Futurismic has a great post about Orbit, a company that is trying to build a market for short story e-books. Charles Stross is hopeful about the economics:

Royalties on ebooks are around 20%; viewing this as a new sales channel, they might go higher (25-30%).

Pricing on short story ebooks … they’d look like complete tools if they priced short stories at the same level as novels, so I’m betting on a price point in the range $1-5, probably $2.50-5 (the $1-2 price spread would be better for sales but is difficult, because the cost of processing the credit card/paypal transactions puts a floor of around $0.5 under each sale).

I think the idea of a whole bunch of professionally written 12,000 word novels for five bucks or (hopefully) less is a great one; I've been promoting it for a while. We could be seeing the re-emergence of the short story as a popular art form.