Where MySpace and Facebook are headed

(Fortune) -- For all of Facebook's recent successes, MySpace continues to thrive. That's the theme of my recent big Fortune story on the MySpace/Facebook battle, "As Facebook takes off, MySpace strikes back." Meanwhile, innumerable permutations of the seductive social networking model continue to arise, because this is increasingly the kind of Internet that users are showing, with their behavior, that they want.

MySpace may remain social networking's giant - with 200 million members and expected revenues of $800 million this fiscal year - but it certainly has felt the impact of Facebook's big strategy shifts of the last year - both to open up its site to all comers and to turn itself into a "platform" on which other companies can deploy their own applications and Internet services.

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My Fortune article describes both a certain reflexive defensiveness at MySpace as well as a determination to improve. CEO Chris DeWolfe insists "MySpace has always been a platform," noting that it is by far the world's largest repository of "widgets," the small programs that users can import to show slideshows, create animations, or serve a variety of other purposes.

Even so, DeWolfe says he'll make the service a more welcoming environment for software partners. In a measured manner, MySpace will open up its site to the applications of others, depending on how members respond, he says.

In an offhand manner, DeWolfe adds that he's noticed how useful Facebook's popular News Feed feature is. The News Feed, which generates bulletins about what your friends are doing all day long, is "pretty cool," he told me. I asked: "So would you want to have that kind of thing in MySpace?" "Yeah," he replied, "It makes sense to put all that in one place at some point." I believe he'll build one.

As social networks, Facebook and MySpace help you get different kinds of things done with people. MySpace puts a heavy emphasis on new media - especially music, video, and films. That has not been a big part thus far of the Facebook experience, which is more about communicating efficiently.

If e-mail was the killer app of the first era, social networking is for this one. It is, by the way, increasingly taking over where e-mail left off. Yesterday I was exchanging video messages with friends on Facebook, even though I was home sick wearing a grungy T-shirt. On a social network, you don't send e-mail to an address, you send it to a person. Just click on their name and create a message. That's a very different experience conceptually and emotionally from e-mail.

It still amazes me how many different forms this new online environment can take. In my own old-fashioned e-mail I'm finding more and more missives from solicitous PR people concerning social networks of various stripes. Here are a few topics I've been pitched about just in the past week:

• "Gather.com is the hottest social media site for grown-ups...'a scholarly MySpace with less hook-ups and more intellectual stimulation.' "
• 'Competitor TeeBeeDee (http://www.tbd.com), "the place for people over 40 who believe that life is still to be determined." If I hadn't been sick yesterday I would have lunched with Robin Wolaner, who launched the site.
• The "emo-social media site Respectance (http://respectance.com)," "a communal grieving space...[to] share memories of loved ones."
• "Marketocracy (http://www.marketocracy.com) has built an army of tens of thousands of investing fanatics who trade stocks on their Website using virtual money."
• LawLink (http://www.lawlink.com), described in a press release as "a new professional and social networking site for attorneys."
• Reunion.com, "the leading web site...to reconnect and stay connected with family, friends, lost loves, and colleagues," brags that it has a "new Web 2.0-friendly redesign." Nielsen/Netratings says Reunion.com is the 6th-largest U.S. social network. Its competitor Classmates Online (http://www.classmates.com) is about three times larger, behind only MySpace and Facebook. (I always found Classmates annoyingly expensive for what it delivered - info about my high-school classmates.)

But I'm waiting for it all to go much deeper. My friend Scott Rafer (see "Riding the social networks wave" from August) e-mails about a company he's working with called Lending Club, which is a good pointer to how powerful social-network applications may eventually become.

Lending Club, which also operates its own site (http://www.lendingclub.com/home.action), created an application on Facebook in May. It already has 15,000 users there who loan and borrow money - over $1 million in transactions thus far. Lenders can make their own judgments about the creditworthiness of borrowers by using Facebook data about workplace, education, geography and other personal affinities.

Most loan amounts are under $500. While some might wonder about the risks lenders take on in such deals, the viral communication properties of Facebook will ensure that, if borrowers stop paying back their loans, word will spread quickly and the lending will almost surely stop just as fast.

As I wrote way back when Facebook launched its platform in May ("Facebook's plan to hook up the world"), I'm waiting for applications that allow me to find out in real time where all my friends are, or who they plan to vote for in a coming election, or what they think about the various products they own. Such services will surely come. There is very little that we do that we couldn't do better, more efficiently, and with more enjoyment if we could do it with our friends.