There was a truly excellent blog post by Stacia Kane awhile ago in which she details why agents turning publisher, and staying agents, is a bad idea. http://stacia-kane.livejournal.com/142318.html#cutid1 And please- read the comments- Scott Waxman comments on the post and clarifies the working relationship and division between the Waxman Agency and Diversion Books.
And check out this link about Diversion Books :)http://www.theresameyers.com/blog/index.php/2010/04/28/introducing-diversion-books-an-exclusive-interview-with-scott-waxman/
This is entirely the post of a novice you understand but I've been thinking about this issue awhile now and I'd like to weigh in with an opinion in opposite of the esteemed Stacia Kane.
While I completely understand the potential horror stories of an agent who opens up an e-publisher which I think we can all well imagine, it doesn't seem like all the fears inherent in it are valid. Authors get ripped off all the time by publishers with questionable practices so when a literary agent of such standing opens a publishing house it has as much chance of succeeding and turning into a legit house as anything else.
BUT, the main point I'd like to get to is this: Agents to make money have to sell books. They represent lots of authors whose work they have the highest intention to sell. But what happens when you have a great manuscript that you love and want to see published and none of the major publishing houses will take it? What happens when your mid-list author is cut off and no one picks up their series? There must be an immense amount of frustration on the part of agents who have a good book in hand and have no where to place it. Book agents got in to publishing because they love books and authors and I imagine they face some disappointment when a book is rejected, and not just from the lost income they are facing.
Violation of ethics aside if I had an agent who had exhausted every avenue for my book and came to me and said "I'm starting an e-book publishing house would you like in?" I would unequivocally say yes. Why? Because I want my work to be read. I want more legitimacy than self publishing affords (and I want an agent too!). Because almost any publication is better than no publication at all.
The advice about being careful; what publisher you sign up with or what agent represents you, holds no matter what format the book is being published in and o matter the background of the publisher. Scams abound. Do the research and fist and foremost: FINISH THAT BOOK! That's what I keep telling myself!
Tea Times Three is up to 124 handwritten pages!! 50 or so more and I'll be at about 30,000 words!