Art and Objecthood

"The answer I want to propose is this: the literalist espousal of objecthood amounts to nothing more than a plea for a new genre of theatre; and theatre is now the negation of art. Literalist sensibility is theatrical because, to begin with, it is concerned with the actual circumstances in which the beholder encounters literalist work."

The question to which Fried is proposing an answer is "What/Why is it that the idea of objecthood is the antithesis to art?" He's saying that by adopting the idea of objecthood(i.e. art being an object open to interpretation of its beholder) has created an art form of its own by making art situational to everyone who experiences it. It takes away from the actual piece of art itself and instead makes a art contextual experience. Someone viewing a photo of a graveyard may admire the beauty of its time period, landscape, etc. and react positively to it; however, if the same someone had just lost a loved one, the art may make them react completely different.
Fried rejects objecthood because he feels that it degrades the work itself and that sculptures and paintings are much more than just objects. Like Greenberg's argument that "what is art?" is no longer the main question but rather "what is good art?" Objecthood takes away from the original expression of the artist and instead gives it a context in the present day and values/beliefs of the time and beholders. In the sense Fried rejects, no longer is art just a way of expression but now its all in the eye of the beholder to get what he or she wants out of the art, which is antithetical.