That is not what happened to literature at all... take a look at these for instance:
http://thewhalehunt.org/
A narrative told solely from pictures by a guy who went on a nine day whale hunt and took a picture no less than every five minutes.
www.wefeelfine.org
A program that was created to observe blogs across the internet and find any word that proceeded the world "feel," and compiled all of them into this one database for anybody to search through. I'm sure some people would debate this as being "literature," but we can have that debate later.
Or take the book "Tree of Codes," by Jonathan Safran, published in 2010. It is a story told with parts cut out of every page, allowing the reader to partially see farther into the novel, and making every page completely different.
There are many examples of other experiments with print literature, as well as various works of literature that have only been produced for the new technology that has been created, such as the Ipad and Kindle. Literature is by no means at a standstill.