In the beginning of the quote, King says something that I have been telling to anyone who cares to listen to me. I don't know anybody who reads short stories these days except for other writers, wannabe writers or critics. And has it affected the way short stories are being written these days? Yes, it has. Read what King has to say on this:
What’s not so good is that writers write for whatever audience is left. In too many cases, that audience happens to consist of other writers and would-be writers who are reading the various literary magazines (and The New Yorker, of course, the holy grail of the young fiction writer) not to be entertained but to get an idea of what sells there. And this kind of reading isn’t real reading, the kind where you just can’t wait to find out what happens next (think “Youth,” by Joseph Conrad, or “Big Blonde,” by Dorothy Parker). It’s more like copping-a-feel reading. There’s something yucky about it.
Last year, I read scores of stories that felt ... not quite dead on the page, I won’t go that far, but airless, somehow, and self-referring. These stories felt show-offy rather than entertaining, self-important rather than interesting, guarded and self-conscious rather than gloriously open, and worst of all, written for editors and teachers rather than for readers. The chief reason for all this, I think, is that bottom shelf. It’s tough for writers to write (and editors to edit) when faced with a shrinking audience. Once, in the days of the old Saturday Evening Post, short fiction was a stadium act; now it can barely fill a coffeehouse and often performs in the company of nothing more than an acoustic guitar and a mouth organ. If the stories felt airless, why not? When circulation falters, the air in the room gets stale.