I a sense it isn't 'dead', because people are still playing, restoring, preserving, and enjoying them, but no new onces have been built for several decades. As far as I can tell, they went into a precipitous decline at the beginning of the last century.
My personal theory is the rise of first ragtime, then jazz, then swing, then rock. Popular music became dominated by rhythm. And what are the two names for a reed organ? "Melodeon" and "harmonium."
Try playing Scott Joplin on a reed organ sometime. The results will not be pretty.
If you look at the cost, space requirements, and applications of reed organs, you can see they were supplanted by pianos.
They were (relatively) inexpensive to make and they were easier to move, especially to remote areas, than other keyboard instruments. This changed as shipping technologies changed, as well as manufacturing technologies. I still like them though.
One can trace the history of reed organs and the transition to pianos in the history of Mason & Hamlin, which started as a reed organ company. In fact, it was Emmons Hamlin who invented the methods for having organ reeds sound like different instruments, enabling reed organs to have different stops.https://www.chuppspianos.com/history-mason-hamlin-pianos/
My guess is the piano replaced it. Simply because so many companies started out as Reed organ makers and then switched to making pianos. During the Civil War Era, the reed organ makes more sense for church services.
I know this is an old thread that I am resurrecting, but I just discovered the harmonium. From what I gather, they are still popular in India and they have several makers there that produce the hand pump variety. I need a digital piano ASAP too continue my progression(I need more than the 3 octaves I have with my toy piano), but the harmoniums they make are very beautiful. I want one badly! :P