The economics of producing plays is fairly dismal. It still takes the same number of people to put on a play now (basically) as it did a hundred years ago. There's precious little room for increased efficiency in the process.
You can only reach so many people at a time in one small space. And although ticket prices for theatre have risen, but there's constant competition with mass mediums, that can operate more efficiently. As was pointed out in a recent issue of The Dramatist, royalty rates paid by theatres to produce published plays have scarcely risen in a generation. But playwrights have to pay rents, food prices and healthcare costs that have all skyrocketed in the past 30 years. And all of this has happened while public funding for the arts and artists has dropped dramatically.You can read all of Patrick's post here. Be sure to check out the worthwhile comment(s) as well.
For more on The Long Tail, check out Chris Anderson's Squidoo page about it.
Of course, Seth Godin has something to say about it as well.