ewharton
(1) They were built on another business - see Michael Porter's supplier power. If you need one company too much, you face a lot of tail risk. Of course, there's nothing wrong with starting this way. In fact, being focused can be the best way to prove an in idea, get money (revenue or risk capital) and scale to other platforms.
(2) They did not add value. In effect, Demand Media was an arbitrage of digital adspace. Arbitrages get spotted and, eventually, disappear or diminish.
The dependency on another business & the lack of value add makes me wonder how they got as big as they got and just why they did not fail sooner. Of course, I hate to see any companies fail, given the risks of entrepreneurship & positive economic benefits (it makes the economy antifragile).