Technology

What MySpace-Facebook Rivalry?


Talk of a brewing showdown between the two social networks masks fundamental distinctions between the sites' leadership, culture, and ability to make a buck

Into the wee hours of the morning on Oct. 18, News Corp.'s (NWS) MySpace treated Silicon Valley's elite to a very L.A.-style party at the San Francisco Museum of Modern Art. Thumping deejay beats, swirling lights, barely clad blonde models, and an open bar greeted Bay Area bloggers, geeks, venture capitalists, and the wunderkinder running successful Web 2.0 startups.

The message was clear: MySpace is on the move northward. Beverly Hills-based MySpace, the world's biggest social network, is opening a Silicon Valley office and plans to hire hundreds of Valley engineers, News Corp. CEO Rupert Murdoch and MySpace co-founder Chris DeWolfe had said earlier at a conference. What's more, Murdoch and DeWolfe said they'll make it easier for software developers everywhere to create applications for MySpace, a move made to much acclaim by rival Facebook in May.

Those were among the few nuggets of news emanating from O'Reilly Media's annual Web 2.0 Summit, which also featured Facebook CEO Mark Zuckerberg, who said as little as possible about reports he's lining up financing that could value his company at upwards of $10 billion (BusinessWeek.com, 10/17/07).

Google and Microsoft Are Watching

It's tempting to view MySpace's moves as part of a push to become more Facebook-like, an early salvo in a brewing battle of the social networks. After all, MySpace and Facebook are two of the very few breakout, mass-market successes of this generation of Internet companies. Both are trying to build multibillion-dollar businesses from connecting people with their friends online. Both sites feature profile pages, friend lists, and the ability to share photos, videos, links, and blogs. And thanks in part to rapid growth and sky-high user numbers, both are shrouded in hype.

What's more, both are catching the attention of technology's titans: Google (GOOG) bought the right to place search ads on MySpace pages in a multiyear, $900 million deal, while Facebook struck a similar deal with Microsoft (MSFT) that's also in the hundreds of millions of dollars. And then there's the speculation Zuckerberg is near an investment deal with Microsoft, Google, or Yahoo! (YHOO) that would give Facebook a multibillion-dollar valuation.

But here's the rub: Differences between the sites far outweigh their similarities, and there's less overlap—and competition—between MySpace and Facebook than would appear. There may come a day when so many people are on social networks that luring new users becomes a zero-sum game, a nasty street fight for eyeballs and ad dollars. But we're nowhere close yet.

At California's Cultural Divide

You won't have trouble convincing Facebook and MySpace they're not competitors. Zuckerberg rolled his eyes when I told him I was writing a column on this subject. "That only invites the comparison," he said. "Why don't you write about whether or not we're like Google?" he added, referring to their similarities as technology companies.

I'll consider that for a future column, Mark. But when it comes to MySpace and Facebook, while both are social networking companies, at heart they're very different businesses being built by very different entrepreneurs, in two California cities that couldn't be more distinct. These differences go way beyond the oft-repeated and oft-dismissed explanation that MySpace is a media company and Facebook is a technology company. Here's a sampling:

Leadership: DeWolfe is coiffed, polished, and acts like an executive. Zuckerberg is awkward and taciturn, saying what's on his mind and little more. He cares nothing of the "scene," be it glitzy Los Angeles or geek-chic Silicon Valley.

Contrast MySpace's San Francisco soirée with the "hackathon" held in the same city in honor of Facebook's announcement in May that it's opening to third-party developers. The hackathon was the closest the company has come to throwing a lavish event, and it was strictly for nerds. The open bar consisted of Red Bull, water, and sodas. The vibe was guys sitting in clusters around computers coding. The food was piles of pizza boxes and large troughs of Chinese food. I don't know DeWolfe, but my guess is if you call him "uncool," he might politely bristle. Zuckerberg would likely shrug and say, "Yeah, and?"

Capitalization: MySpace is part of a larger company; Facebook is trying to become a large company. This contrast plays a huge role in virtually every barometer of a company's ethos, from capacity to innovate to pressure to make money, and importantly, its ability to recruit talent. In Silicon Valley, the top engineers want to be at the hot startup, pre-initial public offering. It doesn't make financial sense for someone to take roughly the same job at MySpace they can get at Facebook right now. And in companies like these, engineering talent is paramount.

Hometown: MySpace lives in a city where the entertainment industry dominates. Facebook lives in a city where technology is king. So, right now Zuckerberg is among the biggest celebrities in the Valley, but down in Los Angeles, DeWolfe would line up far behind the likes of Brad Pitt, Tom Cruise, and Lindsay Lohan. This could prove an advantage for MySpace. Managing the Silicon Valley hype cycle and its backlash is challenging and distracting, as if building a $10 billion company weren't hard enough.

Mission: MySpace is all about self-expression—doing whatever you want with your page, leavening it with heavy doses of pop culture. It is a very new kind of media company. People go there to be entertained. Facebook is about creating a utility to efficiently manage your day-to-day world. On MySpace, part of the fun is roaming around friends' pages, hearing their music blare out at you, seeing how they've designed their "space." Facebook has a News Feed feature that lets people just open a home page to see every change in their virtual neighborhood.

Of course, there is overlap between the two largest social networking companies. There's only so much media attention that can be lavished, only so many hours people have to spend online, and at some point a limit to the ad dollars, too. But it's a bit like comparing eBay (EBAY) to Amazon (AMZN). You might be able to buy nearly anything on either site, but the experience, price, business models, and market valuations couldn't be more different.


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