means, feel free to make the argument that Karp's "quality rather than quantity" approach is already being successfully deployed by smaller independent presses in service of creating and distributing "the one product that only they can deliver better than anyone else," excellent books that speak with perfect clarity to an audience ready—eager, even—to read them. If you do, though, help us figure out: Is that solution scalable to the level of the big houses? If so, how radical a reorg will it require?)