We'll probably never know, but it wouldn't surprise me if there were a decision on the part of their record label somewhere in the mix here. The Grammy Award isn't necessarily reflective of record sales and may be more a political statement on the part of those who make the awards and/or nominations. But the record label is a business and isn't likely to continue with an investment gone bad.
Absolutely. The record label is just picking the bones at this point. The Chixie Dix' record sales on their latest album is 1/12th what it was in 1998. And back in 1998, they were selling out gigs in front of 40,000 fans routinely. On the current tour, they could barely sell out a show in front of 12,000 people in Minneapolis and they've canceled over a dozen concerts ("scheduling conflict" is code for "nobody's buying tickets"). The news media doesn't mention that because there is no way to put a positive spin on it.