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The last two paragraphs, are the most interesting:

'Perhaps there is a clue to be found near the end of Solotaroff's essay: "Writing itself, if not misunderstood and abused, becomes a way of empowering the writing self. It converts anger and disappointment into deliberate and durable aggression, the writer's main source of energy. It converts sorrow and self-pity into empathy, the writer's main means of relating to otherness. Similarly, his wounded innocence turns into irony, his silliness into wit, his guilt into judgment, his oddness into originality, his perverseness into his stinger."

'The writer who has experienced this even for a moment becomes hooked on it and is willing to withstand the rest. Insecurity, rejection and disappointment are a price to pay, but those of us who have served our time in the frozen tundra will tell you that we'd do it all over again if we had to. And we do. Each time we sit down to create something, we are risking our whole selves. But when the result is the transformation of anger, disappointment, sorrow, self-pity, guilt, perverseness and wounded innocence into something deep and concrete and abiding -- that is a personal and artistic triumph well worth the long and solitary trip.'

Perhaps the first time creating something is the most difficult.

"My first three books sold, in combination, fewer than 15,000 copies in hardcover."

So what was she living off? Did the publisher pay her for years, just hoping she would one day hit it big? Or what was different from today?

Grants, stipends, fellowships. Teaching, odd jobs, seasonal work. Of the writers I have known, none "made a living at it", but few of them stopped writing because it didn't pay enough.

Writing as a profession has always been a rough road, subsidised by elite patronage and government arts programs. Most commercially successful writers barely move themselves above the poverty line by the proceeds of their book sales.

tl;dr It's art. It doesn't have to pay to be worth doing.

So it sounds as if nothing has changed, really? If anything, I'd expect more opportunities for writers today, as they don't necessarily need a publisher anymore. Grants and all the other things you mention still exist, I think.
Publishing is broken.

In the face of the Internet, which is the greatest platform ever created for a single person trying to build a following on the basis of their writing ability, publishers still send out newbie authors on book signing tours. So that they can spend hundreds to go to a city they've never been and put copies of their book into the hands of people who happen by the bookstore that day. Because that is apparently the most efficient use of their time.

My little brother, who is trying to break into comics by sustained guerrilla warfare, has a more sophisticated Internet strategy than most published authors. (A blog, a mailing list, analytics, keyword research, reader surveys, etc. If you're going to make writing a career, make a business out of it.)

And authors have such a case of Stockholm Syndrome that they take what their publishers are doing, borked in many ways, and consider it normal. (There is a precious comment on a blog post I made about the Kindle, where a published author loudly objects at the notion that authors sell books to readers: I have it totally wrong, they sell books to publishers. Readers are an afterthought. I don't think I'd be very good at my job if I could even consider uttering the words "I sell software to Paypal.")

I've written two books (both technical) and kind of know the space. My reasons for writing weren't for fame or fortune but to enhance my resume and become embedded in a community. At no point was I ever convinced that I would make a lot of money (directly from book sales).