I think the failure came with the erosion of copyleft like GPL in favor of BSD, MIT, and other "free for all" licenses that companies exploited to the detriment of the community instead of being forced to participate as equals.
Sometimes people just want to make a little money on the side and not conquer the world. If a BSD open source project can help people sell a proprietary product, there's now a new stream of income in the community that could be partially reinvested in the project's core. GPL is excessively ideological and only makes sense for a narrow set of scenarios.
Please note that I'm not against GPL at all. Without it, I don't think we would have Linux and many other projects. What I'm against is promoting GPL to every scenario, which essentially kneecaps the community to protect against a hypothetical greedy large corporate entity.
GPL shouldn't be the default license when someone thinks of open sourcing their project. They should first consider MIT/BSD/etc and only pick GPL for reasons that are specific to that project or industry.