The OpenSocial Business Model: Will the biggest social containers win?

November 2, 2007

By David Berlind

I asked two questions during the Q&A session in today’s announcement between Google and MySpace that MySpace would be embracing Google’s recently announced OpenSocial framework of APIs, with executives from both companies. The first question (which I’m really still waiting for an answer on) had to do with how two or more social networking sites will handle the thorny challenge of reconciling dissimilar identity management systems (when the integration involves the exchange of personal profile data). You can see in that post what some possible answers are, but what’s not clear is how, in the demonstration given, unique MySpace IDs are mapped to unique Flixster IDs (the demo involved the incorporation of Flixster social movie reviewing service directly onto MySpace profiles).

Another question I asked had to do with business models in an OpenSocial world. I probably didn’t phrase it during the press conference as well as I should have. But going back to the example of how OpenSocial results in the embedding of Flixster functionality into larger “social containers” like MySpace; It occurs to me that, to the extent the exporter of functionality (Flixster in the demo example) relies on advertising as a business model, the idea that a lot of people might begin to experience an exporter’s content through a container (where the container gets to serve the advertising instead of the exporter) could result in a cannibalization of the exporter’s traffic (and therefore, its ad revenues). Meanwhile, the container (MySpace in this case) benefits, doesn’t it? After all, using the demo as the example, MySpace gets to serve advertising around Flixster’s content. Today, lots of sites (eg: FaceBook) go out of their way to prevent other sites from using HTML’s frames to frame their content and serve their own ads against that content (FaceBook for example purposely “busts” HTML frames).

Therefore, could the OpenSocial network lead to a world where the biggest and mightiest “social containers” win? As you can hear in the full audio podcast we have of the press conference, Google CEO Eric Schmidt answered that question as follows;

It depends on your view of how network effects happen and whether you think a single dominant player comes out in any of these spaces. The history of the Web says that that’s not the scenario that will happen. The history of the Web says that there is enormous diversity in what people are interested in and that people who are willing to take a bet on an open platform whether its a developer or leading site like MySpace get the benefit of a larger pie. It does not end up as a zero sum game. Your question can be rephrased in exactly the same question we asked 20 years ago and 10 years ago and history says that the Internet wins and that the principles of openness; that people can extend things; that in fact they end up winning because the pie gets so much larger in all scenarios.

Given the way FaceBook has come on so strong in the last few months, it would be hard to argue with the idea that no single dominant player will ever emerge so long as the platform is open. But what about a small handful of dominant players like Google, FaceBook, and MySpace. Yes, OpenSocial is also about unlocking whatever profile data you have in your MySpace vault and making it portable to other social networks.

But how often will people really switch after they’ve invested so much time in building their online personas in a MySpace, a FaceBook, or both? Maybe they’ll do it, but my sense is that they won’t do it often or lightly in which case only a few will get to rise to the top. Put another way, Flixster may indeed be a container as much as it is an exporter of data to other containers. But in which direction will most of the data flow? To or from Flixster? My sense is that people will lean in the direction of uber-containers like MySpace and FaceBook (FaceBook has not announced support for OpenSocial) to be their primary containers and specialty function sites like Flixster to serve up data into their containers.

I’m not saying that sites who primarily end up in the role of serving data to larger containers can’t win. But, if you ask me, the existence and adoption of OpenSocial will force many advertising-driven sites back to square one where they’ll have to think hard about how they’ll sustain themselves while also participating. One thing is for sure. Much the same way a day doesn’t go by when some company doesn’t carve out a niche in the FaceBook universe for itself (knowing full well that FaceBook is where the sunshine is right now), support of OpenSocial will be a checklist item for any site that’s in a position to serve data into the larger container sites. Those sites may not realize it right now. But when Google turns on its container (and you know it’s gotta have one coming or it wouldn’t be doing this), a lot of people will have their moment of clarity.

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Widget Master

November 2, 2007

By Victoria Murphy Barret

RockYou is Silicon Valley’s latest Web sensation. It exists solely thanks to the recent rise in social networking sites. RockYou creates frivolous, mini Web applications that exist on social networking sites such as MySpace and Facebook. RockYou’s popular Superwall, for instance, lets Facebook folks put graffiti–words, photos, videos–on their “walls,” which are public sites where members post messages. Another, called Zombies, encourages people to “bite” friends. Virtually, of course. No joke.

Since RockYou’s founding two years ago, 90 million social networkers have downloaded its applications. For this, RockYou is making more than $100,000 a month in revenues showing ads alongside its mini-applications for brands like AT&T and Sony, as well as by plugging other developers’ mini-apps (for a fee). The pitch to advertisers: We are where the kids hang out. Yet RockYou doesn’t know much else about its customers. Facebook doesn’t share data about members’ ages, locations, education or anything else it might know.

Jia Shen, the 27-year-old co-founder of RockYou, sat down with Forbes.com recently to talk about how to make money selling snack-size software and what Google’s new open platform means for Facebook and MySpace.

Forbes.com: How did RockYou begin?

Jia Shen: We started two years ago noticing that everyone on MySpace was trying to “bling out” their pages. But there was no easy way to do it. We decided to put together a slide show tool. It took one week to build. I worked while I was on vacation in Japan. In one month, we had 100,000 people using it. Then in three months there were one million.

Impressive growth. But were you making any money?

None. You can’t advertise on MySpace. Facebook changed that. So now we’re like any other Web site: We make money on page views. Sony Pictures wanted to promote the film Resident Evil and used our Zombies application for a sweepstakes event.

We also advertise other applications and take a cut. Yahoo! created an application that lets you post music videos on your Facebook profile page. Yahoo! had 8,000 downloads after one month, which is pretty slow. We started promoting the application in banners above our own applications. In a single day on our network of applications, Yahoo! got 120,000 downloads.

What is your initial reaction to Google’s new open platform for social networks?

We’ve been helping Google for a while on this. In theory, it should be very cool. We tested it out with an application called Emote (This is a collection of happy, sad, flirty smiley faces). Before all these networks required different code, and it took us three days to re-write the same application for Facebook to get it to work on Orkut. With the new standards, it took us just 30 minutes to make the same application work on Plaxo. The real test comes two months from now. How many companies will really give us real estate on their Web sites?

Will Google’s open platform give a boost to less popular social networks like Orkut, Friendster and the Hi5?

Sure, if it yields them more applications, it gives people more reasons to flock to their sites. Web traffic isn’t yet a zero-sum game

Is this bad news for Facebook? Will developers spend less time on Facebook apps?

People are making real money on Facebook. So there’s risk in going elsewhere. Am I really going to spend time going after Orkut’s Brazilian audience? I’m more likely to focus on the U.S. market. Facebook is still growing nicely.

Do you worry that the social networking sites, particularly Facebook, will start launching their own applications and compete with outside developers?

It is always a worry, but something that we’ve lived with since day one. MySpace eventually built a competing slideshow, but we already had big penetration, with a diverse set of widgets. Facebook does do little feature creeps here and there. But everything they’ve done so far has been non-competitive.

What will Microsoft get from its deal with Facebook? (Microsoft announced in October a $240 million investment for a 1.6% stake in Facebook, and is serving ads on the site.)

This isn’t traditional brand advertising. But my belief is that Microsoft didn’t want only access to the ad network. Microsoft wanted to make sure no one else got Facebook. (Google was reportedly bidding.)

What were you doing before RockYou?

I came to Silicon Valley in 2000 after majoring in computer science and electrical engineering at Johns Hopkins. The first start-up I landed at failed in three months, so did the second. I thought I was the kiss of death.

But I have a short attention span, so it was fine by me. This company is changing so much I may as well be working at a different place every three months.

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Take That, Facebook!

November 2, 2007

By Wendy Tanaka

Google got back at Facebook on Thursday, announcing that MySpace has joined the growing ranks of social networks that have committed to use its new platform for developers of applications for the sites.

The addition of the News Corp. social network heaps pressure on Facebook–which recently chose Microsoft over Google to be an equity holder in the company–to sign on to the new set of standards, dubbed OpenSocial. With MySpace, developers gain instant access to the world’s largest social network with 115 million users. Facebook, which rolled out its own developer platform last spring, has 51 million users, less than half of MySpace’s members.

At a press conference to announce the partnership, Google and MySpace executives declined to comment on whether Facebook will join OpenSocial. Vic Gundotra, vice president of engineering at Google, assured reporters gathered at the Internet giant’s Mountain View, Calif., headquarters that the company has reached out to every major social network. “We want to see it adopted by everyone,” he said. “We’re not announcing further partnerships now. We anticipate more momentum now.”

MySpace Chief Executive Chris DeWolfe is confident the new platform will “become the de facto standard” for application developers.

Google had been expected to officially announce the OpenSocial platform Thursday, but reports about it surfaced Wednesday.

OpenSocial will allow developers to build tiny applications that can be used across many social networks, boosting traffic and advertising on their sites. Google and MySpace said the main benefit of the platform to developers is that it standardizes how applications are created.

“Not rebuilding and rebuilding on different standards … will be great for developers and end users,” said DeWolfe, who took part in the press conference at Google’s Mountain View, Calif., headquarters. “One of the big trends on the Internet is that users want to consume content when they want it and how they want it.”

Google Chief Executive Eric Schmidt said Google and MySpace have been working together on the platform for more than a year. It had been rumored, however, that MySpace would launch its own developer platform.

Executives declined to comment on how all the companies that have said they will use the standards, which include Friendster, Hi5, LinkedIn and more than a dozen other social networks, will make money from the platform.

At the conference, Joe Kraus of Google’s JotSpot wiki product said applications embedded on MySpace Web pages, for example, will foster “more interaction on MySpace, which means more time spent on the site and more ad revenues.”

Questions about privacy were also raised. Joe Greenstein, chief executive of applications developer Flixster, another partner, said Google doesn’t have access to partners’ user data. “Google is spearheading the initiative, but Google doesn’t touch the data, doesn’t own it.”

Developers were expected to gather at the Googleplex on Thursday night to test their applications on Google’s Orkut social network.

Some of these developers might also be building applications for Facebook. But if Google’s platform is easy to use, these developers might be tempted to pour their hearts and energies into one platform more than another.

Mark Zuckerberg, are you paying attention?

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Fighting for members, MySpace tries to outcool Facebook

October 29, 2007

By Brian Braiker

Do you Facebook or MySpace? Increasingly, membership in one social network does not necessarily rule out the appeal of belonging to the other. Of course, each company wants you visit their site more often than the other (if not exclusively)—all the more reason to differentiate. To that end, MySpace, the 800-pound News Corp.—owned gorilla, made three major announcements this week—two of which served to underscore a deepening fundamental difference in philosophy from its closest rival, Facebook. “MySpace is Hollywood and Facebook is Silicon Valley,” says David Card, a senior analyst for Jupiter Research. Or you could put it this way: MySpace is glam; Facebook is geek. Not that there’s anything wrong with either.

MySpace announced Tuesday that it has forged a splashy licensing agreement with Sony BMG—the world’s second largest label—for access to streaming videos, music and other content. The partnership calls for the social-networking giant and the music studio to share advertising revenue. And in a bid to conquer the social-networking world beyond U.S. borders, MySpace will soon be offering its 110 million active monthly users free voice chats via a new partnership with Skype (220 million strong, mostly outside of the States). In a new service called MySpace IM with Skype, the Internet phone company will enhance the MySpace instant messaging service with new free VoIP capabilities starting November. (The companies will split the revenue, but specifics of the arrangement were not disclosed.)

These moves stand in direct contrast to Facebook, which instead of teaming with major media players to build services for its network of 47 million active users, allows third-party developers to build applications. A staggering 6,000 applications have been built for Facebook just this year. “We are not a media company,” Mark Zuckerberg, the wunderkind brains behind Facebook, announced at the Web 2.0 Summit in San Francisco in October. Analysts are inclined to agree. “I think there’s a core philosophical difference, but [it’s] the same revenue engine at the end,” says Jupiter’s Card. That engine, of course, is advertising. But with its Skype and Sony BMG announcements, original programming and hosting concert tours, MySpace seems to be morphing into an entertainment portal where everyone is in your extended network (and a potential audience member).

Facebook, on the other hand, has tended to be more of a communications hub than its rival. Its platform infrastructure is built around connecting you to your actual friends—hence the viral appeal of applications like Scrabulous, Where I’ve Been and Top Friends. Oh, and it’s even already possible to make calls on Skype through some Facebook apps. And, to be fair, the private company is a chic geek. It’s a media darling despite having about half the active users of its chief rival. Its enviable flavor-of-the-month veneer is due in no small part to the cagey Zuckerberg, who has declined outlandish offers for his company in order to stay in control. He’s also maintained a vigorous reluctance to publicly adopt anything as mundane as a business model. Meanwhile, Microsoft, Google and other funds have reportedly been in talks with the site, considering investments that industry-watchers say would put the value of Facebook at a hard-to-fathom $10 billion (MySpace has been estimated at least $16 billion).

This is where MySpace’s third big announcement this week enters the picture. Perhaps in a bid to make inroads with the developer crowd that has become so loyal to Facebook, MySpace CEO Chris DeWolfe and News Corp. chairman Rupert Murdoch confirmed at the Web 2.0 Summit that the company is working on a developer platform of its own. Details were sketchy and the date of its launch likely farther off than “within a couple of months” as vaguely promised. Even Kyle Brinkman, vice president of product development of the social network, wavered slightly in his enthusiasm for third-party development. “I do think there’s a place for widgets and add-on applications,” he tells NEWSWEEK. “But where we see core propositions for our users, that’s where we want to build services ourselves.”

Which means MySpace is thinking like, well, an old media company. “They may be creating some big synergies for partnering and monetization, but I don’t think it’s really revolutionary thinking at all,” says Rodney Rumford, a consultant and publisher of FaceReviews, a blog that tracks and critiques the network’s applications. “Where Facebook has a great advantage in the long term is the ability not to serve me ads based on what page I happen to be on, but through my behavior. It knows what groups I’m in, it knows my behavior and it knows my friends.” How they end up doing that remains to be seen. But as far as users are concerned, it increasingly seems to make sense to belong to both: one for your music fix and the other to keep tabs on your friends.

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MySpace to Open Up, Too

October 18, 2007

by Aaron Ricadela

Following Facebook’s lead, News Corp. will make it easier for outside programmers to jazz up its social network—and, it hopes, generate big sales.

Murdoch and MySpace co-founder and CEO Chris DeWolfe have a plan to change the News Corp.’s online fortunes: They’ll make it easier for outside software developers to build MySpace tools and then let them share in resulting ad sales. MySpace is following in the footsteps of Facebook, Apple, and other tech trailblazers in harnessing the legions of programmers, many of them independent or affiliated with smaller companies, jonesing to craft the next big consumer application, be it related to games, photos, music, or other interests. Within the next two weeks, MySpace intends to publish a catalog of third-party programs that users can easily find and add to their pages. By December, MySpace plans to test with 2 million members a special portion of the site for installing applications that developers create using tools supplied by MySpace. Most of that software will eventually end up on the broader site, DeWolfe said.

Perhaps most important, MySpace will give outside developers a special page on which they can sell ads. That’s big news for developers, whose businesses rest on the booming market for add-on “widget” software for Facebook, MySpace, and other social networks. Facebook’s growth has boomed since May, when it opened up. Max Levchin, founder and CEO of widget software maker Slide, calls the ability to sell ads “the single most exciting opportunity for widget makers on MySpace,” in an interview before News Corp.’s announcement. “Facebook’s innovation was that you don’t need a relationship with them to share revenue with them,” he says. “They didn’t invent the concept of widgets. But they got millions of people to stick around, and they actually made real money. Developers have a financial incentive to play.”

Best of Both Worlds

Now they will on MySpace, too. But what took so long? MySpace gave many widget makers their start, but it has been so focused on adding users that courting developers wasn’t a priority, Levchin says. “During an era of super-torrential growth, there wasn’t enough time to build a platform,” he says. “They were making sure things didn’t fall apart.” Pressure to match Facebook is also a factor, he adds. “There’s no doubt that MySpace feels pressure to play in the same game.”

The Widget Card Bringing developers into the MySpace revenue stream could help the site expand. Once users have tired of online reenactments of their offline relationships—be it through finding friends, sending messages, flirting—they need more things to stay engaged with a social network. That’s where widgets come in. And as they add more features, tools, and games, sites also create more space for selling ads, increasing traffic, and rewarding developers with a slice of the ad sales generated by widgets.

Facebook has played that card to a T. Its membership has surged, recently reaching 47 million, since it began allowing outside software developers to add programs. And Zuckerberg indicated he may move further onto MySpace’s turf, adding features that make it easier for bands and other groups to promote themselves on Facebook.

Facebook’s incursions aren’t lost on MySpace. “It’s pretty cool,” Murdoch said of Facebook. But “it’s more like a utility, whereas we’re a more interconnected media. It’s not just looking up friends.” Murdoch will need to continue making more out of MySpace to ensure News Corp. parlays the social network’s considerable breadth into market value.

Source: Business Week Online


Smile, You’re on LinkedIn

September 27, 2007

By Aaron Ricadela

Business networking Web site LinkedIn is loosening its tie. Caught between a polished image as a nexus for professional contacts and the encroachment of Facebook and other networks, LinkedIn is taking a step toward informality. Starting Sept. 26, the site’s 14 million users will be able to post photos of themselves.

These won’t be just any photos, mind you. The company wants users to post serious-looking head shots of the kind that would accompany an executive biography. LinkedIn will “do everything we can to encourage it to remain professional,” says spokeswoman Kay Luo, lest the site “degrade” to the level of a less business-like destination. She didn’t name names, but it’s clear LinkedIn wants to avoid the informality of places like News Corp.’s MySpace and even Facebook, the social network that’s exploded in popularity and has become for some Web users an alternate to LinkedIn for keeping up with their professional contacts.

However limited, LinkedIn’s move satisfies users’ requests for a tool that can help jog the memory of a person’s face. It could also make the site more attractive at a time when traditional media and Web companies covet a slice of its affluent audience (BusinessWeek, 1/29/07), and the advertising money spent to reach it. Featuring photos “obviously seems critical for a social network,” says Barry Parr, a media analyst at JupiterResearch. “I don’t remember what all my business contacts look like.” The feature also puts starchy LinkedIn more in tune with the Web’s expanding social nature, which is blurring the line between professional contacts and friends.

Staying Relevant

More openness may be coming. LinkedIn is working on ways to let outside software developers tap into the company’s database to create applications that, for example, would let users keep tabs on their LinkedIn network from within an industry conference Web site, an Internet job board, or a business application like Salesforce.com. Making LinkedIn more accessible could be key to retaining value at a time when Microsoft and Google are reportedly eyeing investments in Facebook (BusinessWeek, 9/25/07) that could value the company at $10 billion or more. Facebook, which started as a hub for college kids who wanted to share beer photos and trade messages, has expanded to become, in Silicon Valley at least, a tool for keeping current (BusinessWeek, 8/6/07) with business contacts and planning conferences.

LinkedIn has hired a new chief financial officer, as well as vice-presidents of marketing, engineering, and operations, since June in preparation for a possible initial public offering in 2009, and may need to reassure investors that it remains relevant. “The challenge for LinkedIn is not only [that] Facebook [is] getting a whole lot more traffic, but in many cases people are using Facebook to pursue their business relationships,” says Josh Bernoff, a principal analyst at Forrester Research, who has used Facebook to find interview subjects for his research. “That’s what LinkedIn was developed for.” Facebook now claims 43 million members and is adding 200,000 a day. LinkedIn is adding users at a pace of about 36,000 a day.

A Different Kind of Club

Including photos isn’t a response to Facebook’s popularity, says LinkedIn’s Luo. “There is buzz about Facebook moving into the professional arena,” she says. But LinkedIn helps people expand their professional networks in part because of the participation of many higher-level executives who are unlikely to join other networks. “To be a useful professional network, you have to have the people above you on the network,” Luo says.

Indeed, LinkedIn has long debated whether to include photos, Luo says. As recently as an August interview, LinkedIn’s co-founder and president Reid Hoffman said “photos and business don’t go together,” partly because images could unduly influence recruiters. To lessen that threat, LinkedIn is letting HR reps turn off the feature so they can screen candidates without regard to age, race, and appearance.

Retention Concerns

Hoffman says the company for the past year has been working on an application programming interface that would let outside developers use some of LinkedIn’s data in their programs, and plans to release the technology by the spring of 2008. Hoffman gives the hypothetical example of a user of Salesforce.com’s customer management software being able to view the LinkedIn profiles for their leads without having to navigate to the LinkedIn site.

Whatever LinkedIn’s reason for adding photos, it will need to confront the bigger question of how big an appetite users and software developers will have for a proliferating number of social networks. Traditional media companies and Web outfits are trying to make social networking less of a destination and more of a feature. For instance, Yahoo!, Viacom’s MTV.com, and eBay are all adding networking features (BusinessWeek, 9/24/07).

The trend will likely accelerate in 2008, forcing users and developers to make harder choices about where to spend time online. “Social networking is going to be a feature in lots of places,” says Jupiter’s Parr. People are going to start picking and choosing where they make their home.” Amid the land rush, LinkedIn wants to make its high-earning devotees don’t stray too far from the cosseted quarters it’s built.

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MySpace to Discuss Effort to Customize Ads

September 18, 2007

By BRAD STONE

Members of the booming social network Web sites treat their individual profile pages as a creative canvas for personal expression.

The social networking companies see those pages as a lush target for advertisers — if only they could customize the ads. Although Internet companies have talked about specifically aiming their ads since the inception of the Web, so far advertising on social networks has been characterized by mass-marketed pitches for mortgages and online dating sites.

But MySpace, the Web’s largest social network and one of the most trafficked sites on the Internet, says that after experimenting with technology over the last six months it can tailor ads to the personal information that its 110 million active users leave on their profile pages.

Executives at Fox Interactive Media, the News Corporation unit that owns MySpace, will begin speaking about the results of that program this week. They say the tailoring technology has improved the likelihood that members will click on an ad by 80 percent on average.

“We are blessed with a phenomenal amount of information about the likes, dislikes and life’s passions of our users,” said Peter Levinsohn, president of Fox Interactive Media, who will talk about the program at an address to investors and analysts at a Merrill Lynch conference in Los Angeles on Tuesday. “We have an opportunity to provide advertisers with a completely new paradigm.”

MySpace’s rival, Facebook, also says it is experimenting with ad customization with the help of Microsoft, which signed with the up-and-coming social network last year to provide display ads on the service. To the consternation of privacy advocates, who say Internet users are unaware of such activity, the social networks regard these detail-stocked profile pages as a kind of “digital gold,” as one Fox executive put it last year.

The companies hope that customizing ads to their members’ stated enthusiasms will improve the effectiveness of the ads and recruit new advertisers who want to pitch their messages to refined slices of the online audience. Fox executives also hope the technology can help MySpace recapture some of the momentum and attention that has recently gone to Facebook.

Richard Greenfield, the managing director of Pali Research, predicts that MySpace’s fledgling program will help increase MySpace’s current revenue to $70 million a month from $40 million a month by next year.

“This is a critical evolution of the MySpace business model envisioned from the day News Corporation bought it,” Mr. Greenfield said.

A 100-employee team inside the Fox Interactive Media offices in Beverly Hills, Calif., called the “monetization technology group,” has designed computer algorithms to scour MySpace pages. In the first phase of the program, which the company calls “interest-based targeting,” the algorithms assigned members to one of 10 categories that represents their primary interest, like sports, fashion, finance, video games, autos and health.

The algorithms make their judgments partly on certain keywords in the profile. A member might be obvious by describing himself as a financial information enthusiast, for example. But more than likely the clues are more subtle. He might qualify for that category by listing Donald Trump as a hero, Fortune magazine as a favorite publication or “Wall Street” as a favorite movie.

The system also looks at the groups members belong to, who their friends are, their age and gender, and what ads they have responded to in the past. “Our targeting is a balance of what users say, what they do and what they say they do,” said Adam Bain, executive vice president for production and technology at Fox Interactive.

MySpace evidently does not completely trust the technology. Every two weeks, teams of five “relevance testers” come to Fox Interactive’s offices to manually check member profiles against the categories they have been assigned to.

The company said that several national advertisers are trying out the service, though they declined to name them. Fox Interactive executives say that some kinds of ads benefited more than others. Clicks on tailored auto ads more than doubled and clicks on music ads jumped by 70 percent.

For the last two months, Fox Interactive has also experimented with the second phase of its targeting program, called “hyper targeting,” in which it further divides the 10 enthusiast categories into hundreds of subcategories. For example, sports fans are divided into subgroups like basketball, college football and skiing, while film enthusiasts are further classified by their interest in genres like comedies, dramas and independent films, and even particular actors and actresses.

For now, Fox’s advertising sales representatives are selling the new kinds of ad abilities. In November, according to Michael Barrett, Fox Interactive Media’s chief revenue officer, the company will set up an automated online system to allow smaller companies to aim at MySpace users with their ads without ever talking to a human being at Fox.

A punk band performing in Seattle, for example, could publicize a performance by looking up all the people on MySpace who live in that area who are punk fans.

MySpace also plans to give its advertisers information about what kind of people its ads have attracted. “We want them to leave knowing more about their audience then when they came into the door,” Arnie Gullov-Singh, vice president for product management at Fox Interactive Media.

That is precisely the goal that worries some privacy advocates. They argue that users of social networks like MySpace and Facebook are not aware they are being monitored and that current ad-targeting is only the first step in what has become a huge arms race to collect revealing data on Internet users.

“People should be able to congregate online with their friends without thinking that big brother, whether it is Rupert Murdoch or Mark Zuckerberg, are stealthily peering in,” said Jeff Chester, executive director at the Center for Digital Democracy in Washington.

His organization will ask the Federal Trade Commission, during a planned hearing on Internet privacy in November, to investigate social networks for unfair and deceptive practices, he said.

MySpace and Facebook executives argue that they are harming no one. They say that they are using information their members make publicly available, and contrast their ad targeting with efforts by Yahoo, America Online and Microsoft, whose advertising technologies follow people around the Web and try to deduce what they are interested in based on what sites they are looking at.

Fox executives also say they are planning on letting users opt-out of the ad-targeting program on MySpace, though it means those members will see fewer relevant ads.

At least one MySpace member has no problems with the new technology. Mark Gong, a 26-year-old photojournalist from Washington, runs the 3,000-member Wanderlust group on MySpace and on his profile expresses an interest for foreign films like “Lost in Translation” and “The Spanish Apartment.” Not surprisingly, that has defined him as a prime target for travel ads on MySpace from companies like ShermansTravel.com, a travel deal site. “I’m not opposed to advertising,” Mr. Gong said. “They have got to make money.”

But he also says he hopes MySpace spends the extra cash on making the site more reliable and fending off the Facebook threat. He says many members of his group have flocked to Facebook in the last two months and that even he is logging into Facebook more often.

“Everybody I know is switching to Facebook,” he said. “MySpace has its work cut out for it.”
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