It's not surprising to me that publisher have dropped B-list authors; they seem to be following in the footsteps of the recording industry of about ten-twenty years ago. They might risk publishing a few unknowns, but they are focusing on "the names" that they know sell.

Thinking about it, the movie industry also went/is going through this. It's massive change to distribution and no one wanted to do it. So when it got to the point where "the little guy" could do it on their own and actually make enough of a living at it to make it worthwhile, "the industry" ignored it/dismissed it/tried to make it illegal/etc. (Oh, and comics/webcomics.)

I know a few people that have started to make a living as "independents" but it's work and still very risky. I don't know if POD and author e-distribution is viable as a sole source or income or not yet.