Uh, sorta, kinda, I guess... It is a lot less alive than it should and could have been. Sure, you can set up your own web-server, install RSS reader on your phone and use RSS as a protocol to get updates of your cat coming in and out or whatever. But essentially all the major services heavily discourage its usage for the majority of users.
Sure, you can use Feedly quite easily and a lot of sites, blogs, etc. still generate RSS feeds.
On the other hand, it's not really a first-class citizen, it's not available on major services that want eyeballs, subscription fees, etc. And, frankly, a lot of us have just mostly gotten out of the habit of using it because we figure we'll learn about most interesting or important stuff on social media in some manner.
You can write web apps rather than mobile apps, publish on open source publishing platforms, use IRC, use RSS, etc. Yes, there may be discoverability and other downsides but nothing is actually preventing you from avoiding walled gardens for the most part.
The problem is there's an arms race on web browsers and constant upgrading of OSes and software and hidden centralizing effects. So even if some group of people are using IRC and RSS, probably many of them are getting caught up in google, chrome, and the current centralizing trend of the current "Web"
IRC is not in the same situation as websites. Plain HTML pages work fine in mainstream browsers. The web server does need to be upgraded to do encryption, but there is good open source software available for that.
Here's your idea in a different metaphor: How many die hard fans does it take for a musical band to exist; for the business machine to be self sustaining by die hard fans that will consume your material when released?
There are lots of bands that have exited the mainstage of public notoriety that are still thriving in various ends.
