Good analysis of the underlying factors driving the decline of literary fiction, even though I remain unconvinced at some portions of the thesis.
They propose that. on one hand, a narrowing supply of literary fiction came about because of atrophying economics—the internet played a major factor in this, of course, but they deny that this can explain the decline in its entirety—jobs became scarcer, both in academia, and in the private sector, drying up the talent pool, and, on the other hand, the demand for literary fiction was affected, not because readers tastes have greatly shifted—their strongest argument in favor of preference stability is that the “great works” of the past still continue to sell and be appreciated—but because the audience has shifted from readers to literary critics.
Looking at publication and readership as a joint system, this dynamic seems quite plausible. As it becomes harder to earn a living on writing alone, compensation moves towards status, since pay is not available. In turn, a narrowing pool of writers becomes focused more and more on critical appeal. The move towards critical appeal can harm readability and mass appeal: you focus on novelty over familiarity, on impressive gadgetry over subtle mastery, or simply on rejecting mass appeal to make a statement. In turn, this shift in production causes even less consumption by the masses, which requires authors to respond with an even greater shift towards the critic, and so on.
Looking at this from a Systems Thinking perspective is very fruitful.