This is chronic, terrible, oft regurgitated bullshit (which I will explain in two points!).
First, there is a reason a lot of titles can't get published, and for the most part it is because they are terrible. The last book you read that you thought was horrendous was a) probably pretty bad, yea, and b) better than anything else the agent and publisher could find.
Second, just because a title is out there doesn't mean people will read it. There are about 300,000 books published annually through the traditional model. This means that if you only read new titles for a year, you need to read 34 books an hour for the entire year to read everything put out through traditional publishing, which are the titles that were plucked out from the general morass.* Most of these titles will not sell well or be read by many people, and they will have the benefit of professional publicists and book sellers behind them. Just because a title exists on the internet does not make it equal to a traditionally published book--not necessarily because of quality, but because of exposure and the publicity weight behind it.
Scribd CTO Jared Friedman, wants to increase the number of books published annually from 300,000 to 3 million, saying:
Our thesis is that the limiting factor in the number of books that are published per year is not the amount of content that people are able to write and it's not the amount of content that people are able to read. Rather it's a structural limitation of the publishing industry itself.... We think that if we can cast off the artificial limitations that are imposed by the way the economics of the publishing industry currently work, we could potentially dramatically increase the amount of work that is published.He cites Harry Potter's temporary stint in the slush pile, saying there are many HPotts just waiting to break out. But if no one is reading the already existing 300,000 titles published every year, who is going to dig through this new e-slush pile? Not me, thank you--I will stick with the handful of traditionally published books I slog through annually.
*Math! 365 (days per year) x 24 (hours per day) = 8,760 hours per year.
300,000 (books per year) / 8,760 (hours per year) = 34.2 books per hour.