It's 100% of why they failed. NNTP providers that didn't provide full feeds were loudly boycotted. Customers and users left those providers. Ask me how I know! Doing competitive full-feed NNTP was one of the most annoying and least useful things I've worked on.
I have been running a (non-binary) usenet server for quite some time too.. Don't underestimate the annoyance of spam and trolls.
They kill pretty much anything once active moderation disappears.
Once they exceed a certain fraction people tend to get very annoyed and jump ship for anything where they have interact less with them.
Over time only trolls are left in the newsgroup (in many newsgroups they haven't really left to this day).
I consider binary newsgroups and the rest to be two almost unrelated things. Plenty of non-binary usenet servers were doing just fine, but of course no one would really pay for them.
Fair warning: even by my standards, this is an area where I have strong opinions (I loved Usenet, and ran a Freenix-competitive full-feed site in the 1990s). I'll just leave this here:
I'm not saying I can refute what you're saying, just that I think my claim about "binary vs. plaintext" being problematic with respect to NNTP is well-founded.
