At MySpace, they use the F-word a lot. Facebook may have double the number of syllables than most expletives, but in the offices of what was once the world’s ascendant social network, it is pronounced with all the malice of a four-letter word.

In the space of a year, MySpace’s greatest rival has gone from being a relatively unknown site used by Harvard students to the universal byword for “social networking”, a technology colossus with 37 million users, an implied value – based on the stake bought by Microsoft last year - of $15 billion (£7.6 billion) and the ability to instil fear in its competitors if Mark Zuckerberg, its 23-year-old chief executive, so much as mumbles the words “personalised ads”.

All of which, one imagines, must rather rile Chris DeWolfe, the co-founder and chief executive of MySpace. After all, Mr DeWolfe’s site laid the ground rules for social networking and has built up a global subscriber base of 76 million, according to Nielsen/Netratings – comfortably more than twice the size of Facebook’s. It has revenues more than 30 times the size they were when it was bought by News Corporation, the parent company of The Times, for $580 million two years ago.

Is he not a little irked at the success and the seemingly perpetual limelight that the young pretender is enjoying? “Facebook is more of a utility whereas MySpace is more about self-expression. Our site is about connecting people and culture and content,” he says. “Our users love the ability to customise their pages. Every profile on Facebook pretty much looks the same.”

Although declining the opportunity to personalise the situation, his answer goes to the heart of social networking’s revenue model, which is advertising-based, and the success with which the likes of MySpace and Facebook are getting marketers to part with their mushrooming online ad budgets.

Both MySpace and Facebook allow users to set up a profile, to upload content such as photos, videos and music to their page, and to share this content with other users. Much has been made of the rich trove of personal information that such sites hold about their users and which, they say, can be used to target adverts more keenly.

“If you say on your profile that you like skiing, the show 24 and the band Snow Patrol, we’ll have a better chance of serving an ad that’s relevant to you,” Mr DeWolfe says.

The challenge that faces executives at social networking sites is in working out how best to take advantage of such information. Facebook’s most recent solution, announced in November, was to allow its users to do companies’ marketing for them – allowing companies to attach adverts to messages sent between Facebook users when, for instance, they make purchases on other sites. The feature, called Beacon, was billed as the next stage in the evolution of “word-of-mouth” marketing – until users realised that the messages would be sent without their consent. A wave of protests from privacy campaigners followed and Facebook changed the feature, significantly reducing potential revenue flows.

MySpace, on the other hand, is positioning itself as a more traditional content provider, hoping to drive up audience numbers by assembling a vast range of professionally produced content – principally television, music and film – as well as offering marketers the chance to target adverts more closely. The site recently announced, for example, that it was dividing its users among more than 1,000 “groups”, according to areas of interest they have expressed on their profiles, so that they would see adverts that were more relevant to their interests, an approach it calls “hyper-targeting”. “Professional content is a big focus for us,” Mr DeWolfe says. “We’re doing a lot of licensing deals, as well as creating two of our own shows.” The site now hosts all of Fox TV and NBC’s programming, as well as lot of “retro” content, including 1970s shows such as Charlie’s Angels.

By contrast, content is not a word that Mr Zuckerberg uses. Asked at a recent web conference whether he expected his company to compete with MySpace on these terms, he said that he did not see Facebook as a traditional media company.

MySpace generally is understood to account for several hundred million of the $800 million revenue reported by Fox Interactive Media (FIM), the digital arm of News Corp of which MySpace is a part. Of that, the majority is display advertising – the banners that appear above and alongside profiles – that are peddled by a growing sales team of 35 in the United States and 20 in Europe, followed by search-based adverts. A relatively little-used mobile subscription service will by phased out soon, making the business wholly dependent on advertising.

A growing proportion also comes from overseas. MySpace is live in 23 countries, including China, and the next countries to roll out, staffed by local management teams, will be Russia, Poland and Brazil.

Another item high on Mr DeWolfe’s agenda is “openness”, the ability to incorporate programs, often referred to as applications or “apps”, from other sites. Some of the most popular features on Facebook are apps such as the music recommmendation service iLike, which is written by external developers and incorporated into users’ profiles.

MySpace has joined Google’s Open Social alliance, designed to encourage open web platforms, and Mr DeWolfe has pledged to make MySpace more accessible to developers, but he admits, without a trace of irony, that the site “hasn’t done the best job” of opening lines of communication with the software community. “We’re now hiring about 40-50 engineers a month, who are going to work on everything from technical infrastructure to developer relations,” he says.

The issue of MySpace hosting copy-right-infringing content – a problem that has plagued other music and video-based sites, such as YouTube – is also under control, he says, thanks to a “digital fingerprint” technology that checks every upload to MySpace against a library of copyright-pro-ected content.

Mr DeWolfe denies that sites such as MySpace, which are at the forefront of a shift towards consumers being able to access music constantly on the web, are rendering record labels obsolete. “I think record companies are expanding their core competencies,” he says. “They are realising they are going to have to recoup their investments in more ways than just CD sales.”

Despite his protestations to the contrary, Mr DeWolfe’s focus on content might just help his company to surf the wave of social networking to levels of success that should leave traditional record company bosses very worried.

Partnership

—Chris DeWolfe (MySpace chief executive) and Tom Anderson (president) met in 2000, when Mr Anderson answered a product-testing advertisement for Xdrive, a data-storage company. Mr DeWolfe, its head of sales and marketing, offered him a job
—After Xdrive became a casualty of the dot-com boom, the pair set up an internet marketing business, Response Base. They sold it to eUniverse (later renamed Intermix) for several million in 2002 and joined the company. Mr Anderson decided that social networking should be their next big bet
—MySpace went live in 2003, with Mr Anderson and Mr DeWolfe inviting bands and club owners in Los Angeles to post pages and allowing other users to become their “friends”
—Intermix was bought in July 2005 for $580 million by News Corporation, parent company of The Times, and became a part of Fox Interactive Media. Mr DeWolfe made at least $2.9 million from the sale

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