Facebook and MySpace Lose Market Share

We interrupt our regular programming with this “disturbing” post regarding an interesting trend reported by Web analytics and trending company Hitwise. Hitwise’s Top 5 Social Networking Websites Ranked by Market Share of U.S. Internet Visits showed that both MySpace and Facebook which are occupying the top two spots are suffering from a slowing growth. Is this a sign of what the future holds for social networking sites, or is the saturation of the social networking sites and the proliferation of niche social networks affecting these two top social networks?

According to the Hitwise report for, MySpace is still the number one social networking site in terms of market share despite suffering from a decline from July’s 68.23% to last August 2008’s 67.54% market share. Comparing this with August of last year’s 75.04%, means that MySpace suffered a -10% loss in market share.

Hot on the trail of MySpace is Facebook which despite of gaining 50% market share from August 2007’s 13.68% to this year’s 20.56% still posted a loss from July’s 19.48%. This only shows that although Facebook has gained tremendous amount of market share for the past couple of months, it has all of sudden declined from July to August.

Explaining these results is easier for Facebook which saw a surge in usage, page views and membership due to the growth of third party applications since Facebook opened up its platform earlier this year. The Facebook application platform has brought in not only third party developers into the Facebook fold, but membership as well.

But despite the success of the Facebook applications, the site also suffered some minor setbacks due to erroneous strategy. The Facebook Beacon advertising program didn’t earn that much leverage and was in fact highly criticized. Then just recently, Facebook decided to abandon its old format in favor of a new format which was not well received by loyal Facebook members who didn’t want the new interface. This might have turned off Facebook users who might have decided to leave Facebook and avoided visiting the site.

As for MySpace, realizing the threats of the Facebook applications decided to follow suit and opened up its platform as well to third party applications developer. Although it was not as popular and well received like the Facebook applications, MySpace’s applications have been well embraced by its community.

But just recently, MySpace is also introducing some new features which might or might not affect its userbase. MySpace Music was launched a couple of days ago and was aimed at providing free music streaming to MySpace Community. But this Music site doesn’t come without a price. MySpace has also sealed an advertising deal with top major consumer products for ad placement on the MySpace music site. Either the MySpace community would just ignore these ads or would get annoyed, still remains to be seen.

Clearly, both MySpace and Facebook have already gained loyal users and followers who have made their participation in the two social networking sites part of their lives. Users have been so accustomed to the sites quirks and flaws and don’t mind them anymore. Social networking sites have reached their comfort zones in these two sites. And it would take quite a lot to rock them off their social networking comfort zones. If both Facebook and MySpace are ready to face these consequences, then they should expect further surge in their market share.