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Balkanization is used in fandom to describe the de-centralization of fandom.
Many fans consider it something that mainly happened in between 1998 and 2005.
Examples of UseA 1997 use of "balkanization":
Another 1997 use:Many of the writers have complained that posting to Gossamer is difficult, time consuming and annoying. Why should reading be the same? With the increasing balkanization of the fanfic community things will become increasingly hard for the -reader-. I for one, do not miss the old hunt and poke days of fanfic before Vincent's Gossamer.
The term was used in 1998 in a panel discussion at Worldcon:
I don't think alot of folks come to this venue [Usenet newsgroup] for fanfic discussion. I think alot of them don't realize this is a good venue for discussion, most folk who want to talk fanfic go to the mailing lists now or just do private e-mail to the author.In the 4, almost 5 years I've been reading X-Files fic (cripes has it been that long?, I feel so frickn' old now) the community has balkanized. Used to be the NG was it (that and FTP). Now there are so many specialized groups and clicks (this isn't bad, it's just the best word I can think of at the moment) and sub-groups ATXC tends to be the home of the most general stuff. The more specialized stuff is usually found on the lists on on private web pages. 
How much longer can we keep it up? Are Worldcons becoming a thing of the past with the median age of fandom rising, hotels becoming more problematic, balkanization of the 'SF Community,' and decreasing numbers of young fans? 
Another early use of term is from a 2001 Escapade panel discussion was "I'm Taking My Ball and Starting a New List: or, The Balkanization of Fandom by Kat Allison, Carol, Merry Lynne ("Why the proliferation of ever more numerous, smaller, more specialized, often private mailing lists in slash fandom? What effect does it have on the fannish community and on the quality of on-line discussion?")
LiveJournal is often cited as a source of balkanization in fandom, but the drift of fandom was already happening; LJ only increased it.
Today, the practice of balkanization is expected as the multitude of fannish platforms and spaces has exploded.
In summer 1998, eGroups started gaining users, although most fans stayed on Onelist. The two merged in 1999 (to a fair amount of crankiness from a lot of fans, who preferred Onelist); by that time, people were using these "public" web-based lists to create main-list lists for their fandoms, and starting lists for any show (or whaever) that caught their fancy, without necessarily waiting for a critical mass of interested people. Then in 2000, pretty much just as fans had finished adapting to eGroups and started to get fond of it, Yahoo bought eGroups and turned them into Yahoo Groups (to even more crankiness).
This was a lot of shakeup in a short period, but fandom had been doing even more internal shaking up. The advent of simple, web-based mailing lists that absolutely anyone could start/own/run changed the face of mailing-list-based fandom.
Some CommentsAn elitist term? A 1998 comment:
Some fans enjoyed this fandom dispersion; for them it made a more enjoyable experience. From a 2003 Media*West con report:...the term itself still strikes me somehow as a tad elitist - and I don't think fanzine fandom does that, inaccurate as it may well be. The mistake, I think, is to look for a term which claims any kind of historical or traditional affiliation that implies "we were here before you." It doesn't matter whether it’s true or not.
A fan comment from 2005:A friend went to a LOTR panel and had to leave early, too. She said there was a big, nasty conflict between the moderators and a group in the audience. They were supposed to discuss each of the characters and the group in the audience thought they'd spent long enough on Aragon. And people fret about the demise of panels at cons! I wonder why? I think I'm becoming a fan of the Balkanization of Fandom as a way to enjoy fandom -- save for a few DMZs that are inhabited by folks who are not proponents of My Way Or The HighWay ideology.
Another comment from 2005:I also wonder if this compartmentalizing affects peoples writing in that they write for a more limited audience.... In fact for awhile I and some others figured there'd be a mix of decentralization and exchange of data but central sites would play a central role. Didn't work out like we expected. People want what they want.
From a fan in 2005 who is very thankful for it:I'm totally on the LJ train. Really, I am. There are things I miss about mailing lists, and if you asked me to choose between fandom primarily going back to lists and fandom staying on LJ, I'd...well, I'd pull a John Sheppard and flip a coin, but pragmatist that I am, I'm all with the "LJ is where fandom is at so that's where I'll be." But like every other medium ever, LJ has its benefits and drawbacks. Every time the "is LJ good or bad" discussion comes up, people say that LJ lets you customize your fannish experience, and posit this as a beneift. This always gives me pause, because the truth is, what LJ lets you customize is the people you come into contact with, which is absolutely a benefit. But again, like every benefit ever, it comes with a cost.
Other fans find balkanization to be a negative: from a fan in 2013:As to the isolation factor -- I agree wholeheartedly and I thank God for it. [snipped] In my experience, the best way to make fandom into a positive space for oneself is to find your niche and stay there. The Balkanization of fandom started some years ago, and has continued apace. I think that's been, by and large, a *good* thing. We have metafandom when we want to branch out, and I think people use it fairly often. I get all the engaging discussion and cheerful disagreement I need from my f-list, and while I had to put some effort into doing that -- *having* that -- it wasn't, in the end, all that much. 
A 2014 comment regarding fandom cohesion and cons:...the “traditional” fannish values of yore seem to matter little to the generation currently running things… General cons, where everything is on the agenda, is falling victim to specialized cons, such as “steampunk”, costuming, gaming, media, and even a couple of cons honoring the “old school” fanzines of yore. This Balkanization of fandom may just lead to its eventual demise, but I hope not.
Now, the one thing pushing back on the “balkanization” of fandom, is the rise of the super-con: DragonCon in Atlanta, and the many Comic Cons, such as Salt Lake City Comic Con or San Diego Comic Con. Events that will literally draw tens or even hundreds of thousands of people. And not just the hard-core fans, either. The super-cons bring “mundanes” from beyond fandom who are still fans, they just do not identify with fannish culture or history, nor do they even necessarily recognize what it is they enjoy; as Science Fiction or Fantasy. For these “fans outside fandom” they are purely attracted to a popular mass-appeal product, such as a comic book line or comic book movie, a popular television show, and so forth.
- The Price of LiveJournal; archive link by cereta (2005)
- LJ and the Ghettos; archive link by Ptyx (2005)
- from Media Fandom Oral History Project Interview with Jan Levine (2013)
- comment by p.juel at alt-tv-x-files.creative: Archive Discussion (was An open letter to A, July 13, 1997
- alt.tv.x-files.creative › REC: "Vestigy" by Lisby by Hawkeye (May 12, 1999)
- Fanac, 1998
- from Fandom 1994-2000-ish/Part Three
- In a Prior Lifetime, pdf, 2006
- tenaya, Archived version
- comment by dragonscholar at Fanthropology: Fandom: Evolution; archive link, February 1, 2005
- The Price of LiveJournal; archive link by cereta (2005)
- from a comment by thete1 at Some thoughts on LiveJournal, not all entirely related.
- Conventions, Science Fiction, and Me…, Archived version
- Whence fandom?, Archived version