It all started with Lulu, being an Internet initiative for publishing books for simple authors, people like you and I, who probably aspire to have professionally printed 'books' of their own. For a few years now I have been printing picture portfolios of my shots via Apple's book printing service. Although quite expensive, it seemed to me that it had a lot better book designs than anything I saw before.
This was until I found out about Blurb via Flickr. It's worth having a look at their business model. In a few words, you can publish a professionally designed and printed book of your own with combinations of text and pictures to your heart's desire. Not only that, but if you reckoned that your book might become a bestseller if it could sell, you can declare it public on Blurb Bookstore and Blurb will take care of making this known to the world. So, if I found your book in their Store and have a look at it (via a clever preview facility they offer) and I'd like to buy it, then I could just order it directly, without you even knowing it. Apparently Lulu goes even further... making it saleable via Amazon and others like them. By all means, if you decided to make an extra buck each time your books sell, then you'll see the selling activity having a positive effect on your bank account. Dan Brown beware!
The day-dreaming aside, I believe that the real deal is not just about selling anyone's books though... the deal is that those Blurb folks (or Lulu's for that matter) seem to me to be very smart cookies for having created a complete monetizing model and running it very efficiently (much faster turnaround than Apple ever been). If you thought about it for a sec, they actually address a rather scarce need of a small percentage of consumers worldwide who, considered within a relatively small geography wouldn't be enough to sustain a financially viable business model; but, taken globally via the net (and being capable to logistically service the entire planet), Blurb will manage to get a winner. Their model is again one of these splendid ideas about monetizing the internet via offering a service to all average Joe's that was unthinkable before.
Finally, if you happen to have a blog like this one here, you can embed a badge (like the one shown on the top of the left column) and can link potential buyers of your masterpieces to the Blurb site for more detail and previewing of your books. These Blurb buggers seem to have figured out solutions about practically everything related to this opportunity!
What are their differences with Lulu, you might ask. I haven't explored them both sufficiently in depth to be able to make well informed statements; I believe though that Lulu offers a possibility to professional graphic designers to even create entire books or publications in tools like InDesign or Quark, (or whatever) and then upload a saved PDF file for printing. In fact, you could publish anything you like this way. Blurb has a client app free of charge that you can download to a Mac or PC and, like Apple, you can create your book based on their rich templates. It is thus much more likely that professional designers would rather use Lulu for quick mockups where amateurs like you and I might turn to Blurb and Apple instead...
Having monitored Blurb's number of new books published, I'd conclude that these guys have kinda struck gold. Unfortunately for them, before you realize, they'll be dozens of others like them stealing each other's ideas and competing (beating) the hell out of themselves with add-ons and new service offerings. As for us, adamant book lovers, will eventually be the ultimate winners emerging out of this dogfight. Quality going up and prices going down. True story.