How Facebook is killing MySpace - MSN Money

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How Facebook is killing MySpace

Once-mighty MySpace has weakened, and rival social-media Web site Facebook now has more users. But don't count out MySpace just yet.

By Catherine Holahan

For the past year, News Corp.'s ( NWS , news , msgs ) flagship Internet property has watched its fortunes steadily fade. Not long ago,

MySpace

was the dominant player in the online social-media space, but rivals have been stealing away users. Just two months ago the site lost its title as the world's largest social-networking Web site to rival

Facebook

.

MySpace also experienced a painful loss of revenue in the most recent quarter, and analysts expect more bad news. At this rate, the "place for friends" could soon find itself virtually friendless and barren.

"They are in a really deep hole right now," said Debra Aho Williamson, a senior analyst at eMarketer, an online advertising research firm. "It wasn't a good quarter for MySpace, and what you have seen since then is a snowball effect."

In the past year, Facebook's U.S. audience has grown 97%, to 70.28 million users, while MySpace's U.S. traffic has declined nearly 5%, to 70.24 million users, according to measurement company comScore. (Microsoft, the publisher of MSN Money, owns a small share of Facebook.)

MySpace brought many of its troubles on itself by focusing too much on revenue and alienating its audience. But, though MySpace's decisions may have led users to leave, Facebook made it easy for them to jump ship.

In an interview with TheStreet.com, published this month, News Corp. CEO Rupert Murdoch admitted that he shared some of the blame for letting the site get out of control.

"The business sort of grew out of control ...

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