I blame David Hasselhoff.

Everything was going fine for the Web–the financial world had been unwinding its overleveraged excesses for nearly a year with nary a ripple into Silicon Valley–until the launch of HoffSpace, a social network revolving around the oogachaka-ing, burger-wagging actor.

Some bloggers called it a bizarre nightmare. Others decried it as the end of social networks. They were probably joking. But they were right.

Hoffspace showed once and for all what the Web sector had fought so hard to admit: These social networks had finally expanded a niche too far. No longer was it possible to argue that one day social-networking sites would be anywhere near as good at making money as they were at expanding, fractal-like, into a gray goo of trivial matter.

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