Folks have been talking a lot lately about the decline of the short story. I think they mean the decline of the short story's readership because short stories seem to be alive and well - fat and happy even. Literary journals are still printing. Kenyon just started an online journal, didn't they? Oh, and Jumpa Lahiri, current mistress of the short story, recently published another short story collection.
Antonya Nelson wrote a nice, succinct, and highly likely explanation for the paradoxical situation of the short story in the market place. Paradoxical situation: the Average Reader wants everything fast - food, weight loss, money, happiness -but they want to read long, big books.
Riddle me that, eh? Nelson's explanation makes sense to me.