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Why Facebook Beat MySpace

What principles could have guided MySpace and News Corp. management and designers, even as they fought over control?

Much of the answer lies in the work of David Reed and what is known as “Reed’s Law.” Developed in the late 1990s, Reed’s Law offers the fundamental insight that the value of social networks depend on how well they facilitate the formation of groups, not just on how they facilitate connections between individuals.

In other words, while networks of fax machines are great because they let any one of us send a document to anyone else, it’s much more powerful to let like-minded individuals form groups around whatever topic happens to interest them and then to share as a group. Reed used his insight, based on some compelling math, to predict in the 1990s that eBay would soon outperform Yahoo even though Yahoo seemed to be as firmly entrenched at the time as Google is today. The ability to form groups even around obscure hobbies–think, collecting Pez dispensers–was more compelling than the ability to broadcast ads.

Social networks that hope to attract and retain customers need to focus not just on the direct interactions with those customers, as MySpace has indicated it will do, by making its network a forum for sending out information on music, videos and celebrity gossip. Social networks need to also facilitate the interaction between those customers. That means providing the platform, tools and many options for users to interact with each other. That also means letting customers define their interactions, and form robust subgroups around those interests, rather than have them just be on topics that MySpace specifies.

Facebook was able to catch up and surpass MySpace because it provided a much better platform, tools and apps, and more options, whereas MySpace diverted its attention to serving eyeballs to advertisers and fell ever more behind on facilitating the “social” part of social networking.

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