I think Josh has it mainly right in his Medium post https://medium.com/i-m-h-o/a5890c2c2cc0 - it's not just about traffic but engagement.

I was one of those passionate users on Geocities, to the point where I was given shares in the Yahoo acquisition for my work in the community. GeoCities died on the vine because they didn't continue to innovate on the site building and community they had. They certainly could have been so much more - foreshadowing blogs, social networks, everything myspace became, etc and could have found a way to build the kind of sticky (and huge) audience that monetises better - if they'd continued to develop.

I think it had more to do with the fact that Yahoo needed to start making money with Geocities... and couldn't.

The sequence seems to always looks the same:

1. Big social network needs to change privacy settings and TOS in order to make money: users start to leave.

2. Big social network is under increased pressured to make money and introduces paid accounts (or more advertising): most of the users leave.

3. Big social network is no longer cool (because everyone's left and it's full of ads) and can no longer innovate (because there is no more money).

4. Big social network dies

We've seen this play out before: Digg, MySpace, Geocities.

I'm willing to bet this will play out with the current crop of consumer networks: Facebook, Twitter, Reddit.

I wonder if it's just that the folks who convince their bosses and boards to make bad moves just don't care. It's a subsidized party. Acquisitions mean travel, splashy events, big budgets, and no one remembers who did what or who's to blame for it as long as you stay a few pay-grades outside of the spotlight, and have a new job before the last one craters.

Picture generals and arms dealers seducing politicians into voting for a war, keeping themselves just outside of the consequence field-of-fire.

This is the only answer I've heard so far that makes sense: cash-rich companies (and investors) have money, and want to spend it.

"It turns out, there's a lot of money in the world. The money is bored. Money wants to be spent! Money is intended to be gambled. These are big numbers, but these are big companies." - Jason Calacanis, http://youtu.be/SY62KuoxWJ0 [Video]

cough Myspace cough

Quite a lot of dotbombs, too, relied on… advertising. Back when it was banners. Punch the monkey!

Exactly! And Digg. And Friendster.

Advertising can be a good business, but it still needs to follow the same formula: Revenue - Expenses = Profit

In my mind, Google is the only real B2C internet company that's proven itself.