I've believed for some time there was a "sea change" in the music biz much the same as in the movie industry in the 70's. Please hear me out. Until the mid-70's, a couple hundred prints of a feature movie was a typical laboratory run, and the film would make its way across the country gradually, opening in the largest cities first then working its way thru the smaller cities, second-run houses, drive-ins, etc. JAWS changed all that; Universal made something like 1500 prints and opened it "everywhere" at once. This was the beginning of the summer (or holiday or whenever) "blockbuster," and it largely put an end to the little "program" pictures small-town theatres in particular depended on.
Comparing that to the record business; I'll use Ray Conniff as an example. Columbia knew they could sell on average X number of copies of a Conniff album, so if they could produce one for less than Y number of dollars, they would make a modest-but-reliable profit. Then came the go-go-go multi-platinum-shipment era, and every label was looking for "the next" Fleetwood Mac or Bruce Springsteen or Michael Jackson or whoever. They wanted, then NEEDED blockbusters; and "product" albums (and the artists who made them) were pushed aside. Those who still wanted albums by "product" artists couldn't get them as the labels were no longer interested in making them, so they gradually lost interest; sort of a self-fulfilling prophecy.
(I could be wrong though, y'know...)
Jeff: It's a logical theory, but not totally accurate. The labels knew not every record would sell huge. Ray Conniff, Percy Faith and Andre Kostelanetz had sort of parallel careers with Columbia...all starting in the late 40s to mid 50s and running until the middle 70s. Their stuff sold best when they were doing original(ish) material and standards in the early days.
By the mid-60s, they had come down to formula...three or four albums apiece per year with a pretty girl on the cover and 12 cover versions of contemporary pop songs. And those sold decently to audiences over 50 who couldn't stomach the originals. But the sales figures went down with every one. The new crop of grownups preferred the originals. And even some older listeners realized that the whole thing was way out of touch. For example, a song of loss and impending suicide sung as though it was a toothpaste jingle:
https://www.youtube.com/watch?v=cvYgkDVu3gM
Ultimately, for Ray, Percy and Andre (and for that matter, Patti Page, Andy Williams, Peter Nero and a dozen or so other Columbia mainstays), it wasn't that they had to sell a million, it was that they weren't selling 30,000 copies...and it made better business sense to roll the dice on a newer artist who might only sell 30,000 copies this time, but 50,000 the next and 100,000 after that than watch 30,000 become 20,000 and then 10,000.