Economic opportunities for professional writers have declined dramatically. The two crucial pathways were mentioned for novel writers to support themselves economically: (1) magazine writing and (2) academia. In the first case, magazine circulation has suffered because advertisers left for the internet, and in the second case, academic job oportunities have declined because of governmental cutbacks to universities, especially in the humanities.
The second half of the article argues that authors have made a tradeoff, deciding to maximize critical praise instead of book sales, thereby turning off general audiences who don't share the obscure and trendy tastes of the critics.
This argument felt weak. As far as I can tell, there's no real explanation of how it supposedly came about. Even the article author seems to admit there are holes in the argument: "There are still some important open questions: the exact role of the critics in moving authors away from popular taste." Indeed.
I'm personally a fan of contemporary literary fiction. My own suspicion is that the problem in literature is the same as the problem in music and movies: corporate consolidation and the ascendancy of data-mongering penny-pinchers with no taste except for profit maximization. Their preference in all the arts is derivative dreck that's easily marketed, ideally with a built-in audience and reproducible, with the goal of spawning an endless series based in the same "universe." The leaders of the industry don't want to take chances on new artists, unless they can guarantee a massive hit.