About the slower ad growth, that sure will be a downer for a lot of ad-based services, no doubt about it. Also, venture capital is a lot harder to get these days than just a few months (weeks!) ago as VCs are unsure of what to invest in. (However, as was just pointed out to me they can’t just sit on their money either, they need to invest, so I expect that to pick up again rather soon.) The companies who are up and running have little to fear, their investors won’t just pull out if they’re doing a good job.

So there may be a problem for a number of social media services. However, I was trying to look at the bigger picture, the state of Social Media as a field (and in upper-case ;).

For organizations of all sizes, from small owner-run businesses and non-profits to huge international corporations, fostering relationships of trust with their customers/stakeholders/clients is crucial, especially in times of crisis.

Social media are one of the tools that enable just that. So even if some (a lot? a few?) services and startups go down, I’m convinced the ideas, concepts and mechanisms (maybe even the technology) behind many of theses services will survive and grow. They have proven successful and will continue to do so, if I’m any judge.

So yup, you’re absolutely right, it might cool the industry for awhile. But the ideas are still hot…

b) for social media tools to go mainstream, it’s not just one trusted friend that has to be on a certain tool, but rather a critical mass of your friends. even with “aggregator” websites (which seem to be the upcoming trend, as i gather from techcrunch’s reviews of new startups, as well as google’s openid), i think there’s a certain fatigue people have with adding new social media tools if they’re already on one or two (good example: technorati’s state of the blogosphere indicated that 94% of blogs are dormant now). so perhaps social media will still attract money, but by working with niche markets (i guess ‘long tail’ stuff)

c) but even with ‘long tail’ markets im not so sure either. forrester released a report on bringing web 2.0 to businesses and they basically indicated that a lot of business types who tend to be conservative with new decisions are apprehensive about applying social media tools at the office. i can send the report to you if you want.

regardless, unless companies have a model that is not based on advertising, im not too sure how they can make money. but beyond that i think also i guess i see the potential for social media high in smaller, niche markets (my nachmieterin was telling me about a website like facebook that is closed, so every random person can’t find you and friend you), and for a web consultant such as yourself to help someone execute their idea, but i think the financial crisis (less potential for ads) plus people’s fatigue with being inundated with information and contacts will cool the industry for a while.