Sure, phrases like "social media" and "network effect" are overused. But when News Corp.'s (NYSE:NWS) Rupert Murdoch bought MySpace for $580 million last year, he got the same skepticism. "How can you monetize this?" people wondered. "Has he lost his mind?"

But now Google is willing to commit at least $900 million to MySpace and other News Corp.-owned sites to provide their search and advertising technology. To me, this is strong evidence of the monetization power of social media.

Yet Yahoo! (NASDAQ:YHOO) has not had to write big checks to succeed in social media. Its acquisitions -- such as for Flickr -- came with small price tags. According to Yahoo!, Flickr's cost was an immaterial amount. And as I mentioned before, Yahoo! has been able to organically create social-media megaproperties, such as Yahoo! Answers.

I also agree with Chuck on the perils of diworsification -- as does Yahoo!'s CEO, Terry Semel. On the third-quarter conference call, Semel said there were "too many priorities" when he came on board with the company in 2001, so he brought some much-needed focus. But Semel now admits that Yahoo! has indeed become unfocused again. As a result, he now plans to concentrate on three key areas: monetizing search, building Yahoo!'s lead in graphical advertising, and moving aggressively into social media, both in video and mobile forms.

Yes, Yahoo! has things to fix. But it's a lot easier to make those repairs when the market is growing quickly and there's a talented workforce, a powerful brand, and an enormous user base. In other words, Yahoo! presents investors with a big opportunity.

Duel on!

Yahoo! is a Motley Fool Stock Advisor recommendation. Get your free Stock Advisor market report today!

Fool contributor Tom Taulli does not own shares of companies mentioned in this article. He is currently ranked 22nd out of more than 12,000 players in Motley Fool CAPS, the Fool's new stock-rating community. The Motley Fool has a disclosure policy .