so spare me the politics.
It was "Why is Sony failing?"
The reason that sony is failing is that you can buy (or, in your terms, "rent") more content, more accessories, more apps, more of everything, and do so more conveniently, from competitors products. The device itself is not the failing; it is that the usefulness of the device is diminished by the relative lack of things to do with it, and the lack of ways to do so conveniently.
It matters not at all what you think of the big picture to answer the posed question; it is simply that whatever Amazon offers, Sony offers *less* of it—not in the device hardware, but in everything that surrounds the device hardware, in the ways that the device hardware can be used. Sony's hardware is thus less useful, not for reasons relating to hardware or UI design, but for reasons relating to business relationships, customer-facing opportunity structure, and so on.
The politics of DRM and so on is an important discussion to have in our political life, but the fact that Amazon offers DRMed books has little to do with why Sony is failing (Sony, of course, offered the same—just fewer of them, with fewer ways to get them on the device, and fewer accessories to use with it).
Yes, the community is the product—it is also the product that the community consumes. Yes, publishers and manufacturers skim value off the top of that circular transaction. That is, as you point out, the business model.
And what I am saying is that that is the *dominant* business model right now, and that Sony sucked at it in comparison to Amazon or even to Barnes and Noble.