By Richard Waters in San Francisco

FROM THE FINANCIAL TIMES

Chris DeWolfe seems uncharacteristically defensive. A co-founder of MySpace, he runs a business that came from nowhere over the past two years to become one of the internet’s most popular services.

Yet, on a trip to Silicon Valley this week, it was the local infatuation with upstarts like Facebook and YouTube that seemed uppermost on the Los Angeles-based executive’s mind.

Facebook has emerged on both sides of the Atlantic as the new “flavour of the month” in social networking.

Once a site for college students, the site has opened its doors to other users and allowed other internet companies to build their services onto of its platform, triggering a wave of interest.

“They were smart, those were two of the variables that helped a lot of our growth,” says Mr DeWolfe – although he strongly denies that this has had any impact on MySpace’s own trajectory.

“The idea that users are leaving MySpace for Facebook is not true and not borne out by the numbers,” he says.

While it has been growing much faster, Facebook’s audience in the US is little more than a third the size of MySpace’s, according to ComScore, internet analyst.

Yet Facebook’s rise shows that MySpace is fast losing its uniqueness as the only site to attract a mass audience looking to socialise online. Many users are becoming members of multiple networks, creating a new level of competition for attention.

“There is an overlap between the networks – you do different things on different networks,” says Joanna Shields, head of international operations at Bebo.

Even Rupert Murdoch appeared to endorse this new dynamic, pointing out the new popularity of Facebook in an interview with the Wall Street Journal recently.

Mr DeWolfe, who says he talked to Mr Murdoch about the comment, brushes off his boss’s remarks.

Another Silicon Valley upstart is also looming large on Mr DeWolfe’s radar screen.

He says soon he expects YouTube to add new features in an attempt to turn its service into a fully fledged social networking site. At the same time, he has his eyes firmly on YouTube’s own audience: MySpace upgraded its own video service this week with the launch of MySpaceTV.

This is a YouTube-like service intended to accelerate the site’s transformation into a mainstream entertainment service.

The skirmish between these two giants of so-called user-generated content is set to have a powerful effect on the online media landscape.

Mr DeWolfe questions YouTube’s ability to graft a social network on to its bare-bones video service.

“To change ingrained behaviour is pretty complicated,” he says. “You go on to YouTube to watch video, not socialise.”

The next step for MySpace, which already has a sizeable video audience, will be to add professionally produced content, says Mr DeWolfe.

It is the scale of its audience and the willingness of MySpace’s members to share ideas about their favourite music or video with friends that will draw TV studios and others, he adds.

“Community is a differentiator,” he says.

News Corp’s own assessment of the value of that community has clearly risen sharply of late.

The company recently approached Yahoo about swapping MySpace for 25 per cent of the internet portal, a deal that would have valued the social network at around $12bn, though that approach came to nothing.

SOURCE: THE FINANCIAL TIMES

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