Facebook creams MySpace in popularity battle

The pioneer of the social networking phenomenon has been totally overshadowed as Facebook Inc. recorded almost double the number of global visitors in December than longtime leader MySpace.com Inc.

Facebook, once thought of as the up-and-coming social network, had almost 222 million unique visitors last month, while MySpace came in at 125 million, according to online researcher comScore Inc.

That’s a dramatic change since the race for unique visitors was a near dead heat in April 2008.

“The trend isn’t new in terms of Facebook’s phenomenal growth,” said Andrew Lipsman, director of industry analysis at comScore. “It’s doubled its number of visitors in the past year.”

And Facebook isn’t starved for money, with a $15 billion valuation thanks to a 2007 Microsoft investment.  

Facebook‘s ad business is humming along nicely, noted CEO, Mark Zuckerberg at the Web 2.0 Summit in San Francisco last November.

He spoke of a healthy cash stream both from direct sales to big brand marketers and from smaller advertisers that buy space on the site using its self-service tools.   

Generating “hundreds of millions of dollars” in annual revenue has allowed the company to focus on growing its worldwide user base this year to about 125 million members and to not have to make revenue generation its top priority, he said.

Industry pundits have suggested recently that, given its fast growth, Facebook may be approaching a cash crunch that could affect its operations and force it to seek more funding, but Zuckerberg dispelled those ideas.

Likewise, the staggering $15 billion valuation doesn’t weigh around the necks of staff, nor does it dictate the company’s business strategy, according to Zuckerberg. “We don’t feel any pressure to live up to the valuation,” he said.

By the same token, Microsoft Corp.’s $240 million investment is just one piece of the companies’ collaboration, which also includes partnerships for online ads and search technology, so Zuckerberg isn’t worried about Microsoft CEO Steve Ballmer regretting what he paid for the Facebook stake. “They have been a really good partner for us,” he said.

Facebook, which now has more than 700 employees, is especially interested in recruiting talented technical staff, such as engineers and product managers, and growing its direct sales force – in particular internationally, he said.

Asked by conference chairman John Battelle to comment on criticism that Facebook is too much of a walled garden, Zuckerberg said the company’s goal is to continue opening itself up, but that will be a gradual process.

It started in earnest last year with the launch of the Facebook application development platform, which lets external developers create applications for the site, and continues with Facebook Connect, the company’s nascent data portability initiative to let members export their Facebook data to other sites.

Questioned about whether Facebook is purposefully not participating in Google-sponsored efforts like the OpenSocial set of APIs for building social networking applications, Zuckerberg said there isn’t an intentionally adversarial attitude toward the search giant.

Rather, Facebook is weighing its options and evaluating OpenSocial, which it considers inferior to its own Facebook platform, he said. It remains to be seen which effort will become an industry standard, he said. Facebook this year open-sourced a big portion of its platform.

In addition to Facebook’s nonparticipation in OpenSocial – in which MySpace Inc. and Yahoo Inc. also are players – Facebook starred in a public spat with Google this year when it blocked the search vendor’s own data portability system.

There are many privacy and security issues that need to be worked out as well before wide-ranging interoperability can be accomplished, and Facebook wants to make sure it doesn’t compromise its members’ ability to control their profile information, Zuckerberg said. “A lot of these problems will be solved over time, but I don’t trivialize them,” he said.

No matter what happens in the short term, Zuckerberg said he’s confident that in the long run, both in Facebook and in the Web ecosystem in general, there will be a high degree of openness and interoperability among Web sites.

However, while Facebook holds a sizable lead worldwide, MySpace is still the champ in the U.S. Lipsman noted that Facebook has about 55 million American users every month, while MySpace has 75.9 million a month.

And two-thirds of MySpace users are based in the U.S., while only a quarter of Facebook’s users are here in the states. Lipsman said Facebook has done a great job of luring in worldwide users, especially with its foreign language interfaces. In the markets with the new interfaces, he noted that Facebook quickly went from a small player to a leader in social networking.

“It’s gained traction because it’s become more culturally relevant,” said Lipsman. “I think there’s a lot of room for international growth [for MySpace]. MySpace is rooted in the music culture in the U.S., but it needs to transcend that market. Maybe there’s an opportunity to strike a cord with international audiences.”

Allan Krans, an analyst at Technology Business Research Inc., said Facebook is continuing to gain momentum because it continues to reach out to new users with promotions like this week’s collaboration with CNN.

In a somewhat new twist to social networking, a lot of techies watched Tuesday’s inauguration of President Barack Obama with all of their Facebook friends. According to InsideFacebook.com, more than 1 million people had updated their Facebook status through the CNN.com Live Facebook feed as of halfway through Inauguration Day.

“The onus is on [MySpace] to reinvent themselves, attract a different segment of folks and attract some people back,” said Krans. “You need to capture the next trend and not just catch up with what people are doing now.”

Source: Computerworld.com

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