A major reason the decline of private servers is not many people will donate to a simple VPS unedited private server with one of the main sources like they used to... this requires people to actually add stuff and have coding knowledge, which is about 7% of the people here. A lot of the bigger people have moved on from Coding, and hardly anyone else knows how to add stuff, like I said before.
Not only that, but RotMG as a game has become as dead as ever, Kabam is releasing small updated but nothing game changing by any means. As to be expected from Kabam.
I could honestly write a hella long summary on why private servers are dying but it is self explanatory and I need to do some homework :P