That first nugget ignores that some people invest a lot of time and effort into their online identity via a social networking site. They aren't going to switch in a heartbeat.
2007, fb way ahead: http://blogs.zdnet.com/social/?p=114
2006, fb ahead: http://changesgood.wordpress.com/2006/09/23/myspace-is-in-vo...
2004, fb catches up: http://www.blogpulse.com/2004_review/2004review_socialnetwor...
If you think of it that way, it's not an either-or proposition. I can continue to have my profile on your site, but I won't venture there as much, you lose the ad revenue, and the downward spiral continues.