The news of the RIF at MySpace puts front and center the need for social networks to adopt new business models to keep them afloat. As this news suggests, treating social networks as just another ad-supported on line channel puts them at risk when ad fortunes go south. More importantly, it fails to capitalize upon the real value of these networks – the potential to monetize the creation or leveraging of these relationships around some sort of social commerce application.

Making that transition will require three things. First, it will mean a willingness for management at the social networks to think of themselves as a social platform, rather than a media or advertising company. Sounds simple, but that fundamental shift in thinking is essential so that proposals that look, sound and perform differently from ad deals are not dismissed out of hand.

Second, brands that wish to engage on these social platforms must think outside of the box in terms of the kinds of programs and offers that they take to the networks. Programs disguised as viral ads touting the brand won’t cut it on most networks. (Nor will, in most cases, activities targeted to build community. Those efforts in particular are tough slogs – subject of an upcoming post.) Not because the networks won’t sell the space, but the people you want to engage, won’t. That is why the CPMs on social networks are pretty anemic and most of the fan pages are even leaner.

Third, brands and networks must work together to define business models based on engagement and how that engagement translates into a currency that carries value to all parties to that platform. One of the key tenets of platform success is making it easy for people to get together and helping them correct the failures that not getting together will (or has) created for them. Today, ads (regardless of how clever) do little, if anything, to correct the failures that the social platforms were designed to overcome. And, as we are now seeing, they are doing even less to ad value to the networks themselves as advertisers, disappointed in their ROIs on social networks, pull back.

The news from MySpace, I think, is a healthy indicator that they are serious about reengaging and reenergizing both their members and their employees around fresh new ideas. MySpace Living is one of those exciting new ideas. I have a feeling that the next 6 to 12 months will yield many more interesting developments as all of the social networks refocus their strategies on how to make money. If, that doesn’t work, there’s always the Russian billionaires.