Just like in anything else, there will be a lot of people jumping in, but few can hang on. I can think of a few custom knife makers who make decent products but they lack the "magic". Just making a good product won't cut it anymore, and as somebody said competition is always good and the main beneficiaries end up being the consumers.
I will say this. I know probably, I'd say ten or fifteen, guys personally who are HUGE knife guys. They do research online, they know who they like, they read a lot of the things we read. However, they aren't members of this, or any knife forum, and aren't interested in it. To make my point, there are a lot of people in this country who are big knife fans who buy all sorts of things that people here might not, so I personally think there's room. You talk about the "magic". One of my buds showed me a recent purchase. He picked up a sheathe knife at a gunshow here for like $40. It's a fixed blade, decent leather sheath, D2 steel (in fact that's all it has stamped on it, D2) and he's let me see it. Nice walnut handle scales, full tang, just a nice little knife. It was made by the guy with the table, someone I didn't recognize (don't even remember the name), guy who was making knives in his garage. I think it's a blade kit that the guy then outfitted a nice handle to, pit a decent grind on, and made a sheathe for. Either way, it's nice. I offered to throw him $45 for it, and he said "Eh, I'm not in the selling mode right now". Hey, no worries I understand. My longwinded point is this: there are buyers out there for almost every knife. If a guy gets into the game, refines his craft, and puts out a decent product, then people will buy it. Not every maker can be (or should be) a Randall, or a Loveless, or whoever. Sometimes it's just a guy who buys knife blanks, shines 'em up, makes a decent knife out of them and sells them to happy customers. I would posit the argument that a lot of people out there aren't looking for "magic". They're looking for "Hey, that looks sweet, fits well in my hand! I'll take it!" And what's more? There are far more people like that, than there are discerning, critical-eyed knife buyers like us here on BF.
Full disclosure, my bud who bought this knife and really likes it? Guy's got two or three Randalls, so it's not like he doesn't know what a quality knife is!