You aren't up to date with what's happened in publishing in the last several years.
because that means editing and marketing and other overhead must now be spread across a much smaller number of books
Traditional publishers aren't spending what they used to on these things. In marketing in particular, authors are expected to do a lot more of the heavy lifting. Even fiction authors are expected to maintain a "platform" today -- something that you used to need only for non-fiction. I have a friend who published three novels last year, and she spends more time on her blogging and social media marketing than she does writing.
As for fixed costs, I'd estimate story and copy editing costs on a typical 100K word genre novel to be well under five thousand dollars these days. Not much goes into book design either -- except for cover art. And standard contracts don't give any premium to the author for ebooks, which are cheaper to produce and "stock". All this adds up to publishers breaking even on a much smaller number of books than they needed even a few years ago.
And this kind of penny-pinching works. If you read Publisher's Weekly, you'd know 2012 was a banner year for publisher profits. All that stuff you've heard about ebooks paralyzing traditional publishers with fright is hooey. Maybe back in 2007 or 2008, but they've got the angles figured now.
In the same way, you're deeply ignorant of the bookselling end of the business... Everyy linear inch of bookshelf costs the same. whether it's occupied by Stephen King or J. Random Nobody.
I'll ignore your arrogance for a moment. What I know about the business is what I've gleaned from my author friends, who have had over ten books published in the last two years, one of which made the NY Times best seller list. Your point about linear inches is neither here nor there, since bookstores in the last year or two have been using POD to make much more efficient use of each linear inch. It is possible that *some* bookstores may not have figured this out.
It has always has been more of the same old thing. What part of this is so hard to grasp?
Nothing is difficult to grasp, if you realize publishing is a different ball game than it was even five years ago. To use a baseball analogy, publishes are still hitting home runs with their A listers, but they're paying much more attention to "small ball" with their down list authors.
It's one of those technological ironies. Bookstores can stock more titles than they used to, but they're stocking the same *kind* of titles. That's an unexpected result.