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This is the law of diminishing returns.
If you have a program, being sold by one affiliate, and that affiliate makes 30 sales per day; and you add 20 more affiliates and they all make 5 sales per day, then you add 100 more affiliates, and they all make 2 sales per day.
A market goes through a cycle of development, growth, maturity, and then retreat.
When you have hundreds of affiliates all promoting the same product, then they can expect a diminishing return. There are a absolute number of surfers, and if all affiliates provide them the same offerings, then you can expect - as more affiliates join the market - that your slice of the pie will shrink.
Diversification, I think, is the key to success (the same as any market). If you are caught in the maturity stage in a markets cycle then you can expect your sales to remain constant (not good - unless you are growing you are shrinking), if you are in the retreat stage in the cycle, then you can expect your sales to shrink. The maturity stage should forewarn you of the retreat stage; at which time you must diversify your offering to capture the development and growth cycle of the markets next rotation.
Doing any different will spell shrinking $$$.
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