Publisher's Weekly is reporting:
With the departure of founder Bob Miller to Workman Publishing it was widely expected that HarperStudio was be shut and Friday afternoon Michael Morrison, president and publisher of HarperCollins general books group and Canada, sent a memo to employees informing them of the decision to close the imprint. According to HC, the "last batch" of titles to be published under the HarperStudio imprint will be on its summer 2010 list, and beginning with the fall 2010 list books signed by the imprint will be released under other HC imprints.
This imprint was started by HarperCollins, one of the Big6 publishers. It was created to experiment with new distribution methods like digital only releases and a no return clause, as well as low advance with high royalty contracts. Why did it fail? Given the current economy, I would say it was more likely bad timing than anything else.