What's an eBook? It is a book that is read on a reader. Major book store chains like Amazon and Barns and Noble sell their own proprietary readers. Barns & Noble sells the Nook; Amazon the kindle. Also, the Apple iPad can download books. You read the book on the reader, no paper is involved. Hence the name electronic-book.
Advantages
Ebooks do not require you to use an agent, or a publishing house. This cuts both ways. There is an approval process of course, you can't publish just anything, but there are fewer people between you and a successfully published product.
So, what about an editor and cover design? You are likely well advised to get these people on board. Your product will be stronger and more saleable. The eBook is sold to the buyer who downloads the book onto his or her reader. Once there is is read like any other book.
As to the money? Your eBook seller makes a deposit to your account.
Disadvantages
There are not a lot of drawbacks here. As you do not need to deal with agents and publishers you can get your ebook up and making money in a relatively short time. As to the retail cost, you determine it and pay a commission to the seller. Your money is deposited into your account and you're done.
As to your cover design, you will need to provide it. Whether you create it yourself or hire a graphic artist is up to you. Also, as far as publicity, media releases, social networking and other PR, that's all up to you as well.
For more on this see Amazon Author Central, and ePublsihing Resource Center.
Digital Rights Management
In the future, look for Digital Rights Management (DRM) cracking and the exchanging of books in a manner to what the music industry faced in the 1990s. SeeCopyfight at Corante.
On Monday we finish our series on publishing with Portable Document Format (PDF) publishing, using PayPal to handle your money, and a Web site, or blog, for an online store. Your customers download the book, pay and on on their way.
This is new, and novel (no pun intended). There is no reason why you can't be your own publishing house using this technology. In face, if you have a project ready to go, it can be online and making money by the end of the week. So, perhaps it time to stop thinking like a writer, and start thinking like a publisher. A publisher who publishes your own content.