On a more serious note, I agree about niche markets. What I'd like to see is for publishing to do some research into whether their ideas of marketing work at all, and try to come up with some empirical evidence of how that time and money can best be spent.
Wow--ask and you shall receive. Lovin' me some Al Gore every day. But imagine a national ad campaign along the lines of PETA's nude anti-fur deal: naked big name celebrities, Proust or whatever they keep on the nightstand in the way of reading material, simple ad copy along the lines of "reading is sexy." Get the top five publishers to fund it, major markets only, print and billboards, as risqué as you can make it--think of the buzz! If sex sells, why can't it sell books?
The libraries are full of those posters -- including one of E.T. Of course, you can argue that that's not the place for them. Yes, I think public service spots on all channels would be nice.
This article is nothing new and new writers certainly are not screwed.
When I started writing back in 1989, I was 14 years old. The first thing I learned was that you absolutely had to have an agent to get in the door with publishers (and, ironically, several small publishers and one or two major publishers have looked at my material sans agent). The WSJ article is nothing new to me, just a modern spin that mentions the internet. Remove any references to the internet, and it's 1989 all over again (and, please, oh please oh please, let's not go back there). For those of you with PhDs, that means this is totally irrelevant information.
If any writer tired of rejection slips wants to use this article as an excuse to give up, then they have that excuse tailored, with a bow, but I grew a thick skin against articles like this many moons ago, and have a list of credits to show that said thick skin has paid off.
It seems the main effect of an article like this is only to thin out the herd for the editors and agents. I'm with Brian, ignore it and keep on submitting. Like anything else in life, it's more than just talent- it's the right story, in the right place, at the right time. Don't fall victim to a recycled story about how tuff it is. Of course it's tuff, that's what makes it exciting.
I think it's always been tough, but each new technological advance makes it tough in a slightly different way. I think the "Got Books?" advertising idea is interesting.