Maybe when you were in high school or college a teacher 'graded on a curve.' Basically that meant that he or she would allocate a few low grades, a few high grades, and most in the middle. If you put this on a graph, it looks like a bell, and it's known as the Bell Curve.
How does this relate to writing? In films and books, the bell has become a well. Take movies, for example. There used to be a few low-budget movies out, a few high-budget movies, but most were medium-budget. Now there are lots of low-budget movies, lots of high-budget blockbusters, and very few medium-budget films. (If you plot this distribution on a graph, it looks like a well.)
The same is true with novels. There used to be a few very literary or experimental novels, and a few block-busters, but most were mid-list kinds of books, a good, comfortable read--not junky, but not too demanding, either. That mid-list has just about disappeared. There are literary books which win the prizes, and thrillers and romances and chick-lit by big-name novelists, but what we might call "the well-made novel" has undergone a major decline. Maybe not welcome news, but if you're wanting to write novels, you have to take this into account.
According to the May 29, 2006 issue of Fortune, something similar is happening in TV. An article on Fox Network's Peter Chernin notes: "Lately, the executives in charge of Fox's TV production unit have found that pleasing but inoffensive, middle-of-the-road TV shows are tougher sells than ever. 'You have to be creatively adventurous,' says Dana Walden, who, with Gary Newman, runs Fox's TV unit."
This reversal of the Bell Curve into a Well Curve seems to be taking place in many contexts. The stores that are doing well are the big discount places like Wal-Mart, and the premium stores; it's the ones in the middle that are struggling.
The moral seems to be 'get extreme.'