Setting aside homes with over 150 television stations, computers, cell phones, and computer games, are American teenagers reading less than those of us who were born before 1970? Also, what does it take to spark an interest in reading---anything!
One way to spark an interest in reading in children is to read to them and with them. If children come, from an early age, to associate reading with loving attention from their parents or others, they are more likely to acquire the skills in reading, and the interest in reading, that will make them life-long readers. I have a colleague who read to his daughter every night of her life until she went off to college. She is now herself (while still in college) the author of three books in addition to being a highly successful student and a voracious reader.
I think we now live in an instant society. We have fast food and microwave meals that are instantly ready to eat. We can turn on the TV and have instant entertainment with no effort at all. Once, information had to be found in a library. Now, it is immediately available in the palm of your hand. Students don't even have to type the words anymore. Most smart phones now have voice recognition. All they have to do is speak a few words to phone (or computer) and they will immediately have the answer. Students have lost interest in the why because they just want the answer as fast as possible. There is no need to read the entire article when they can hit control F and skip to the answer. There is no need to decipher the current events in the paper when there is a TV anchor telling them what to think. While this does not apply to everyone, I think the next generation of children are starting to really miss out on many of the skills gained from reading and searching rather than instant answers.
An interest is sparked by exposure to what each individual would regard as "a great book." Millions of otherwise less-than-motivated kids started reading because J. K. Rowling wrote an incredibly engaging series of novels that sparked something in those kids (and their parents...). I have had students say they aren't readers, but realize they like reading after I have required them to read a novel that I think could "flip the switch" so to speak. Not all kids like all my suggestions, but I have had more than one student thank me for exposing them to: The Kite Runner, The Hunger Games, Extremely Loud and Incredibly Close, The Handmaid's Tale, Brave New World, Persepolis, and the list could go on. Educators need to keep asking students to read and thinking about what titles they suggest.
I think we need to examine our definition of reading for the modern age. I rarely see my nine year old with a book, but I know he is able to be fairly discriminate when searching the Internet for school project work, and he can swiftly navigate a set of instructions for a computer game. A lot of his games have written on-screen information which he devours too. If we are having a mammoth movie session, I flick the subtitiles on our DVD's so he reads what he hears as well. He certainly reads nowhere near as many books as I did at 9, but I didn't have the range of options for entertainment that he has. I think there is a place for all of these things, and as long as a child CAN read fluently, and does extend their vocabulary, understand a range of texts and their purposes, I don't mind if the word is printed or virtual.
It is just these electronic distractions that you mention that is the predominant cause for the lack of reading in the 21st century--by both students and adults. I only see a rise in electronic gadgetry that will further draw kids and adults from what was once a peaceful and mentally enlightening distraction--reading. Students consider reading a waste of their time these days, and most are willing to skip the task and settle for the summary version. I don't have an answer. If parents would set more of an example for their kids--taking the time to read regularly if just to allow their children to see them with a book in their hands--that would be a start. But most adults prefer TV, video and other electronic pursuits these days as well, so it does seem that reading for pleasure will eventually dissolve into a pasttime for just a select few.