Wow! I wonder if Rupert Murdoch (who owns HC and Fox and the Wall Street Journal and basically everything else) had a hand in this? I remember in the late 1990s, HC cut loose more than 100 authors under contract, abruptly cancelling their books.
Later the article says, "The new group, which Ms. Friedman is calling a studio, will most likely publish hardcover editions priced at the low end of the market, around $20 a copy. She pointed to some of the titles that Mr. Miller had published while at Hyperion as models, including “The Five People You Meet in Heaven” by Mitch Albom and “The Best-Loved Poems of Jacqueline Kennedy Onassis.”"
Those might be the only authors who can afford this - someone who has already made a ton of money and someone who's dead. Normally, it takes at least a year after a book is accepted for it to be published - and then even if you sell all those copies immediately, you wouldn't see royalties for at least six months or even a year. If you had no advance to live on during those times, what would you do? [Full disclosure: I guess you would have a day job, as many authors do anyway.]
In England, they started experimenting with no returns on backlist (older books) last fall, as you can read about here.
Read more here.