Well, I don’t think I’d go that far. Well-balanced LGBTQ characters appear in mainstream fiction all the time, especially in literary fiction. But the glory days of a dedicated genre are definitely over. Part of the problem is the demise of the independent gay book store and a focused audience of middle-class gay men who wanted to buy literary fiction about other gay men.
It used to be that a publishing house could market a novel by, say, Felice Picano, and every gay book store in the North America would feature it on its shelves, promoting it heavily, and half the “gayborhood” would buy a copy.
But with the gayborhoods shrinking, and gay book stores on a huge decline, it’s much harder to market an LGBT genre novel.
Editors who represent other genres, say thriller or mystery, can be hesitant to publish a novel that doesn’t directly appeal to their target audiences. They’d much rather publish something steamy and exciting that will appeal to the mass market of straight people.
Editors of literary fiction have an easier time of it, because their readers are generally more educated, more accepting of diversity, and more interested in difference. Literary fiction, of course, is traditionally the least popular and least profitable of a publishing house’s offerings.