I've heard that too, but in a couple different ways. I have heard that economy is low-margin because of the increased market competition. In a saturated market with limited potential for new customers, premium options are also a rare area for growth. That makes sense to me. But I have also heard that, per square-foot, economy cabins bring in more total money.

I think it depends on your perspective. On a daily basis any ticket above economy is a win, a more profitable ticket to be sold. On a larger scale, when airlines are determining how much space to allocate to various classes, economy does seem to be where the bulk of money comes from.