[Ed note. I posted this earlier today on the Huffington Post. I am cross posting here as a courtesy to my blog subscribers. ]

The first shoe dropped less than a year ago when Facebook stopped restricting its membership to college users. Before that it was like a private college party, started at Harvard, popular in major college campuses. Social life on campus revolved around Facebook. Facebook’s 23-year-old founder Mark Zuckerberg dropped the second shoe on May 25 as he announced an unprecedented amount of access to developers. Facebook is now a business opportunity, with everybody welcome. So long, private party; and hello world.

The party crashers are business users, looking to gain access to Facebook’s growing party of 28 million members. Access means eyeballs, and eyeballs means, at least in theory, money. Facebook, presumably, is looking to gain traction with some of the nearly 200 million registered users of MySpace, its Web 2.0 rival.

The new Facebook API gives Web programmers a crack at one of the most visited sites on the Internet, ranked between top 10-20 most visited websites as of June 2007, and the number one site for photos in the United States, ahead of public sites such as Flickr, with over 8.5 million photos uploaded daily. It is also the seventh most visited site in the United States (according to wikipedia).

So, not surprisingly, "Facebook vs. MySpace" is all over the blogs. Blogs compare user registration rates, volume of logons, time on the system, and recently valuations. They also compare features, interface, prevalence of bullying, even — certainly the most interesting — a Berkeley PhD student’s analysis of class distinction between Facebook (upper, educated) and MySpace (not). Some experts read that as evidence that the two don’t actually compete, but rather just coexist, with different user bases. Others point out a growing overlap of users operating in both sites.

Developers came quickly. iLike Inc levered its Facebook release to become the fastest-growing digital music service on the Web. Picnik, a photo sharing application, has registered 200,000 users. Major players including Washington Post and Red Bull are already there.

Developers don’t get a clear route to making money. They do get access to millions of users, but the traffic runs through Facebook. Most (if not all) of the new apps are free. iLike lets users purchase music they find through links to friends. There are branding implications for some, and traffic statistics for others.

While MySpace has made no formal response, earlier this week LinkedIn founder Reid Hoffman announced his site’s API to make it more of a platform like Facebook. LinkedIn is a business networking site, sharing resumes and recommendations.

So suddenly groups are mixing. What used to be college students in Facebook, business people in LinkedIn, and the rest of Web 2.0 in MySpace, is now a free-for-all.

The newcomers are also wary. I asked a 33-year old software company CEO about Facebook vs. LinkedIn. "I don’t want to mix my business contacts with social contacts," she answered, "but there’s no question that Facebook is suddenly very interesting. The API makes it much more attractive." She, however, is keeping her business networking in LinkedIn.

College students, meanwhile, are taken aback. I know a Stanford junior who called it "weird" to see her 31-year-old brother in Facebook holding a baby daughter. Students have been using Facebook to cement relationships, link friends, set up activities, join groups, and find out who is the good-looking guy on the third floor. One campus folktale is about the guy whose girlfriend broke up with him by changing her settings on Facebook, from "in a relationship" to single and looking. Now they find business people in their 30s, married with children.

— Tim