You're overlooking the fact that Yellow Pages are a proven and effective means of advertising. Businesses wouldn't spend BILLIONS annually advertising in the Yellow Pages if they didn't work. They don't work for every business, but for many businesses Yellow Pages are practically required. Businesses like pizza delivery, insurance, plumbing, self-storage, healthcare, legal services, etc where most customers are not walk-ins (first contact is made through telephone) the return on investment on Yellow Pages dollars is very good. For some businesses it's not as good and a Yellow Pages presence is more of a service to the customers than advertising. Think Best Buy or other large retail chains where most if not all transactions are done without any sort of advance phone call. Here a small ad is a convenience for the customer to use to find the address of the business, hours of operation or service number.
Are there too many books with overlapping distribution? Yeah, probably. Most often these books only partially overlap. Therefore it is necessary to advertise in two overlapping books in order to advertise to your entire market. These are almost always competing publishers so it is unlikely they will ever cooperate to reduce the number of books printed. There's no way to work that out so that all publishers come out ahead.
Disclaimer: I work in the Yellow Pages industry.