Techcrunch reported today on the new MySpace Profile 2.0, introducing a slicker layout, flash drag and drop profile editor (removing any requirement for HTML/Javascript knowledge), and granular privacy control.
This is a great move by MySpace. One of the key reasons for the shift over to Facebook for a lot of people has been its cleaner look and granular privacy. With these changes, MySpace manages to address a lot of these issues, whilst still maintaining its unique differences; much bigger profile customisation with bespoke designs, music etc. Will this keep users from shifting over? Time will tell, but it's definitely a shift in the right direction, and the granular privacy will make more users comfortable with adding friends from their 'real' social graph (including work mates) whilst still maintaining the more outgoing parts of their profile (compared to the more professional looking Facebook) for other friends.
Combined with the more open nature of the site and the continuing focus on music they are moving towards being a truly viable alternative to Facebook for a wide age-range. However, as a 'primary' social network (i.e. one that is aiming to own your whole social graph, as opposed to a niche section of it), they're going to have to work very, very hard to both hold users and attract more in order to prevent users from shifting to Facebook purely out of social pressure. In the US, they currently hold an advantage over Facebook by just having more users, although in some countries (e.g the UK) they are significantly behind.
If Facebook continue their world-dominating growth and manage a full coup of the world's social graph, then one scenario could be pushing even more heavily into the music focus, aiming to be a 'secondary' social network where users manage their online music activity, connecting to bands and other fans, discovering, listing and buying new music (on top of their primary social network activity somewhere else). This is similar to the role LinkedIn plays for many people (who use it to manage their business connections, on top of a main social network like Facebook). In many ways this would take MySpace back to its roots (a MySpace executive once admitted to me that they were completely surprised when Facebook blew out of the woodwork, not even realising that social networks could be used to harness your REAL friends - in the early days there just weren't enough users to make this feasible, so a majority of online soc net activity was meeting new people). It's unlikely that this is scenario A in MySpace's business plan, but was no doubt in the back of their mind when they launched the new MySpace music service.