Jack, do you mean in total sales of all books? You may be right that by selling short stories individually online we'll see more fiction being sold but not as many books. Or, we'll see many, many titles selling a few copies each adding up to about the same sales we have now.
even good stories being bad because they're written and edited badly.
I've seen plenty of examples of what happens to a decent story when the writer is not terribly skilled, and the editing is not stringent enough! If I make the mistake of getting hold of such a book, I probably won't read to the end---I just won't put up with clumsy writing. While I admit I read quite a few mysteries for entertainment, my one justification is that I am picky about the quality of the writing. :) But I have read quite widely, so I do recognize quality when I see it. I don't expect murder mysteries to approach "high literary" status---but I want much more than pulp.
However, the internet has given a lot of people false hope, perhaps---that it's ENOUGH just to "be in print." It doesn't mean much if there are no criteria.
Probably some readers are easier to please than this one. I can only speak for myself.
The internet has led to more reading and writing in general. Take email. How many letters, even short ones, did folks write prior to the internet? Surely not as many as emails and the more cryptic text messages. Blogging has gotten huge, and message boards like this one.
Better for books ... tough to say. Many more ebooks soon. Even if not so well done, is it a bad thing that someone wrote and another read where they might not have before? I've ordered a few books via the internet just for fun that I would not have bought in a bookstore.
Someone 'in the industry' wrote that while you may think some bestsellers are not the best in terms of writing technique, they do understand storytelling (plot), and that's why they sell. The sales numbers don't lie.