Facebook is now the largest social network in the world. But they continue to trail MySpace by a massive 36 million users in the U.S., and at current growth rates it will take them 18 years to overtake them.

Most of Facebook’s growth is international, where they’ve executed on a brilliant strategy for quickly rolling out localized versions of sites by getting their users to do the translation work for them (MySpace, by contrast, expands via a command-and-control infrastructure that puts people on the ground in each new international market). But the commercial value of some of those international users is far less than the U.S., the UK, Japan and a handful of other countries with robust online advertising markets.

Is Music Perpetuating MySpace’s Lead In The U.S.?

Music is MySpace’s territory. They host millions of artist and band pages, and one of the first things any new band does is create their MySpace page. MySpace says 35 million people per month visit their music sites, including MySpace Music and various artist pages. Some artists have millions of “friends” and the pages allow streaming music, artist control over the look and feel of the site, etc.

Facebook, by contrast, has no real internal music strategy. Artists can set up Pages to promote themselves, but the pages are no different to any other fan pages (for example, no streaming music) - there is nothing music or artist specific on the site.

Next month MySpace is rolling out a new music joint venture with the major labels that will have music streaming, playlists, downloads, merchandise sales, ring tones and other features. It’s not only likely to be a major destination site for music but also a significant revenue driver for MySpace and the labels (a little may trickle down to the artists as well).

Music is a huge part of what drove historical MySpace growth, and I believe it is a major factor in perpetuating their lead over Facebook in the U.S. market.

Facebook’s Response To MySpace Music: iLike

Facebook doesn’t appear to be engaging in any direct music strategy at all. Instead, they’ve placed their bet on iLike, a third party application that has no streaming deal (they piggyback on Rhapsody). Last month Facebook announced that they’ll give iLike special access to Facebook through their new Great Apps program. All official and most off record messaging we’re hearing is that iLike is Facebook’s music partner for the long run.

We’re big fans of iLike. But Music is such a big category that is so completely dominated by MySpace, that it seems like they should have their overall music strategy under their direct control. Today, Facebook users who want to stream music must do so via a contractual maze that goes from the labels to Rhapsody to iLike to Facebook. Meanwhile I can’t visit a MySpace page without being attacked with streaming music.

At its core Facebook is still a generic social network that, through the social graph, provides an easy way to connect with friends. MySpace by contrast has the social graph as well as a huge footprint in the music world. That not only provides a reason to go to the site, but provides a nice business model as well.

The TechCrunch team is on site at the Facebook Developer conference, and we’ll be live blogging the news. Mark Zuckerberg’s Keynote starts at 1:30 pm PST.

Facebook’s press release is here.

Live Coverage

In a press briefing after the keynote, Zuckerberg stated “I wish I knew” when asked when the anticipated payments system would launch. He also hinted that Facebook is working on launching improved search, but they aren’t close to launching it yet.

2:49 PM: That’s it. The show is over.

2:48 PM: Great Apps can integrate with users just like native Facebook apps, and they get early access to features. The Great Apps program is in alpha stage and the first two partners are iLike and Causes. There will be a strong enforcement system with all apps, and they will disable apps that are a problem. Over the last year they’ve disabled apps for violation of privacy or other policies. They take this very seriously, he says.

2:47 PM: The second announcement is the Facebook Great Apps Program (Top Tier program). They embody all ten of the guiding principles, and they advance the mission of Facebook.
Read More

Update: Our live notes from Mark Zuckerberg’s Keynote are here.

Today is definitely Facebook day as they hold their second annual F8 developers conference in San Francisco. Last year they released their developer platform, which led competitors to hurriedly release their own competing offerings. What’s in store for tomorrow? We’ve made our predictions, and CEO Mark Zuckerberg takes the stage at 1:30 to make his keynote, and workshops will follow all day after that. The full schedule is here.

Some of the news is breaking early. For example, we will almost certainly see the Facebook payments platform launch in some form, for example - Facebook desperately wants to find a way to help application developers make money beyond advertising, and the iPhone App Store has shown that people are willing to pay for quality applications.

Even more certain is the launch of Facebook Connect, which will allow third party services to authenticate Facebook users and merge profile data into their offerings. Digg will be one of their launch partners, and will show off the new product on stage, say our sources. However, neither CEO Jay Adelson or Founder Kevin Rose will attend the event.

We’ve also heard from sources that Facebook will announce a tiering system for applications, confirming our previous post in March. Five to ten top tier apps, which have proven themselves trustworthy and which create as good or better a user experience as what Facebook is able to create itself, will be named in the near future. iLike (music) and Causes (charity) will be announced tomorrow, and more will come soon. We heard that Flixster (movies) was on the short list but was bumped at the last minute - perhaps due to their MySpace partnership announced yesterday.

Other apps will be grouped into a middle tier, where most of them will fall, and a bottom “unwashed masses” tier for untrustworthy or spammy apps that have little user value. Each tier will have different rules for engaging with users, particularly around invites, messaging and entry into the news feed.

iLike, the music service with a massive following on Facebook and increasing popularity elsewhere, has introduced full-song playback on its flagship site, iLike.com. Through its partnership with music subscription service Rhapsody, the site will be offering over 5 million songs from all of the major labels and a variety of indie artists, too. In conjunction with the launch of full song playback, the site is also launching a new self-serve ad platform for concert promoters.

Unfortunately, the full-song playback will be partially restricted for users that aren’t Rhapsody subscribers. Non-subscribers will only be able to listen to a maximum of 25 songs per month, while Rhapsody users under the service’s $12.99 monthly plan will be able to listen to an unlimited number of songs. iLike competitor Last.fm began offering less restrictive playback options in January, but has had issues with keeping its content-providers satisfied (Warner Music Group pulled out of the deal in June).

The new ad-platform, which also launches today, is designed to give concert promoters a way to create feature-rich ads without much effort or technical know-how. Ads will be distributed across iLike’s network (namely their website and social network applications), and will display content depending on a user’s geographical location. On social networks, the ads will also include elements like “invite your friends” and “see who’s going”.

iLike has also announced plans for a new developer platform that will be launching in the near future (likely in the next few weeks). While iLike has offered widgets for syndication in the past, the new platform will allow developers to customize their own web applications.

MOG has announced that it received a $2.8M strategic investment from Universal Music Group and The Angels’ Forum. We’ve also heard that Sony BMG was also part of the round, which means two major record labels have come together to invest in the same online music venture.

Music afficianados can use MOG to blog about their favorite artists and tracks. It also provides software that detects which songs you play on your computer (regardless of the media player you use) and shares your listening habits with friends on the site. This software is not a plugin like iLike’s but a standalone client that runs in the background.

Since December, Rhapsody has also integrated with the service, allowing MOG users with Rhapsody accounts to play songs mentioned on MOG directly from blog posts.

This strategic investment hopefully will mean that we’ll see even more music delivered through MOG, perhaps eventually a free streaming service for everyone regardless of their Rhapsody status (just speculation at this point). This would align their service more with the Imeem model of providing free ad-supported, and label-sanctioned, music.

As music CD sales plummet and the long term price of recorded music trends towards free, live music will evolve from being a way to market new album releases to quite possibly the primary income stream for most artists - even the big ones.

That’s why services like iLike, which determine your favorite music based on your iTunes listening habits and then tell you about upcoming concerts for those artists, are on the rise. Relative newcomer Songkick goes even further - it makes educated guesses about what music you’ll like that you may not have heard before, and then suggests local live shows for you to attend.

Songkick founder Ian Hogarth says that 70% of U.S. adults attend a live music show every year, but we collectively spend 35 times as much on going to movies as we do on concerts. There is a big opportunity to increase the size of the market, he says. but people need more information on who’s performing, where, and when.

We first covered them at launch last year, and we also mentioned their “Alexa For Bands” project recently. Today though they’re releasing new functionality and also announcing a round of financing.

Songkick focuses on artists that are still alive (dead artists tend not to go on tour) - they’re tracking about 1 million of them in their database. Users can get recommendations on the Songkick site or via an iTunes plugin (Windows and Mac). And now Songkick is making their database available to partners. Larger partners can access the data via their API (music search engine SeeqPod does this). And smaller sites (music blogs, for example), can add upcoming concerts about artists they’re discussing to their blog posts and other content via a new “BandSense” product that auto-determines band names and inserts links to upcoming concerts.

API partners split revenue with Songkick 50/50. Blogs and smaller sites get 100% of the revenue for now.

Songkick was originally a Y Combinator startup and took a small amount of financing. Today they are announcing a second round, from The Accelerator Group and SoftTech VC. The company was founded by Ian Hogarth, Pete Smith and Michelle You.

Rumors surfaced again yesterday on Billboard and today in other media outlets that Facebook is in talks with the record labels to launch a music service that will include either free ad-supported music streams or paid downloads. Talk of such a service started last October, but what Facebook ended up launching was simply artist fan pages. MySpace is also preparing its own music service to be called MySpace Music. And other competitors from imeem to iLike to Last.fm are putting pressure on Facebook to respond with its own music offering. Music drives many social interactions, so you can see why Facebook would want to own that area even at the risk of alienating key partners (such as iLike).

But Facebook should really stay out of the music business. If it tries to enter in a big way it risks alienating not just its partners, but musicians as well. Its fan pages for musicians have not really done that well. Look at 50 Cent’s official Facebook page. He’s only gathered 8,213 fans there, compared to his 1,918,372 fans on his iLike page on Facebook (which includes fans across other social networks as well). I noted a similar disparity shortly after Facebook first launched its music fan pages.

In fact, 50 Cent already dissed Facebook once. He took down his official Facebook page for at least a couple months. It just recently went up again. His online efforts are geared towards driving as much traffic to his own fan site that he controls, This is 50. That is why fan widgets like iLike or Kyte.tv appeal to him more than tying himself to any one destination. As iLike CEO Ali Partovi likes to say, “The new opportunity for growth is beyond Facebook.” Partovi just announced this morning that iLike has 23 million users keeping track of 200,000 artists across Facebook, Hi5, Bebo, iLike.com, Ask, and even iTunes.

What is happening with 50 Cent is indicative of a bigger battle brewing in the music industry between artists and record labels over who will get to control future online revenues. Both record labels and artists did not like the fact that MySpace was making money off of their artist pages with ads, so they started negotiating deals to get a cut of the action. The prospect of Facebook becoming a competitor was welcomed because Facebook treats artist pages like any brand or canvas page. The ads on that page belong to the brand or artist or application developer, whatever the case may be.

But with music, Facebook may now be putting itself in between artists and record labels, who both have claims to that page. It is easier for Facebook to negotiate directly with record labels, but in most contracts it is the artists themselves who control their Websites and pages on social networks. Of course, if they want to stream or sell music from those pages, that is where the record labels come in. Facebook is negotiating with the record labels, but the artists may be going elsewhere, as we are seeing with 50 Cent.

As traditional music revenues are drying up, the labels want to transition to online revenues as fast as they can. But if those revenues are associated with advertising on fan sites, the artists themselves may have a greater claim to them. Of course, any fan site would be pretty lame without the music. But who gets what cut is all up in the air right now and the artists are in the driver’s seat because nobody fans a record label. We might be seeing a shift in power between artists and labels. Of course, it helps if you are 50 Cent and you own your own record label.

San Francisco/Seattle based music service iLike launched a “news feed” for favorite artists this week. Users can now see exactly what their favorite artists are up to - when they go on tour, release new songs or videos, etc, the news is presented to them in the feed.

Users can select their favorite artist via the iLike website or on their social network applications. Or the service decides what you like based on your playing habits on iTunes (they have an iTunes plugin - if you listen to a song ten times, it thinks you like the artist).

The news feed for favorite artists can be viewed via the iTunes plugin, the website, the social network applications, or via a new iPhone app (just go to iLike on an iPhone and log in).

The company continues to dominate the Facebook music scene. Their U2 page on Facebook has 1.9 million fans. Compare that to just 168,000 friends on the MySpace U2 page, and 933,000 on Last.fm. The fact that a previously unreleased U2 song was first heard on iLike didn’t hurt those numbers, either.

In July 2007 iLike had 4.5 million users of its Facebook application. Today they have 14 million. But more than half of their new members today are coming from their iLike.com site and other social networks - OpenSocial gave them access to Bebo, Hi5 and soon MySpace. On their website alone they see 3.5 million worldwide monthly visitors, which isn’t bad considering most users interact with iLike via their iTunes plugin, or on Facebook and other social networks. Last.fm, which was acquired last year for $280 million, has 4.7 million.

It’s available in two places - on iLike and on iLike’s Facebook application. The Facebook application is particularly interesting - 1.2 million fans have signed up specifically to get new U2 news and were notified as soon as the video went up two days ago. So far, over 9,000 fan messages have been left on the video.

This was an experiment, says a representative of the company. No press was notified when the video went live - they wanted to see how fast it spread virally and without any promotion.

This wasn’t out of the blue - iLike has connections to U2 through Elevation Partners (Mark Bodnick at Elevation is on the board of iLike, and Bono is also a partner at Elevation), and Brooke Hammerling, who handles PR for iLike, is a personal friend of Bono’s.

But regardless of the connections, the success of the viral release will certainly get other artists to consider using iLike to talk directly to fans via the Facebook application. That’s something MySpace and other competitors can’t do yet.

Facebook just got a whole lot friendlier for music artists. With the launch of Facebook Ads, it is welcoming bands and musicians to set up their own public Facebook pages where members can sign up as fans. Alas, there will be no standalone Facebook Music service. Instead, Facebook is treating music artists just like any other brands, which can also set up their own Facebook pages, collect fans, and market to them directly.

Yet, when it comes to music artists, one of Facebook’s most popular application developers, iLike, is doing the exact same thing. Already, any band or musician can create an iLike artist page on Facebook that includes their most popular songs (filtered by what your friends like), upcoming concert dates (click on a date and see if any of your friends are going), an artist blog called iCast, related artists, and a Fan Wall where Facebook members can leave notes. In fact, half-a-million have done so. And starting today, iLike will create duplicate versions of these marketing pages for them that work with Facebook’s new brand destination pages. Right out of the gate, iLike will generate 160,000 pre-populated artists pages that the musicians or the labels themselves can modify, or leave as is.

So if you are a music artist, you now have to make a decision: Do you go with the iLike page as your main Facebook page (and take advantage of the nearly 10 million members who use the iLike app), or do you go with your own advertiser page on Facebook? Case in point: the new Facebook page for 50 Cent (shown left) had only three fans when it first went up just after midnight, compared to 1.2 million fans on his iLike page on Facebook.

Well, it turns out that iLike does not care which page artists choose to call their home. Any widget on the iLike artist page—popular songs, upcoming concerts, the iCast blog, even the iLike button—can be plopped into a Facebook artist page (also known as a canvas page). And every link in each of those widgets takes you back to the Facebook application pages that iLike controls.

This is not an unintended consequence. I asked Facebook CEO Mark Zuckerberg yesterday about the potential here for Facebook to be competing with its own app developers. He responded, “What is the effect on app developers if we are making it possible for bands to have music pages? It increases distribution because your app can be on that page.”

Fair enough. But where does that leave Facebook in the fight for the hearts and marketing dollars of the struggling music industry? Already, I like iLike’s chances in this battle. But it doesn’t end within the confines of Facebook.

On Monday, I met with iLike CEO Ali Partovi at the swank Fifth Avenue offices of the investment bank Allen & Co. (Partovi went to high school with Herb Allen III, who lets him use the office for meetings when he is in New York. And, of course, who did we run into in the lobby downstairs, but Ron Conway. That guy is everywhere. But I digress.). Partovi wants iLike to become a one-stop-shop for artists to manage their own profiles and communicate with their fans, whether on Facebook or elsewhere.

To make it easy for them to do that, iLike is also introducing today the Universal Artist Dashboard. From one place, a music artist or record label can set up an artist page on Facebook and iLike.com, as well as information that pops up in iLike plug-ins for iTunes and and Windows Media Player. And since iLike has also joined Google’s OpenSocial effort, these artist pages will soon be exportable to other social networks as well, such as MySpace, Bebo, Ning, Hi5, Orkut, and in iGoogle Web widgets. Instead of having to manage their profiles in all of these places, artists will be able to upload all of their songs, concert dates, and blog posts once to the Universal Artist Dashboard and then spread it all over the Web. They will be able to manage all the messages coming from those artist pages from the dashboard as well.

That is the power of being a widget company—you can insert yourself anywhere. Explains Partovi: “A syndicated effort is always stronger. Rather than try to bottle up everything in one place, push it out to where people are. That is why YouTube is so successful, because it is pasted all over the Internet.”

Take Avril Lavigne as an example. Her record label could create a Facebook page for her at http://www.facebook.com/Avril+Lavigne, which it hasn’t. But she does have an iLike page at
http://apps.facebook.com/ilike/artist/Avril+Lavigne:

Here is what her page, built from the same widgets, looks like on iLike.com. (Now, just imagine similar pages for MySpace, Bebo, Hi5, and all the other social networks participating in OpenSocial):

And here is what iTunes looks like with the iLike sidebar (also built from the same underlying data), showing updates from artists in your music library, including a recent tour bulletin from Avril Lavigne at the top:

The same person who hacked the RockYou OpenSocial application on Plaxo just 45 minutes after it was publicly released is at it again.

This time, he claims to have easily accessed the iLike application on Ning. Specifically, he says he can add and remove songs on users’ playlists. And more damaging, he can also access a user’s friends list in the client-side code. Give him a Ning username and he can give you details on their friends: relationship to user, last date of update, photo, profile creation date and part of their email address.

He’s pulled up Ning co-founder Marc Andreessen’s friend list to prove his point, and shared part of it with me. I won’t be publishing it here, but it shows that he got access to the application.

Total time to hack iLike on Ning: 20 minutes.

As with the RockYou/Plaxo hack, no real damage has been done, but it shows that in the rush to get applications out the door quickly, attention to security may have fallen by the side of the road.

TheHarmonyGuy now has a blog up where he is writing about his hacks of OpenSocial applications. See it here. He notes that RockYou’s application remains unpatched.

More on OpenSocial here.

Details emerged today on Google’s broad social networking ambitions, first reported here in late September, with a follow up earlier this week. The new project, called OpenSocial (URL will go live on Thursday), goes well beyond what we’ve previously reported. It is a set of common APIs that application developers can use to create applications that work on any social networks (called “hosts”) that choose to participate.

What they haven’t done is launch yet another social network platform. As more and more of these platforms launch, developers have difficult choices to make. There are costs associated with writing and maintaining applications for these social networks. Most developers will choose one or two platforms and ignore the rest, based on a simple cost/benefit analysis.

Google wants to create an easy way for developers to create an application that works on all social networks. And if they pull it off, they’ll be in the center, controlling the network.

What They’re Launching

OpenSocial is a set of three common APIs, defined by Google with input from partners, that allow developers to access core functions and information at social networks:

• Profile Information (user data)
• Friends Information (social graph)
• Activities (things that happen, News Feed type stuff)

Hosts agree to accept the API calls and return appropriate data. Google won’t try to provide universal API coverage for special use cases, instead focusing on the most common uses. Specialized functions/data can be accessed from the hosts directly via their own APIs.

Unlike Facebook, OpenSocial does not have its own markup language (Facebook requires use of FBML for security reasons, but it also makes code unusable outside of Facebook). Instead, developers use normal javascript and html (and can embed Flash elements). The benefit of the Google approach is that developers can use much of their existing front end code and simply tailor it slightly for OpenSocial, so creating applications is even easier than on Facebook.

Applications can have full functionality on profile and/or canvas pages, subject to the specific rules of each host. Facebook, by contrast, limits most functionality to the canvas page, allowing a widget on the profile page with limited features.

OpenSocial is silent when it comes to specific rules and policies of the hosts, like whether or not advertising is accepted or whether any developer can get in without applying first (the Facebook approach). Hosts set and enforce their own policies. The APIs are created with maximum flexibility.

Launch Partners

Partners are in two categories: hosts and developers. Hosts are the participating social networks, and include Orkut, Salesforce, LinkedIn, Ning, Hi5, Plaxo, Friendster, Viadeo and Oracle.

Developers include Flixster, iLike, RockYou and Slide.

What This Means

The timing of OpenSocial couldn’t be better. Developers have been complaining non stop about the costs of learning yet another markup launguage for every new social network platform, and taking developer time in creating and maintaining the code. Someone had to build a system to streamline this (as we said in the last few sentences in this post). And Facebook-fear has clearly driven good partners to side with Google. Developers will immediately start building on these APIs to get distribution across the impressive list of hosts above.

And they’ll do it soon, too. It’s clear that the developers who arrived early to the Facebook Platform party won easy customers. Those that came later had to fight much harder. Developers found their new gold strike, and they will soon all be there, mining away.