Patternfish has an article about The Problem of Discontinued Yarns in their August newsletter. I, as well as Bonnie Dean and Nina Machlin Dayton have contributed our thoughts to this piece.
As a designer I can’t tell you how frustrated I am when the yarns I choose to work with are discontinued. Unfortunately it happens far too often. I suspect yarn companies don't wait long enough for some of their yarns to find an audience. Many businesses run on quarterly sales figures. I think this may be an inappropriate time span in the knitting world. It's not unusual for a knitter to work with a yarn, move on to other projects and then want to use the same yarn again, after having had the time to judge it's long term performance after wearing and washing.
The constant discontinuing of yarns has impacted my yarn choices, in that I now favour more basic yarns which match the standard yarn weight system used in North America. These yarns can be easily substituted especially when the source fibre is the same. I also check the longevity of a yarn, hoping it's history proves, it will continue to be produced.
This situation occurs because the players in the knitting industry have different goals in mind. Selling yarn and selling patterns aren't always in alignment. Yarn companies want to sell their yarn and pattern writers want to sell patterns.
More of the design work is being taken over by independent designers as knitters move towards PDF downloads and away from magazines and books as their preferred pattern sources. Knowing this makes me hesitant to use yarns which don't have many easily identifiable substitutes. Since the pattern marketplace has become worldwide,many knitters have become comfortable making yarn substitutions or perhaps are purposefully choosing patterns with more common combinations of fibre and weight to make substitutions easily.
There has been an explosion of indie dyers who are taking part of the market away from mainstream yarn companies. Most dyers use the same base yarns for their products, knowing knitters will be able to find patterns which match. Large yarn companies are watching this, seeing the trend and hesitate to invest in more unique yarns.
In the case of my Prudence Crowley vest pattern I am often asked for substitute yarn suggestions. I've listed some alternatives on Ravelry and the Patternfish page. Several of them came directly from knitters who contacted me to let me know yarns which were successful for them. I've also added instructions as how to best search for other options as the pattern has continued to sell very well in spite of the original yarn being discontinued.