Well, not so much a demise, but a major change. Many popular websites are slowly declining in market share, and have done so for the past few years -- with no end in sight. Soon the Web will be completely different from the one we've known and loved/hated since 1994. As I already pointed out, Twitter is declining in popularity with some speed.
First of all, against all expectations and reason, the monster Google has been declining in popularity. This helps to explain why Google killed off so many of their "projects" in the past two years. (The massive "blip" in July 2012 was apparently a technical screw-up by Alexa, and appears on most of their charts.)

Yahoo's financial and managerial woes are easy to see in its traffic chart. In 2000, Yahoo was far and away the world's biggest and most popular web portal, and "unassailable". It appears to be headed for "ghost site" status, albeit slowly.
Microsoft, you say? MSN? Ha ha ha.
Bing, the mighty "Google Killer", isn't. They're spending billions to promote it but it's still a very distant second.
CNet, once the premier destination for tech news, is declining, probably because there's so much competition for a relatively small audience. In the 1990s the Web was a nerd's paradise. Those days are over.
I'm happy to report that "old-fashioned" blogs and communities, with the "traditional" geeky focus, are all going down the drain. Good fucking riddance. (No wonder you can't post anything "controversial" on Metafilter or Boing Boing anymore. They are dying of paralysis. See you in hell, Mr. Doctorow, you little shit.)
So much of Web 2.0 owes its existence to Pyra Labs, creators of Blogger. Pyra associates sold out to Google and went on to create Metafilter, Twitter, various personal blogs that are still popular with tech people, and to become the "cream" of the "digerati".
Soon, Pyra, and its "great creation", will be footnotes to history -- if that.
It's sad to see Digg go like this, since they've actually been working hard to become a good, varied and honest news aggregator. Not that anyone cares anymore -- if they do get any media coverage, it's usually a snarky putdown. That's something Web 2.0 specializes in. Kevin Rose is still a drunken asshole, though.

Which websites are
increasing their traffic? Well, for one thing, the Web is becoming steadily more Chinese. Major Chinese-language portals like baidu.com and sino.cn have been gaining steadily for years. Russian sites like yandex.ru are also gaining ground at the expense of English-language portals, but not to the same extent. The slow penetration of broadband into those two countries seems to be a major reason for their late arrival to the "party". Or freak show, if you prefer.
For whatever arcane reason, Pinterest and Tumblr have been stealing the eyeballs normally expended on more traditional properties. Millennial "hipster" types apparently love them. When it first started, tech bloggers regarded Pinterest as a joke. Not anymore.

The only (and I mean ONLY) major Google project whose traffic has been improving in recent years? YouTube. Combined with the steady increases in other video-delivery systems, the Web is becoming an audiovisual drug delivery system, foremost, while its "traditional" uses for discussion and delivery of textual content have basically peaked.
And in 2012 the biggest winner of all, Facebook, came within striking distance of pushing Google out of the #1 spot, for the first time in
more than ten years. Google not being #1 would have been unthinkable not long ago.
Facebook has turned itself into Website for Dummies. Deliberately programmed to generate obsessive behaviour and "socialization", it completes the popularization of a once-arcane communications system. From a digital "playground" into an addictive drug. Web 2.0 is essentially nothing more than a filthy heroin syringe.
And speaking of Wikipedia.......its traffic chart is a fucking mess, because it is a fucking mess. But it, too, is slowly declining. So much for "all human knowledge". From now on, it's reserved mostly for
plagiarism by schoolboys and lazy journalists.
That's all I wanted to say. You can go back to playing Bejeweled and Pot Farm on Facebook now.