I've been reading about 5-10 books a year for the last 10 years or so, after having not read anything of substance (outside of school) for some years prior to that.

Since my reading time is limited, I want to read books that are really good. I have to say, quite frankly, that many books just aren't that amazing (and I'm including both traditional and self-published in this). That makes me reluctant to pick up a book unless it's from an author I already know, comes with a really strong recommendation, or just has a superb opening. If a book doesn't have at least one of those three (or ideally two), I'm just not going to pick it up.

This is all anecdata, but my point is the demand side is more complicated. Even given the competition, the vast availability of both traditionally and self-published books doesn't guarantee that quality goes up, at least in aggregate.