Social media has been hot lately. This week, MSNBC.com, a joint venture between Microsoft Corp. (NASDAQ: MSFT) and General Electric (NYSE: GE), announced a deal to buy Newsvine (the price tag was not disclosed). The site allows people to comment and vote on news stories.

However, the business models are still in the formative stages -- and are mostly focused on advertising.

Yet, we are seeing some new approaches, as seen with ThisNext. The company operates a social media site that allows users to recommend, share, and discover products. It's called "shopcasting."

To get more insights on things, I had a chance to interview the company's CEO and founder, Gordon R. Gould. According to him:

"To date, both the market and the company have been shaping up beautifully. Social shopping is definitely the next big sea change we are going to see on the 'Net in terms of consumer behavior and advertising spends. Millions of shoppers have taken the advice of our community to discover great new products which we think is great.

"Whenever you start any company, a big part of the success factor is getting the right team together. I think we have done that, as evidenced by our market leadership in what is emerging as a huge space. The other main consideration is your market. You need to have a huge market to make a venture-backed company successful.

"ThisNext is an innovation-based Brave New World company. Brave New World companies define and build markets (as opposed to better-faster-cheaper companies, which generally make markets hyper-efficient.) One thing that both pleases and surprises me is the speed with which ThisNext's brand of social shopping is being recognized as valuable by shoppers, influencers, and brands and retailers. I think there are four factors that are accelerating and facilitating market adoption of social shopping:

Overchoice: Consumers have too much to choose from and would rather turn to friends and trusted influencers to help them make decisions. Very few people really want to research everything. The vast majority of people want to adopt a "if my friend thinks its great, then I probably will too" strategy.

Discovery: Think about the last time you walked into a store to look around. Did you buy exactly what you thought you would buy? Did you even plan on buying anything? How many of the other people in the store do you think know exactly what they were going to buy when they walked in? Offline, 70% of all retail purchase decisions are made via discovery.

Social media: People trust social media and they trust each other to make good product recommendations. Social media expands the network of trusted people. Therefore, mix social media with shopping and you have a potent concoction. The data supports this view given that 90% of people list recommendations from trusted people as a key decision-driver in making purchases.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.