Facebook and MySpace are like chalk 'n' cheese

Broadly speaking the two sites cater for different demographics, solve different problems, and in terms of strategy -- with Facebook's new platform -- couldn't be further apart. Yet they both face the same challenge: making money.

With talk of Rupert Murdoch attempting to 'offload' MySpace to Yahoo in return for a 25% stake in the company, there's inevitably been another round of discussion in the tech media comparing Facebook to MySpace. Not only is Facebook growing at a faster rate than MySpace -- though as TechCrunch points out, MySpace is still growing fast and Facebook has a long way to go before catching up -- it was Yahoo that tried and failed to buy Facebook last year.

However, the problem when trying to predict a winner between the two sites is it's like comparing chalk 'n' cheese. Broadly speaking they cater for different demographics, solve different problems, and in terms of strategy -- with Facebook's new platform -- couldn't be further apart.

Here are some of my thoughts and observations which might help to clear up the confusion, and explain why I think we have to be careful when comparing the two, and that the real question is how each site will turn growth into revenue.

Facebook is the new social networking darling.

This one is true. Facebook is eating up lots of press coverage, first amongst the tech crowd and then mainstream media. It was the same for MySpace over the last 18 months or so. First thing to note, the stories are different. MySpace was reported as this new crazy phenomenon for teens, with reporters gushing at its growth whilst in the same breath admitting to not quite getting it. We also had plenty of moral panic type articles based on concerns about young people's safety on the site. Another important element of the story was that MySpace represents a major challenge to the music industry, as well as a new way to market to young people. The problem with a lot of the MySpace coverage is that the people that wrote the stories weren't part of the site's natural user-base. This is where Facebook has a major advantage. Tech writers and other parts of the media fit the Facebook demographic perfectly -- and -- in all my time writing about MySpace I've only ever received a couple of friend invites, compared to one or two a week on Facebook since I signed up. It's easy to mistake personal experience for a wider trend, and while we know that Facebook is growing rapidly, if I'd used personal invites as a measurement, I'd think that MySpace had never got off the ground.

A second reason for Facebook's sudden popularity amongst the tech press is that what they are doing with Facebook platform is very interesting from a tech and business point of view. Way cooler than anything over at MySpace. The issues at stake: third party developers, open vs closed, monetization, APIs -- are all things that get us pundits excited. When was the last time you could say the same about MySpace (more acquisitions, yawn!).

Different demographics / different solutions

This one is harder to nail because feature-wise the sites have plenty of overlap, and some users will be members of both. But essentially I see the two giants generally catering for the needs of different demographics -- hence their distinct differences in terms of layout and functionality.

Writing in today's Guardian newspaper, Richard Wray came up with a great analogy:

Facebook, like most internet successes, taps into innate real life traits - curiosity, sociability and sharing. If MySpace is as messy and chaotic as a teenager's bedroom, Facebook is the frenzied networking of a cocktail party, delivering an unending reel of "news" on the lives of your friends.

A teenager's bedroom, plastered with posters (and brands) and with continuous background music, sounds a lot like a MySpace profile. Add into the room a teenager or two who are always on the phone or text messaging friends about gossip or the hottest new band -- and very generally speaking, you've nailed much of the appeal of MySpace. The fact that teenagers are increasingly using the site's internal messaging system over email says it all. Additionally, those posters on the wall can be other user's profiles, which include bands and brands vying for wall space.

In contrast, Facebook is much more popular amongst college students and graduates/professionals (due to it's University roots). The site's design is far less customizable -- you can't decorate your room. Instead, any customization is about deciding what functionality to include. This is even more so now that third parties can set-up-shop on the site and add new features which fulfill every possible need. I logged into Facebook today to accept a few friend requests, and noticed a professional networking event, that one of my contacts was looking to hire, and another had a rather nice laptop for sale. Getting that info took seconds due to Facebook's controlled and efficient interface. Completely different to MySpace.

Who will make the most money?

This is where I welcome comparisons because it is literally the billion dollar question. If we accept that the two sites aren't really in competition for users -- presuming that MySpace can keep attracting a new generation of teens -- there is still the issue of which user base and which strategy will be the most successful in terms of future revenue.

Both sites rely on advertising revenue (though they have the potential to make money through e-commerce). The problem is that eyeballs don't simply translate into ad click-throughs as Facebook knows too well. MySpace's reaction has been to bombard its site with -- at times -- intrusive ads, which hasn't gone unnoticed.

Therefore, I think the challenge both sites face is not who will out grow the other, but how they can convert their dominant positions in arguably two different markets, into a sustainable cash cow.

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