Amazon needs to try something different with the whole visibility thing. They are basically forcing authors to either: put out a book a month minimum to maintain search visibility; or putting out collections to boost their backlist.
From Amazon's perspective, do they really, though? They're trying to sell books, not help authors. And as you note, there are ways that authors can maintain visibility, to which list you can add advertising. Or getting picked up by an Amazon imprint. There are plenty of authors who always have books in the top 10,000, so I can't imagine Amazon thinks there is a problem.
As a side note - here's an anecdote to counter the idea you have to release a book a month. My last book was released on 2/9, a kindle worlds book in David Wood's kindle world. David has very solid sales and a receptive initial audience, but he's hardly a household name. The kindle world books are not in KU. It's priced at $1.99 (I have no control over this) which is an odd sort of price not likely to drive readers on price like a 99 cent book. After an initial push the first day, the book had no promotion. It stayed between 5000 and 12000 for three weeks or so, then it stayed in the top 25,000 for another five weeks. This is only a single anecdote and I know a lot of folks experience the 30 day cliff. But it does seem quite possible that with 4 books a year plus collections and shorts, an author could do well.
With the deluge of books being put out by brand new authors (over 1500 per day?), I read that if your book isn't ranked 200,000 or better, it's dropped out of Amazon searches entirely. I don't know if that's true.
This is an urban legend. Books come up just fine no matter what their rank. Lower rank does have a correlation with appearing further down the search results pages, but it's not a perfect correlation. There's no magical level where books stop appearing in searches. I have a shorts collection ranked a million and it comes right up. It's not near the top unless I put most of the words in the title in my search, but thst's to be expected.
Since most new authors seem to jump into KU, better authors are getting pushed aside. My editor had a KU sub and canceled it a few months ago; the offered books were so bad that the cost wasn't worth the time to search and read.
Data is not the plural of anecdote. Honestly if there is a single mistake I see repeated in posts many times a day by kboards authors, it's assuming that the way they (or people they know) consume and judge books is the way most people do. KU almost certainly has several million subscribers and there are many, many books by excellent authors in KU. The Amazon Imprint books alone provide many "vetted" authors in many genres. And what do you mean, "better authors" pushed aside? Who decides who's a better author?
I've been out of KU for some months now (thankfully), and have seen my sales compensate. My paperback sales jumped from 10 per month to 40+. I don't know if KU is still having problems, but I'm rather glad I dumped the program and went wide. Wide was a bit of a slow start, it has been accelerating every month. Between paperback increases and wide, my former $300+ per month in page reads has just about been replaced.
I think this is great and it must be a relief to see things picking up. I am wide with all but two books. As authors, we have to make the best decisions we can for our own books and approach. Like many, I don't care for the exclusivity requirement, and I can't give away the first book in my series as a reader magnet if it's in KU. And the even bigger problem is one which you hint at in your first comment - if you're not in KU, it's harder to get visibility because you don't have borrows helping your rank. Those concerns, however, don't mean that KU has bad books or is not doing well.