I think there are two main reasons why the long picture book (think
The Velveteen Rabbit) have faded away.
1. A growing early chapter book market
When I was a kid (in elementary school in the mid-1970s), there were VERY few early reader chapter books; I do remember Frog and Toad, but not much else. Then there were chapter books like Charlotte's Web and Ramona the Pest, and there were picture books. Period. Those long picture books filled a need for readers who were getting ready to make the switch to chapter books, but might not have had the stamina yet for chapter books. I don't ever remember using a bookmark for the long picture books--they were read in one sitting.
2. Use of picture books to teach language arts skills
Fast forward now to my day job as an elementary school teacher/librarian?several people brought up the text complexity that the Common Core Standards require, and I totally agree--I use longer picture books with my 6th grade students (Patricia Polacco, Eve Bunting, etc.). BUT?the reality is that I need complex, rich stories that can be read in about 15 minutes. I use these books for lessons, and I need to have time to read the story, show/model what I want the students to do, then give them ample time to practice that skill. This is different from when I was in elementary school; I don't ever remember my teachers using a picture book as a springboard for a lesson. There was spelling, reading groups, and writing, which was all separate from read-aloud time (my favorite part of the day

).
Of course there are still readers out there who would sit through long picture books and some who would read them on their own, but from a publisher's standpoint, publishing these books for so few readers would have to be a labor of love, not a sound economic venture.