I think I'd rather live in a world without books than a world with solutions like the those proposed. Don't bother reading the article, the first part is stuff you already know and stuff that's just plain wrong. (Like a 20% piracy rate translates into a 20% loss).
The meat of the article is in the last three paragraphs. Just read those, and then come back here to rip into the article.
"As of the end of 2011 an estimated 20 percent of all e-books downloaded onto Kindles, Nooks and iPads were pirated. That's a 20 percent pay cut to authors, agents and publishers—a number that will only go up"
Not everyone that download something would have bought it instead if there were no alternatives.
Books don't seem dead to me. If anything, there is a resurgence in books and publishing (regardless of format).
The article seems to be outraged that it may be tougher in the future to become a multi-millionaire author by rehashing shitty story lines. Like music, you may have to learn to get by with quality, not filler.
First: Pricing is set too low; margins get squeezed.
Fundamental flaw: eBooks have lower production costs than print books, so their prices should be lower. The article mention "warehouse space" as a constant cost, but if the purchase of physical books goes down, just print less physical books and reduce the amount of warehouse space you're using, which will reduce costs.
Second: Piracy runs rampant.
Fundamental flaw: The article says that piracy numbers will go up, but it's wrong. Piracy is high when the consumer has no legal alternative to get the media in the way they want it. Right now, eBooks are confined to a device or service, which is dumb. If I own a Kindle and download a bunch of kindle books, I've paid for those books and they're mine. But if I want to switch to the nook, I can't take my library with me. How does that make sense? Piracy is rampant because people have either (a) already bought the physical copy but now want a copy on their e-reader (completely reasonable) or they bought the electronic version for another device and want it on their new device (also reasonable). When the book industry gets together and stops being stupid, and offers the books in the way the consumers want them, you'll see piracy go down -- just as iTunes reduced the use of music piracy.
Third: à la carte sales whittle down revenues.
Fundamental flaw: The argument here is based around the concept that people no longer have to pay for 13 crappy songs they don't even want. I can't even comprehend what type of logic brought the author to think that this model was fair to the consumer -- this was a pure rip-off and consumers got fed up with it, that's why there was a change.
Fourth but not last: the loss of a product's brick-and-mortar distribution outlets reduces consumer consciousness of a product.
Fundamental flaw: What? What?? Because you don't get the e-mails from B&N or Amazon every week talking about their new releases and they're not advertised everywhere on those services and many others?
As for your solutions, wow, is this guy wrong. First he talks about fixed prices -- the cost of something should be what the market can bear, and right now, the cost of what the market can bear has been reduced. People no longer want to pay $25 for a CD or $40 for a book. It doesn't make sense to them. These things are too widely available to still cost that much. You have a much larger supply and either the same demand or a lower one (due to people not wanting to spend money in a down economy).
Publishers colluding to set prices??? Is this guy freaking nuts? That's an easy way to guarantee that every college text book costs $1000 and ENCOURAGE piracy of books. If you charge more than what the consumer is willing to pay, you're going to cause more piracy. If they want any money at all, they need to find a price that more people are willing to pay.
The meat of the article is in the last three paragraphs. Just read those, and then come back here to rip into the article.