Everyone is talking about Facebook’s privacy debacle and Pete Cashmore (@mashable @petecashmore) does a great job of being neutral in his recent Mashable/CNN post, even though he isn’t.

Pete’s take on the Facebook controversy has only two facets:  1) the positive side of the sharing issue is that sharing is beneficial to users because more info = better service to all, and 2) the negative, evil side of the sharing issue is that Facebook wants to make more money from its users in every way possible by selling your personal data and serving ads at your eyeballs.

Shortbord thinks that another dimension should be added to the discussion and that Facebook could have avoided this entire shitstorm of criticism and people fake-leaving the service (that’s right, 540MM users at last count – pretty sure Facebook will come out of this controversy net positive in a huge way). Here’s  how: let users benefit financially from sharing their info.  All of a sudden, these privacy concerns would be turned upside down and users would be wondering “how can I share more of my personal info so that I can earn more value from advertisers looking to pay me to spread their brand message to my social spheres.” Give people an incentive to share, other than the incentive of making an already phenomenal service better.  People simply don’t understand how much better Facebook would be if it was as open as Twitter, and they don’t care to learn.

This begs the following question: “well how do we let people make money from all of their Facebook activity without turning the network into a spam machine?” The answer is simple: regulated, transparent, authentic endorsement badges on profiles, in status updates, and anywhere else Facebook and individuals can maximize the efficacy of the ad unit while minimizing the intrusion on user experience. Why are display ads reserved only for websites, when people are building audiences, serving impressions and generating leads all of the time? After all, people are the new distribution channel on the social web.

Facebook is the center of the web universe, but its truly holding back the evolution of social media marketing by continuing to show ads AT users instead of WITH them.  When ad dollars are flowing directly to users, and websites hosting the users’ time and user-generated content are earning a percentage, only then will social media be monetized to its full potential.