I couldn't disagree more with this... That would cut out most of what's interesting in jazz from about 1940.
As for whether academicism killed jazz, I think it gets things the wrong way around. Universities are an alternative form (from the market) through which people get paid for cultural work. Just because the proportion of people making a living out of a form from the academy rises doesn't mean it's responsible for the decline elsewhere. It's not surprising that as other pathways to earning from a form decline, the university exerts a stronger force on the field. (I'm not sure how much jazz's centre of gravity has moved to the university, though - it probably depends where you live; I doubt it's true in NYC or New Orleans.)
The same is true for a lot of fields - I think the point was well-made in Chad Harbach's piece from n+1 someone posted a while back, about creative writing degrees: http://www.slate.com/id/2275733/ You could make the same point about academic Marxism.
Back to jazz - it lost a lot of its vitality mainly because the bulk of its core audience moved on to other forms, and sure, a part of that was its departure from danceability - its real centre of gravity became polite cocktail music in hotel lobbies and cafes.
Mike Beggs