As major publishers struggle with the recession, smaller players are jockeying to fill new gaps.

Earlier this week, GalleyCat caught up with Mark Coker, founder of the digital self-publishing platform, Smashwords. The company offers authors an 85 percent cut of royalties and produces digital copies of a book in nine different formats for e-book readers.

Since opening last May, the company has counted 500 users, 90 authors, and about 120 books published on the site. Smashwords recently announced a deal with Stanza, the iPhone digital reader, as well. "E-book sales are growing by fifty to sixty percent. But for every e-book sold, ninety-nine print books are sold," Coker told GalleyCat.

"We are still in the first inning of this game. We have a long ways to go. We as an industry have a lot of obstacles to overcome. There is a tremendous amount of prejudice against self-publishers."

Nevertheless, the publisher felt that market pressures would open up opportunities: "If you look at the traditional publishing model, I think the book supply chain is broken ... That model is not sustainable. Publishers will be forced to publish less books. I think that's the sad reality," Coker told GalleyCat. "We need to provide tools that help authors help themselves."