Newsstand decline was an independent thing.  Rising printing and publishing costs drove up prices on periodicals, while economic hardship drove out many small businesses that provided newsstand outlets:  the mom and pop shops.  The were further pushed out by large corporate chains, who looked at the bottom line. Adult magazines were more profitable for them, so they dominated their newsstand space.  As more and more of the market turned to other entertainment and information platforms, print media continued to shrink at higher rates.  Chains reduced the size of their newstands and replaced them with more profitable items.  This combined to push children's periodicals further and further off what stands remained.  It wasn't just comics; publications like Ranger Rick and Highlights also suffered.  The publishing costs are supplemented with advertising; but, to try to hold back price on a single issue, you need a ton of advertising.  This is why you have magazines with 20 pages of ads before you ever come to an article.

Meanwhile, television further replaced newspapers as the main source of news and the birth of the internet took things further away.  Adult magazines have been in steady decline since the 70s; but, they had more lucrative advertising to keep them going longer.  By contrast, the bulk of comic book advertising was taken up by novelty companies, outright cons (Count Dante and the like), and classified ads for dealers.  Comics drew some advertising from the candy manufacturers; but, it was never quite as effective as tv ads, so they concentrated more there.  

Newsstand are/were a crapshoot.  You print 10,000 copies and if you sell 5,000 you have a huge hit.  Retailers can return unsold copies (well, stripped covers and mastheads) for credit; so, they have no incentive to sell beyond a certain point. Some comics wouldn't even be put on display,as it ate into more profitable space.  Some distributors would bundle titles to force retailers to carry lesser titles; but, that didn't mean they had to try hard to sell them.  If the sell through on the popular titles were high enough, they could carry the lesser ones based on the credit they got back for the unsold and undisplayed copies.  This is part of why comic book publishers were all over the genre map in the 70s.  They were trying to find the next big thing, because even the popularity of superheroes was waning and the space to sell them was shrinking.

Fan dealers created the direct market to get the comics they wanted directly and sell them to a known, niche audience.  The publishers quickly found that they could market more effectively to this market than guess at the mass market and put more of their eggs in that basket.  Over time, they had it all.  The problem is, they abandoned the much larger, yet riskier mass market for the smaller sure thing.  Problem is, people change as they age.  The direct market is aimed at existing fans.  If they leave the market, there isn't a mechanism to draw in new readers to replace them, let alone supplement them.  The publishers have gnashed their teeth over that fact; but, they put all of their efforts at aiming for a younger audience in the market where they have been excluded, so it is a system with built-in failure.

While all this has gone on, you have had a more and more incestuous managerial and creative pool.  You went from creators with a wide range of influences working in a new medium to creators who more and more drew inspiration from the comics that came before.  As long as new material was created that attracted new attention, it worked fine.  Once it became recycling of the same old plots, characters and stories, you lost large segments of the audience.  Without new blood to shake things up creatively and managerially, you don't get change at the publisher.  Comics are about the illusion of change; but, that filtered into comic book publishing.

The companies, now, are part of massive entertainment conglomerates, who do everything based on market research and perceived return on investment, in the short term.  Therefore, they are risk averse.  They want a good quarterly report and a certain percentage of growth, as a whole.  They have no invested interest in making comics better, as it is too minor a segment.  The comics themselves haven't supported their publishers since the 60s.  from the 70s onward they made more money via licensing and that is why those companies were purchased by media conglomerates.  they are intellectual property for exploitation in merchandising and other, mass media.  Regardless of the intent of the people within the publishing division, the upper echelons of the conglomerate know they get X amount of sales and Y amount of revenue from other outlets. Y far exceeds X, so X is the minor partner in the relationship.  They exist to maintain trademarks and do R&D for new properties, with minimal cash outlay.

Quite frankly, the only thing that will seriously change that is if the comic divisions were spun off into independent entities, back where they started.  They couldn't support themselves that way in yesterday's market and have no hope today, without hitting on a massive new audience.  That won't happen because those characters that sell a few thousand copies are used in cartoons and movies that make millions, and can be slapped on t0shirts and bedsheets that sell more units in one chain of stores than the comics do in the entire industry.  For comics to change within the existing system, you need people at the top who want to take risks and try new things; but, if their corporate masters won't support that, they end up as impotent.  Charlton was in a position to take a huge chunk of the market because they controlled all elements of production and distribution, at much lower costs.  However, the owners didn't care enough to back Dick Giordano's ideas (and George Wildman & Nick Cuti's, later); so, Giordano lost heart and left Charlton, moving to DC.  By contrast, Kinney/Warner hired Jenette Kahn because she had a proven track record of attracting new child audiences to print publications and she was given the support to clean house and initiate real change.  That turned DC's fortunes around and knocked a big chunk out of Marvel's market share.  The problem was, when things were stable and going well, everyone started becoming risk averse and spent more time reworking the same wheel.

Comics are a viable medium, but they do a heck of a lot better in more mainstream, mass markets, like the YA books of Rena Telgemeier or newspaper collections, like Calvin & Hobbes.  That audience gets more bang for their buck from those books than monthly comics.  They also exist in places other than insular comic shops.  Digital is a major platform; but, you still have to attract that mass audience and give them something that gives them a lot of content, for minimal outlay.  You've also got to give creative talent an incentive to produce, beyond mediocre page rates.  The more they have a stake in the game, the more creativity they put into the product.