In an interview with the Herald this week from Los Angeles, Mr Brewer, who co-founded InterMix Media, which sold MySpace to News Corp, said MySpace would still grow strongly but not as fast as Facebook. But Mr Brewer, who has left the company to set up an online ad network that deals with both companies, also warned that Facebook is likely to be usurped as the king of social networking sites within two years by another entrant which will most likely pop up with better user functionality for mobile phones.

"There's a fundamental shift going on," Mr Brewer said. "Both sites are ... different. We built MySpace for people to find and connect with people they don't know. Facebook is ... built around connecting with people you already know. "Clearly, the world eagerly embraced MySpace, but as the average person has adopted social networks, where they come to first is making connections with the people they already know. "Facebook has done an excellent job of capitalising on that."

Australian figures from Nielsen Online support Mr Brewer's view. In September 2007, MySpace boasted nearly double the number of users of Facebook, but within a year MySpace users had declined by 400,000 while Facebook had signed up an astounding 2 million new users. As of December last year - the latest figures available from Nielsen - Facebook had 4.6 million users compared with 2.3 million for MySpace.

While the winner in the race for user numbers appears to be clear, making money from them is not - a point made by Rupert Murdoch this week. He said there had been a "slight downturn" in revenue at MySpace. According to Mr Brewer, MySpace's revenue decline is partly linked to News Corp and MySpace being outplayed by Facebook in opening up applications, or "widgets", to outside developers on a revenue share model. Facebook had about 80,000 developers scrambling to launch the next hot application to tickle Facebook users, while MySpace had been slower to move, Mr Brewer said.

About 30 per cent of Facebook's total user activity is in the applications area and it has helped break down advertiser resistance to social networking sites. Mr Brewer said widget zones are considered a safe haven by advertisers because there is little risk of having their ad placed next to unsavoury pictures, conversations and comments.

It is also where Mr Brewer's new project, an online advertising company called AdKnowledge, happens to play - his company serves ads into these areas of MySpace and Facebook 14 billion times a month. Prolific advertisers on social networking sites include movie studios. Universal Pictures, which uses Facebook and MySpace, might pay $2 every time a trailer is viewed. Mr Brewer said the real revenue potential for social networking sites was in their ability to trigger word-of-mouth marketing. "We see when we roll out a movie promotion, 60-70 per cent of the movie trailer views are coming from people who saw their friends watch the same thing," Mr Brewer said.

However, Mr Brewer said that in the end, social networking sites would have to accept that they would not monetise their audiences through advertising in the same way as a typical online publisher.