I want to point out a couple of paragraphs from the PW article (and you can read the entire article online): Anderson writes, “Here's the reality of the book industry: in 2004, 950,000 titles out of the 1.2
million tracked by Nielsen Bookscan sold fewer than 99 copies. Another 200,000 sold fewer than 1,000 copies. Only 25,000 sold more than 5,000 copies. The average book in America sells about 500 copies. Those blockbusters are a minute anomaly: only 10 books sold more than a million copies last year, and fewer than 500 sold more than 100,000.” (taken from The Writing Life)
I had to call up a couple of my authors to let them know what a good job I was doing for them. :)
UPDATE--In response to a comment about whether this is referring to books published by reputable publishing houses:
Nielsen Bookscan tracks point of sale purchases made at the larger retailers--most of whom do not carry POD or vanity press books.
You're right about how difficult it is to stay in business with this level of failure, but you're wrong in your implication that reputable companies don't have this problem. Editors and publishers do their best to pick books they think will sell well, but sometimes we guess wrong. Too many wrong guesses and we're in big trouble. That is why a lot of small, but very reputable houses, have been swallowed up by a few power-house publishers. The good news is, one Harry Potter or Da Vinci Code can cover several years of failures.