They specifically call out the Libby app as the turning point. Once it became super accessible for people to get ebooks through libraries, it started really putting the squeeze on publishers and authors.
In the episode they talk about how publishers started seeing the curve go parabolic and were basically forced into panic action to stay solvent. The money disappears on that side of the equation and full time authors are downgraded to working authors, and working authors are pushed out entirely.
On the other side though, what they've created is a system of winners and losers. Libraries have limited budgets and have to be choosy about what ebooks they're getting now. So fewer authors get a larger slice of pie. I do think that generally lines up with the demand for books now...but it means that it will be harder for new authors to break through.
It's really fascinating to me that, like they point out in the episode, everyone involved (authors, publishers, librarians) are passionate about books and getting people to read. They just need the economics to all work out, and that's where it gets super contrived.
Very complex issue and highly recommend the Planet Money episode.