Of course in this case Amazon is in the middle, right? Suppose publishers demand to be paid by usage. Amazon can still charge their customers a flat fee--it just moves the risk of mis-setting the flat fee onto Amazon rather than the publishers.

Also, consider the incentives that a flat fee system sets up for publishers and writers: if you get paid per title rather than per reader, you're motivated to flood the market with books not to try to write a few really good books that lots of folks want to read.