I'm not that convinced that a band or artist used to make their real money off their sales; that might have been true for someone with at least a hit single/album (well, the single would have carried the album), but never for the "indie" acts. Yes, Pink Floyd famously lost money on their Wall tour, but that was because of the (over)complexity of the show. In general, artists tend to lose money on their tour when they overdo it (too many gigs, too expensive a show, etc.). I'm seriously doubting that Sonic Youth, for instance, really made much money selling their albums.
The artists "going solo" are simply those who don't have enough of a following to justify a band. So they go on stage with an acoustic guitar or maybe a keyboard posing as a piano. Once upon a time, bands would have been a bit more appealing than solo artists (but there was more of a "live music" culture, probably; and/or a more passionate audience). But they would never have made money off record sales even back then.