MySpace cranks up heat in Facebook turf war

BEVERLY HILLS -- MySpace popularized online social networks and has a membership the size of the population of Mexico. It commands a gluttonous chunk of advertising, has a multibillion-dollar parent in News Corp. and boasts dynamic leadership in co-founders Chris DeWolfe and Tom Anderson.

The goal is to make MySpace the starting point for people on the Internet, where they can check in on the activities of friends, peruse e-mail, get the latest on news and weather, and post their favorite photos and videos. "We're offering one place where people are in control," DeWolfe coolly explains at an L.A. restaurant near MySpace's offices, cradling a cocktail.

MySpace is competing with Facebook not only for advertising market share but for mindshare: Facebook is benefitting from the type of buzz in Silicon Valley that MySpace received a few years ago.

"There is a class divide between the two," says tech blogger Robert Scoble. "MySpace is Hollywood. Facebook is Silicon Valley. The tech influencers go to Facebook, but the mainstream crowd is MySpace."

While some may scoff at such stereotypical comparisons, Facebook's growing popularity is a concern for MySpace, financial analysts say.

"Is Facebook to MySpace as Google was to Yahoo?" posits Spencer Wang, a financial analyst at Bear Stearns, alluding to the upstart search-engine service that upended an older competitor. Since Facebook made its network available to anyone in September 2006, its user base has grown sixfold, to 59 million. Wang expects that to reach 100 million by mid-2008.

"The Facebook factor is a huge concern," Wang says. "It could lead to a potential cannibalization of MySpace's user base, less time spent by users on MySpace, and increased investments by MySpace to fend off Facebook."