The discussion about the demise of the player piano industry has been
interesting.  However, I don't believe the industry actually died; it
was just comatose for awhile.

I had done research on the piano industry during the Depression long
before the subject arose in MMD.  William Braid White wrote about
"The Decline of the American Piano Industry" (American Mercury, Feb.
1933) and made these comments about player pianos:

  "The defeat of Bryan [in 1896] coincided with the first appearance
of that remarkable musical phenomenon, the player-piano.  It came as
the Pianola, in the shape of a cabinet on castors looking like a small
reed organ. ... Crude though it was, it possessed genuine musical
possibilities, and for some years was quite popular.  Unfortunately,
it soon fell from its high estate, partly because the art of playing
it artistically turned out to involve considerable mental and physical
effort, but even more because its destinies came to be controlled by
the manufacturers of cheap pianos, who saw in it the means of
stimulating their sales among the hundreds of thousands of American
families whose members would never learn to play the piano in the
ordinary way.

  "Cheap upright player-pianos soon came on the market, with the
playing mechanisms built in.  Within a few years after 1905, they were
leading all other kinds of piano in output, and had become in their
turn the big money makers.  The apex of their popularity came during
the war-time boom of 1916-19.  Almost immediately thereafter this
received, suddenly and unexpectedly, a fatal wound, by the emergence
of public radio broadcasting."

As others have noted, White also blames radio for the demise of the
player piano.  But what is more interesting is the fact that he
believes their popularity peaked _before_ the 1920s.  Later on, White
states, "The player-piano is also virtually dead and not likely to be
resurrected, although it possesses virtues which may yet, under
intelligent management, revive it."

White's article on the piano industry's demise was published in
February 1933.  However, in October of that same year, "Etude" magazine
presented a very encouraging view of the piano industry in "Carloads of
Pianos":

  "Our reports indicate that numerous manufacturers have greatly
increased their forces of employees, increased their working hours to
the N.R.A. limits, and are shipping pianos in carload lots to many
parts of the country.  The increased demand in some parts of the South
and of the Middle West has been such that some of the leaders of the
industry feel that a great shortage of pianos is imminent."

How did the piano industry change from White's dismal portrayal to
Etude's rosy one in just eight months?  The answer is, it didn't.
"Etude" was a music-oriented publication and included advertising from
piano manufacturers.  "Etude" had a vested interest in making their
readers (and advertisers) believe all was well in the piano industry.

"Etude" further stated that radio had actually benefited the piano
industry instead of causing its demise.  Their rationalization was that
radio had helped to promote music appreciation and create a demand for
musical knowledge and literacy.

A "successful piano manufacturer," H. Edgar French, responded to
Etude's article with some interesting facts:

  "[D]emand [for player pianos had] reached the astonishing proportion
of nearly sixty-five per cent of the industry. ...The all-electric
radio supplied the requirements of those sixty-five per cent of piano
customers who formerly bought player pianos.  But the depression threw
on the market literally thousands of pianos and players from customers
who could not complete payment of their contracts."

French further noted that the piano business suffered in part due
to "the flood of player pianos whose value had been deflated to
ridiculously low levels."

Even during the Depression, there was disagreement as to how the piano
industry, including player pianos, had been affected.

Joyce Brite
Player Piano and Mechanical Music Exchange
http://mmd.foxtail.com/Exchange/