Some fantastic points here, and I'd like to make a little addition.
Amazon's model for self publishing works very well, for them. I believe Seth Godin mentioned a statistic like half the earnings that Amazon gets from the books they list aren't even from the top 5000 authors on the platform.
They make their money from the long tail of authors who might be selling 1-2 copies a month. For them, it's an army of small-time self publishers that make them millions and more in aggregate. But for the authors, it's not sustainable at all, unfortunately.