Tom Coates, ‘tech development’, London, Yahoo! said this (paraphrased):
The shift is in helping people create content and make use of it. The content they produce is part of an environment which is greater than the sum of it’s parts, and the hosting company can turn that into a larger resources, so I’d probably put that as what social media ‘is’.
People may be reluctant to stick ads onto user generated content but you can get lots of loyalty to a site and one of the common services in UGC sites is is bumping up the most popular content to the top of the pile. People could also be selling rights to photos so others can make other products, like posters etc.
Buying social media sites is an expensive way of going about it.