[Raynor]

Originally Posted by Hookbill

Do you have quotes? I don't recall this from MR (then again, it's been about a year since I read it). The reason, as far as I could gather, for Morgoth's decrease in power was due to his putting his power into his servants, not the earth itself.

It's found in Myths Transformed, HoME X:

Originally Posted by Notes on motives in the Silmarillion, II

Melkor 'incarnated' himself (as Morgoth) permanently. He did this so as to control the hroa, the 'flesh' or physical matter, of Arda. He attempted to identify himself with it. A vaster, and more perilous, procedure, though of similar sort to the operations of Sauron with the Rings. Thus, outside the Blessed Realm, all 'matter' was likely to have a 'Melkor ingredient', and those who had bodies, nourished by the hroa of Arda, had as it were a tendency, small or great, towards Melkor: they were none of them wholly free of him in their incarnate form, and their bodies had an effect upon their spirits.
...
Sauron's, relatively smaller, power was concentrated;Morgoth's vast power was disseminated. The whole of 'Middle-earth' was Morgoth's Ring, though temporarily his attention was mainly upon the North-west.

Edit: x-posted with WCH