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Couple of points. It's all driven by market economics, in one way or another. I would not still be writing novels (probably) if my wife didn't have a steady job. I've got 16 SF novels published, and I'm not unusual in being in that economic situation. The push in recent years to emphasize bestsellers over midlist has certainly hurt many midlist writers, and driven a lot of them out of the market altogether.
In the U.S., most writers get a royalty of 6-8% cover price on paperbacks, and 10-15% on hardcovers. Most (or at least many) books never earn out their advances to pay additional royalties. (That doesn't mean the publisher isn't making a profit, but they might not be making a large profit.) For most midlist writers, sales have gradually been declining over the last decade. When I was a new writer, it wasn't unusual for a new writer to sell 50,000 copies in pb. Now, short of a breakout, it's more like 10-20,000. It sucks. We all hate it, and are all searching for other business models.
I don't know that ebooks will change the equation very much. (I hope it will, but I'm not counting on it.) You still need editors, art design, distribution, marketing, etc. Everyone thought print-on-demand would solve the problem of books going out of print. Now there are a million PoD titles that no one will never see on a bookstore shelf, though maybe they'll see them listed online. Some of my older books are available in both ebook and PoD formats, and they sell in the single digits in a quarter.
Another factor is the easy availability of used books online. If someone can buy my new book for regular price or a used copy for $.01 plus shipping, which will they do? Granted, that also helps writers pick up new readers, which is all to the good. Just like free ebooks. But it's helped kill the reprint market for books that have gone o.p.
All of which goes to say that the phrase "earn a living as a writer" is an oxymoron for way too many good writers.
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