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."

Last week, I was a moderator at a conference called TiECON SOUTHWEST 2006.

The topic was certainly interesting – "The New Internet: YouTube, MySpace and Beyond."

As is always key for a moderator, I was lucky to have a great panel. There was the money guy, that is, a venture capitalist from Softbank, Tarang Shah. The others included company founders, such as Gordon Gould from ThisNext, Eden Jarrin of Be Jane, Michael Sawtell of The Family Post and Erik Hawkins of PureVideo.

For the most part, it was a free-form discussion (there were also smart questions from the audience).

Here are some of my takeaways:

Web2.0 was supposed to be the next big thing on the Net. And, yes, there were some cool technologies, like Flickr.com, Writely, del.icio.us, and Digg. Biggies like Yahoo!, Microsoft, and Google even snapped some of these up.

But there's a problem: while these sites are definitely cool, the business model is often hazy. After all, when you give something away, you need either a premium product to upsell or a lot of users to monetize things with advertising.

Well, we are finally seeing signs of trouble in the Web2.0 world. For example, PubSub recently closed shop.

Interestingly enough, some of these failed companies are finding some liquidation value on eBay (yes, despite a terrible stock performance, this company definitely has a killer business model). I wrote about one for BloggingStocks recently, in which a community search engine decided to sell out.

The most recent to hit eBay is Kiko, an online calendar site. In fact, the company's investor wrote a blog post on the demise, blaming the "do no evil" Google.

As for the eBay listing, there is currently one bid – for $49,999.99.

I talked to Gordon Gould, who recently raised venture capital for his Web2.0 startup, ThisNext. According to him: "We looked long/hard at whether to raise institutional money or not for ThisNext . We decided in the end it made sense to do so. The 'build it for no money' opportunity is highly problematic, particularly if you are in a crowded marketplace (and the web services marketplace is currently very crowded). More broadly, taking VC money can help a company weather macro and company-specific economic downturns. I started Upoc in 1999 and raised an $18mm round in early 2001. If we had not raised that round, Upoc would have been crushed by 9/11. Our VC's basically gave us the working capital to survive the downturn. VC can also help companies not make every product decision to be a 'bet the company' type of scenario where you can afford to experiment a bit. Taking no money usually means if you make a mistake, you die."

Tom Taulli is the author of various books, such as the Complete M&A Handbook and operates InvestorOffering.com.