Although some love to throw MySpace and Facebook in the same bucket, the two companies continue to evolve in different directions to the point where it is probably better to talk about meta-competition than direct rivalry.
The latest example is how they approached targeted advertising. Jeremiah has a solid analysis of what the near-term will likely hold for both companies.
MySpace’s approach–allowing brands to target across more than 300 affinities is more traditional and bound to lead to improved ROI given their scale in both users and inventory.
Facebook’s approach is novel, using the built-in viral loop to spread “trusted” brand endorsements. The trust comes from users choosing to endorse a brand. The message is controlled by the brand. In other words, Facebook users opt-in to become distribution channels for brands. It would be very interesting to see what incentives brands put in place to buy endorsement and the extent to which Facebook will provide tools for that. Also, Facebook has a strong incentive to impose some constraints on the system–I’m not sure this is the type of environment where unchecked market forces will yield an optimum outcome for any party (FB, users or brands). I guess I’ll have to find some time to play with the system, although from early reports such as Fred Wilson’s experience it seems there should be no rush.