Following introductions of participants on our EconSM Conference‘s opening panel, the The Social Media C-Level Superpanel, the panelists - Barak Berkowitz, chairman and CEO, Six Apart; Michael Birch, CEO, Bebo; Tariq Krim, CEO, NetVibes; Richard Rosenblatt, CEO, Demand Media; Herb Scannell, CEO, Next New Networks—held forth on the challenges facing social media as it evolves. Rafat Ali, publisher and editor of paidContent, moderated.

-- Niche Vertical Sites: Asked about building a brand online, Scannell said brands provides advertisers and users a sense of what to expect. “Hits are getting hard in any business and there hasn’t been a hit sitcom since Friends. More and more, brands will speak to people based on a particular passion. Some will be bigger than others, however.” Because of the vast amount of sites, Rosenblatt said he plans to focus on niche passions through acquisitions of fairly established brands. “You can’t do it from scratch. When we wanted to tap into hiking, we bought a well-known site, Trails.com.”

-- Revenue Sharing: For those who do want to create a company in the social net space from the ground up, advertising revenue sharing is considered a good way to get traction, Birch said. He noted the increasing use of widgets and APIs. Rosenblatt regards this as dangerous. “If you’re going to build you’re business from straight APIs, make sure you have a fallback in case you get blocked.” He pointed to the case of Photobucket, which was blocked for a short time by MySpace for inserting ads within video slideshows featured on its page.

-- Pricing: One of the primary challenges the space currently faces is when it comes to extracting revenue out of social nets. It seems to be a problem of metrics, Birch said, adding: “There is no pricing model right now. We’ve developed our own metric based on the amount of interaction we see. We try to demonstrate the impact and effectiveness of user interaction to advertisers, and how it works better than just banner ads. That said, banner ads are an important part of a campaign, but engagement can greatly enhance that sort of marketing program. For the moment, though, engagement is still a tougher sell than just focusing on display advertising.”