I think you're focusing too much on Ning. What I am really referring to is the business model that it uses. As you've suggested it's imperfect and maybe Ning hasn't run their business very well but I don't think because of that we should say that another company cannot implement the model successfully.
The model I envision is very similar to the shared hosting model employed on the web. You sign up for hosting and you install a CMS like drupal or wordpress and you have yourself a community and you pay a subcription fee. But instead of drupal there could be a social networking application. Each network creator would be responsble for it's promotion and marketing but I think it's a viable model because there are existing real world communities that would like to establish an online presence and something like this may be a great way to do that.