Myspace to “lay off 550 to 600 employees tomorrow”

It wasn't that Facebook adapted and MySpace didn't; it was more that Facebook started off in a totally different direction from MySpace, and it turned out that the market preferred Facebook's way. To focus on just a single difference that's probably the most obvious to casual users, Myspace allowed users a great deal of flexibility in designing their own pages (poorly), Facebook didn't and still doesn't, and basically presents a standardized page for each user with their information on it. There's a significant 'philosophical difference' there. Those differences extended beyond design to their user-acquisition strategy, which created the network effects that allowed Facebook to crush Myspace among college users.

Bluntly, the market decided it preferred a nicely manicured, access-controlled walled garden to the free-for-all of Myspace.

Interestingly, though, I think Facebook has now opened itself up to everyone to the point where it risks getting "Myspaced" itself; if influential users were to suddenly jump ship to something else, Facebook could become about as cool as having a Myspace page or Hotmail email address, and an exodus could follow.

Facebook built itself in large part on exclusivity but has attempted to move away from it in order to grow. They're trying to walk a very delicate edge and I suspect that they'll fall off eventually.

They tried to reestablish the brand with a general focus on entertainment, but nobody was buying it.

I'd say up until the last six months, they still had 80%+ of the artist market using their service. You can't give that up...but they did. Now every artist is spreading out to sites like Bandcamp.

without the artists, what do they have? a social network? ha!