My take on the matter, for what it's worth, is that a HUGE reason for the explosive growth of jungle/trip hop/and all the stuff in the middle, (breakbeat oriented studio music) is the simple fact that it is usually made by one or two individuals and because it is programmable. Its creation takes considerable talent but does not require the collective, dedicated efforts of a group of people (like an acid jazz band does).
Secondly, the attractiveness of innovation/exploration has had a tremendous effect. Many songs produced within the broadly defined genres sound new, challenging, interesting, undefineable. Creative individuals with the understanding of technology continue to break boundaries, thinking, now that I know how to use this stuff, what else can be done? Or even more simply, "how can I please my ears?"
On the flip side (on the demand side if you see my economic background lurking behind all this), there is a continual desire amongst DJs to play something new, fresh, to their audiences. DJs start to hear the new sounds, and the ones that like them, play the songs. At this point the music gets public exposure. The scene grows, and more people enter on both sides (DJs and producers) Somebody invents a catch-all phrase, or a couple, so it becomes easier to write about (which greatly enhances exposure). More people enter. More clubs emerge. There is a limited amount of physical space. In an effort to stay fresh, clubs playing yesterday's music go for today's.
This quasi-economic landscape may be trivial to many of you all. I'm not about to say that this phenomenon could ever have happened with the acid jazz scene, with acid jazz being played as far and wide and becoming as long lasting as I believe the new music will be, but were the limiting factor of the requirement of numerous individuals to form a band removed from the equation, it would have been easier. Supply would have had an easier time meeting demand. The emergence of the individual producer of music has balanced it out for the newer music, and as was pointed out, growth overall has increased (play in large clubs....).
So is acid jazz dying? Since we haven't defined it, if accept that acid jazz at the very least is divided by its method of production, it is very easy to see why people using studios (sorta like that old Mitch Moses' Blues project song or others on the early this is acid jazz comps) to create jazzy sounds have expanded the boundary of what is placed over a breakbeat from the world of saxophones and trumpets. And there weren't that many bands making funky new music in the first place. People will still play the rare groove in the clubs, but the beat oriented - individually produced - acid jazz has grown and expanded into new sonic territory and consequently new language, labels, clubs, press etc.
Oh yeah - I think the beautiful thing about this whole process is although the economic analogy is quite appropriate IMHO, is that nobody's makin' a heck of a lot of money off it, but more importantly, it's not the motive behind the individuals (including some of those on this list) who are bringing it to us.
Am I way off base?
Jay B