Ideas and the words to deliver them should be crafted to their natural length, not to an artificial marketing length that justifies a particular price or a certain format.
— Russ Grandinetti, Vice President for Kindle Content, Amazon
First of all, bravo, Amazon. Second of all, IT'S ABOUT TIME, I TOTALLY HAD THIS IDEA ALREADY. Like, over a year ago. It's a good thing we have the Internet these days for keeping track of things like this.
I believe the sale of e-chapbooks, e-novellas, and even (gasp!) e-short stories via Amazon will help revitalize two flagging genres of American writing: poetry and literary fiction. Don't want to take a chance on a début poetry collection? Try the shorter, cheaper chapbook. Not sure you want to buy that up-and-coming author's novel? Buy a short story or two. Only have a two-hour train ride and don't want to start a whole new book? Try an essay or a novella! Don't even get me started on the potential literary magazine renaissance.
The literary world is changing, bros and she-bros, and it's doing so very quickly. Smaller publishers have more opportunities now than ever before to showcase their (read: your) work electronically, so if you're not signed with one of the Big Six, don't despair—your publisher may be much nimbler and more savvy than a larger, more traditional house, and though you might not become the next J.K. Rowling, you certainly stand to gain a lot by having your work available to an ever-growing and (omni)voracious audience.
Again, however, I feel I should caution you: this does not mean an Internet free-for-all, and this does not mean that self-publishing is the way to go. I'm not saying you're stupid or impulsive, mes auteurs (far from it!), but simply because one can flood the Internet with work that hasn't been edited, marketed, or even reviewed by professionals—who, let's face it, sort of know what they're doing—doesn't mean one should.