There are plenty of appropriate words in the ACTUAL English language well suited for many new situations. We don't need to bastardize words just because marketing people feel it adds some intelligence to what they are saying.
Here's a few words that work well in this case: department, division, grade, group, grouping, heading, kind, level, list, subset. Just to name a few.
"transformative phenomenon" ... come on! lol
I voted yes to the definition of industry because it is simply such a big and transformative phenomenon. The meaning of the word industry has to change to keep pace with a rapidly evolving technology that impacts so many sectors of the economy: news media and advertising, travel, retail ... the list goes on.
I think the term industry is being misused here. Does Social Media deserve its own space on the shelf, yes it does. But an industry, by definition, is the manufacturing of a good or service. It's still just "Computer Technology", there are smaller categories within the larger "industry" of Computer Technology (web, desktop software, database, etc). Is Social Media at a point where it's a smaller category of Technology, no. It's a web site that allows people to interact with each other. So it's just another TYPE of web site.
Industry or disruptive technology. Bottom line is people and business are adopting this approach to community. I believe it's not only an industry, it's a statement about what our society has been lacking–the ability to connect and relate to each other.
It doesn't have to be large to qualify in economic terms as an industry. It just has to be a distinct field of endeavor with a non-trivial economic presence.
That said, some of the more interesting work is being done by companies in other industries who use social media. For them it's a channel to use in expanding their current industry. To me that's more interesting because it speaks to the creation of new ways of doing business, not just creating yet another niche for software providers and consultants