I think its rather early days to reach this conclusion. A social network is just a network of people. In the real world small networks of like minded people have often had a disproportionately large amount of utility. The one thing for large social networks right now is that they provide a global namespace of people which helps discoverability. But perhaps in the coming years we shall see social networks emerge for vertical talents where likeminded people can work productively (Mendeley etc come to mind). You could arguably make the point that within each of these verticals a single player will dominate.
Yes, I see where you're coming from. Let me refine my point. Niches will probably get smaller and smaller. Facebook may lose market-power to smaller, more focused networks. I'm just not sure if that will weaken Facebook to the point that Facebook stops being "the" social network. Facebook is still the ultimate place for global connectivity. Perhaps Facebook will remain Facebook, but people will stop using it as their main social outlet.
Like you said, this could result in dominant players within a vertical space. But, how large will these vertical spaces be? I don't know. If i knew, I'd be a millionaire. (I'm not.)
I wonder if Facebook could actually become too big.
If everything i write into Facebook will be read by friends, bosses, grandma, and father-in-law, i will probably write nothing or only simple jokes.
So there might be a point, where everybody has a Facebook account, but nobody uses it anymore.
This might be counter by introducing more controls, but that complicates the interface.
