What a strange argument. In order for the internet to be a failed utopia, it would have had to have been vaguely utopian at some point in its past. I don't think that was ever the case. I'm also wholly unconvinced that a system for data exchange should even be considered on "utopian" terms.
Talking about the internet in utopian terms does make it easier to pull one over on the rubes, as all the startups who are going to Change The World know well. It's not obvious to me that that's worse than thinking in purely utilitarian terms though, because then all you care about is what you can get out of it for your employer, and everyone whose interests aren't in line with those of tech companies and governments get screwed. Which happens anyway, but at least we feel bad about it.
"Utopianism" is indeed a powerful argument. I think it was b_b who pointed out that Moore's Utopia was far more of a thought experiment/social satire than it was a goal (although Marx and others didn't get the joke). It certainly didn't mean "place where everything is perfect." Nonetheless, that's what it's come to mean. Rhetorically, throwing "utopia" out there is akin to saying "would you like things to be perfect?" which is low-hanging fruit at best. Calling the Internet a "failed utopia" argues that there was an attempt at perfection that failed, though, which is false by inspection. Engineers are builders of tools. Petroski makes a compelling argument that necessity isn't the mother of invention, luxury is; when you're under the gun you do what works but when you've got the time to contemplate efficiencies and improvements you make incremental progress. Nobody invented the fork because they were starving and couldn't eat, for example; they invented the fork because eating with knives was functional but ungainly. The Internet is pretty obviously a giant ad-hoc assemblage of incremental improvements. Almost none of it was idealistically planned; the whole thing is a big fat unwieldy bundle of utilitarianism. That's pretty much the polar opposite of utopian regardless of how one specifically chooses to define the term.
Utopias not being achievable doesn't make them useless. They give us a model for how things could be better. Marx's communism is never going to happen, but it gave people a model to compare industrial society to, and the labor movements that grew out of those comparisons did make things suck less for workers. So, the Internet as a place without scarcity or political control, where what you know is the only thing that limits your ability to participate, can be a good model even if the Internet has never and will never really be that. It gives us a standard by which to judge the actually existing Internet, and a better standard than "how easy is this to monetize".
Well, but failure to understand or appreciate what "perfect" really means causes one to apply false principles and unhealthy goals. Consider: Marxism/leninism arose out of misunderstanding Moore's Utopia so instead of free food for all and universal human rights the USSR got bread lines, oligarchy and crony capitalism. An internet without scarcity or political control reflects a world devoid of intellectual property or economic protections; when the whole world is Wikileaks and Napster your entertainment industry becomes Double Rainbow All The Way and the cinnamon challenge while your privacy becomes The Fappening.
I think intellectual property is much more a hindrance than an aid, and while Lenin did misread Marx his misreadings had less to do with the way the USSR ended up than the problem vanguards have had ever since; they run their government the way they did their revolution. That's all a tangent thought. If you work in film and television, you think IP is just fine because it gets you your royalties, and if you work in software you think it's ridiculous because bits don't have colors and if the law would stop insisting you pretend otherwise you could fix that damned nVidia driver bug that has been driving you nuts for years. We compromise, which means that everything sucks for everyone but hopefully the suckage is evenly distributed. Compromise isn't what you aspire to though; otherwise you wouldn't have anything to compromise.
Wow. Paranoia. Backintheday... I think everyone whose livelihood is dependent on mechanically reproducible goods is interested in royalties of some sort. "Of some sort" is always the sticking point. And that's why I think utopias, particularly in this context, are useless: the problem is always in the gray areas, not in the principles.