Here is Lev Grossman's account of the alleged demise of poetry:
If poetry is dead, who killed it? In the 19th century it was a vital part of Western culture. Writers like Byron and Tennyson were practically rock stars. "Every newspaper in the U.S. printed poems," says Dana Gioia, chairman of the National Endowment for the Arts. "At the end of Longfellow's life, his birthday was like a national holiday."
But the 20th century saw the rise of Modernism and brilliant but difficult and allusive writers like T.S. Eliot and Ezra Pound. (Eliot's Love Song of J. Alfred Prufrock was first published in Poetry magazine.) Poems became less like high-end pop songs and more like math problems to be solved. They turned into the property of snobs and professors. They started to feel like homework. "It's thought of as a subject to be taught instead of simply an art to be enjoyed," says Christian Wiman, Poetry's editor.
This historical narrative is frequently enough recited that I have to assume some people actually believe it. Poetry was a "vital" art, read by one and all, back in the good old 19th century (when poets still knew how to rhyme, dammit!) but has been destroyed by putatively "brilliant" but in fact dastardly Modernists intent on making poetry too "difficult" for the average reader, a private possession of the "snobs and professors." (If it were only true that professors still admired poetry, difficult or otherwise, homework or not. Unfortunately, academic literary study has mostly turned poetry into the same simplistic source of sociological critique and political agitation it's turned fiction into--although this does, admittedly, drain all the enjoyment out of it, if not in the way Wiman thinks.)
What this story leaves out is the evolution of mass taste--and the emergence of other forms of "entertainment" to satisfy it--that occurred between Longfellow and John Ashbery. While it is true that some poets in the 19th century (but not all: think Emily Dickinson and Gerard Manley Hopkins) were popular in a way we cannot easily imagine for poets in our time, poetry was an early beneficiary of the spread of literacy both in the United States and Europe and was regarded as entertainment because it was accessible to many people at a time when few other "entertainment options" were available. Gradually poetry lost this audience to fiction, but both poetry and fiction ultimately lost it to the popular arts as we now know them: film, television, etc. Poets were no longer "rock stars" because that role was taken over by, well, rock stars.
It could be said that the "difficult" writers of the 20th century began to experiment with the conventions of poetry and fiction for the same reason that painters in the 20th century began to turn away from the conventions of representation to produce various forms of irreal and abstract art. Painters no longer saw the point in reproducing reality in the era of photography; poets and novelists no longer saw the point in clinging to traditional narrative and familiar forms, in straining to entertain "the people" in the era of vaudeville and movies. Instead, both painters and writers began to examine their media for other possibilities to be explored, to find other ways to engage their viewers and readers, even if that meant potentially alienating some of those in the mass audience who just wanted painters to paint pictures and novelists to tell stories. Or poets to rhyme and express nice sentiments.
Gioia and Wiman would like to reverse this history, to take poetry back to a more innocent time when pretty words made young girls swoon. This isn't going to happen. Poetry is now written and read by people who actually like to write and read poetry. (To "enjoy" an art doesn't preclude enjoying informed criticism of that art, either.) I honestly don't understand why it's necessary to change that. Poetry is as vital as its ever been, judging by the number of journals, small presses, and blogs devoted to it. "Western culture" should have to take care of itself.