Barry Diller likes social networks. He says they function as telephones used to: they help us communicate with each other. But one thing they don’t do is make money. Here’s what he told the Goldman Sachs Ninth Annual Internet Conference today in Vegas:

In social networks, the only way you get paid is from advertising and advertising has … on social networks has proved to be not particularly effective.   

That’s not to say things can’t pick up:   

It probably will find ways to be effective but it hasn’t been and so you can’t say okay, lets find widgets and all of these things to put on all of these services.

IAC has invested in widgets and things, with a piece of music sharing application iLike that is one of the most popular on Facebook:        

It’s great. It’s got way more than 10 million … uniques. It’s thriving as a service. It has zero revenue. And it is very much a social network site. … I’m not saying we won’t find ways, but this is very very early days here. So valuations on these kind of entities, I think, are pure speculation. 

 (Photo: Reuters)