Worth reading. No -- mandatory reading.
I hope some outfit comes up with a new solution that is private by default, fully modular and allowing users to customise every aspect of their profile to precisely define exactly how MUCH they want to share and with WHOM. Better yet, how about a system which uses Facebook's own APIs to support seemless export of all your own profile data into this new system (either that or script it up). Imagine being able to use Facebook's own tools to eliminate itself from the market. That would be a nice touch.
But of course, all this information costs money to store it right? So there is clearly an economical problem - but that's solvable. Want to make money with targeted advertising? No problem. This new Facebook insists that all ad networks and affilitates send THEM the ads and relevant metadata. New Facebook then filters ad delivery to the end user directly. Bingo - user data isn't shared. You then just focus on making enough money to sustain the service and ensure that user information is considered sacred. No fancy ass crap about exposing APIs to mine for data, no changing of default privacy settings, etc.
I'm pretty sure that users could live with targeted advertising if they knew that their information wasn't being shared and their privacy being taken seriously.
Now who wouldn't sign up for a service like that?
PS: On a side note, this is how you get security to be seen as a business enabler.