It's possible that we're just a bunch of ungrateful, self-absorbed whiners. I don't know. I'm sorry if that sounds like a bunch of rubbish. The question itself, the death of the novel, shows how much the questioner has been co-opted by a very modern idea which is a lie. If somebody is saying in this age of electronic media that the novel is dead, what they're really showing is how much they themselves have been hypnotized.
Literature is massively popular and making millions and millions of dollars.
As far as I know, hard stuff, what you'd call literary fiction, has always had a small audience. I myself don't see that core audience shrinking. So in this culture of mass media . Publishers tend to be more and more like conglomerates. The economics are such that publishers make most of their money two months after the book comes out - which means they have to do their best to create some kind of hubbub about the book.