Facebook may be the king of the Silicon Valley crowd, but Paris Hilton apparently prefers MySpace. 42 year old MySpace cofounder and CEO Chris DeWolfe has been dating 27 year old Paris Hilton for at least a few weeks, sources close to the company confirm. We first got wind of this when we saw DeWolfe in a random video clip with Hilton from last month (see below). He’s also been throwing parties in the Hamptons, and Hilton has been at all of them.

Now we’ve got a source in New York that’s confirming the two are dating. DeWolfe is hosting yet another party tonight in the Hamptons, and Hilton will reportedly be there as his date.

This is a brilliant marketing move for MySpace (or for Hilton?). Or maybe they actually like each other. All we’ve confirmed is that they are definitely dating.

As far as we can tell DeWolfe still has a wife (but is reportedly separated) and Hilton still has an official boyfriend, but whatever, this is Hollywood. Best of luck to both of them.

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According to data released today by comScore, both Facebook and MySpace still trail Japan’s leading social network Mixi.jp by a wide margin, despite recent pushes by both networks to expand in the country. While Facebook’s Japan site has grown three fold in the last year, it still has only about 4% of the users that Mixi does (538,000 versus 12.7 million unique visitors in June).

The data confirm TechCrunch contributor Serkan Toto’s post last week that described why the two networks are largely failing in Japan. Toto explains that much of the problem stems from Facebook and MySpace’s late entry into Japan - it took both of them years to release localized versions, giving Mixi time to establish a stranglehold on the market.

According to Toto, another contributing factor has been a lack of changes made by MySpace and Facebook in response to Japan’s cultural differences (although both Facebook and MySpace argued that we missed key emerging partnerships and products they are developing). In Japan, many users are more concerned with security, privacy, and to some extent, anonymity - things that Mixi has placed more emphasis on than Facebook or MySpace.

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The Commission on Presidential Debates (CPD) has tapped MySpace to create an online portal for the upcoming election season that will include live streaming video and real time polling. The site, called MyDebates.org will be open to anyone (you don’t need to create an account), and will launch as we get closer to the first debate on September 26.

The CPD is charged with organizing the four “real” debates leading up to this November’s election (it is unaffiliated with the dozens of primary debates we’ve seen over the last 18 months). The partnership with MySpace marks the first time the organization has included any kind of real-time participation.

Visitors to the site will be able to watch the debates stream in real time. A team of employees working behind the scenes will monitor the arguments made by each candidate, and will pose questions to viewers that will be displayed in tiny popup overlays. In this way, the site will be able to collect an endless amount of polling data in real time, allowing users to immediately see how the public responds to each question. The site will also be involved with the town-hall debate on October 7, which will feature questions drawn from a pool of submissions from MyDebates.org.

At MyDebates.org, users will be able to create widgetized “Issue Cards”, which can be embedded in their blogs and webpages. While there are a number of sites that offer similar widgets, this one has a trick up its sleeve - during the broadcast of each debate, these Issue Cards will fold open to reveal a miniature video player.

This isn’t the first time we’ve seen tie-ins between debate organizers and online sites - last year we saw similar cooperation between CNN and YouTube, with disappointing results. But the primary debates pale in comparison to those leading up to the general election, and MySpace and the CPD seem to be taking a new approach.

Television changed the election process forever, bringing the candidates into the living room of every American. The web is clearly the next frontier, but it has yet to live up to its potential. If MySpace can create a site that is both intuitive and informative, it stands to actually enhance the democratic process by engaging and motivating the millions of apathetic Americans who might not vote otherwise.

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Sized at an estimated $5.6 billion in 2007, Japan boasts one of the biggest online advertising markets in the world – a huge potential just waiting to be tapped by foreign social networks. The world’s two largest social networks, MySpace and Facebook, barely register in Japan. As the Google Trends for Websites chart above shows, local social network Mixi is outpacing both in Japan. On Alexa, Mixi is ranked the No. 6 most popular site in Japan, compared to No. 95 for MySpace (Facebook doesn’t even make it into the top 100). MySpace and Facebook are trying - but why are they failing?

Complacency and failure to adopt to cultural differences

Social networks have become integrative elements of modern American youth culture over the last years, shaping social patterns and changing the ways that people communicate. When taken abroad, these services have to deal with a large number of cross-cultural peculiarities by their very nature.

Societal and cultural gaps are particularly evident in the case of Japan. Market entry in this country with a “What works in the US must also work over there”-attitude is going awry for both Facebook and MySpace. It’s not a stereotype that communication tends to be nonverbal in Japan. The society generally puts more emphasis on the community rather than on the individual. Also, security plays a major role in many aspects of Japanese life.

These cultural distinctions largely explain why social networks from abroad have a hard time winning over Japan’s 90 million web users. Mixi, the country’s biggest social network, positioned itself as a tool for communicating at a distance through diaries and communities to meet like-minded members. It doesn’t primarily exist to make new friends (poking is restricted) or as a platform for public self-presentation.

A perfect example of a cultural misconception: Mark Zuckerberg recently said in Tokyo one of Facebook’s unique selling points is the usage of real names and photos in profiles. This may be true but it’s exactly what Japanese web users usually try to avoid. And they already have a high-trust, invitation-based social network anyway: Mixi.

Lost in Translation (Without Mobile, You’re Dead)

MySpace opened a Tokyo office in 2006, three years after launch in the US. It took Facebook four years to initiate a user-generated translation of their site. Too late – in the meantime Mixi developed into a $1 billion-listed company without the slightest competition from abroad.

Facebook’s hands-off approach especially leaves a lot to be desired. The quality of the site’s translation is amateurish in parts (at least in the initial version), a challenge MySpace’s local team was at least able to master. In addition, due to relatively weak English skills, most of the Facebook applications are pointless in the eyes of Japanese users. Without apps that make sense, Facebook is crippled. Facebook is also missing the function Japanese consumers deem fundamental in a social network: blogging. This paradox may be the site’s biggest drawback in blog-crazy Japan.

Perhaps an even bigger problem is that both Facebook and MySpace fail to offer an optimized version for Japanese handsets. Millions of Japanese are accustomed to using one thumb, a dialpad and a jog dial on their phones when accessing the web during their commutes to school and work. In this country, the mobile web is bigger than the PC web.

Success factors in Japan: Get in fast, show some respect, and find a local partner

Offering a country-specific version before a local copycat beats you to it is an obvious key factor for success, and not only in Japan. But being relatively complex entities, social networks face a trade-off between additional risks and potential gains in the course of localization. Overdoing the adoption to local tastes might compromise the big idea and infrastructure of the site (i.e. in the form of cluttered interfaces or fragmentation into culturally and linguistically walled “mini-networks”).

Practical experience from the Japanese web industry has shown that partnering up with a local company is the best way to diminish these dangers (see Yahoo Japan, the No. 1 site in the country, which is a joint venture run by Softbank). Japan has embraced just five American web brands which decided to go solo and none of them is a social network: Wikipedia, Google, YouTube, Twitter and Amazon.

MySpace’s establishing of a physical presence in Japan was received as a sign of long-term commitment, a move which melds with the local mentality. But in Japan, maintaining your autonomy comes with a price: It’s no secret that it usually takes foreign companies years to build up brand identity, trust, industry connections and general market knowledge.

The same is true for complex web products such as a social network – if the company behind it really means it. Currently it seems Facebook and (to a lesser degree) MySpace chose to start working the Japanese market with a minimum of resources. But in most cases, remote management is perceived in insular Japan as second-rate treatment. Apart from M&As, cooperating with an established local partner seems to be the best shortcut option conceivable. It’s almost impossible to win in Japan without close interaction with end users, press, developers, potential employees and advertisers.

But the Japanese market isn’t lost yet for MySpace and Facebook, despite Mixi’s dominance. If millions of Americans don’t mind registering to multiple social networks, why should the Japanese? Growth potential, especially for Facebook, also exists in the realm of connecting professionals online, which may be the reason why LinkedIn is currently pondering a market entry in Japan. In that specific field, they and designated partner Digital Garage (which helped Twitter build traction and earn money in Japan), see practically no competition in this country.

Update: MySpace has clarified that they entered the Japanese market via a joint venture with Softbank and have a local office in Tokyo with 75 employees. Further, MySpace says they have an “aggressive, localized mobile product in Japan.”

(Editor’s Note: Serkan Toto is a TechCrunch contributor based in Japan).

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MySpace COO Amit Kapur apparently meant it when he told me earlier today that MySpace is continuing to hire despite letting 5% or so of staff go in the coming days. He introduced five new senior executives this evening via an email out to all staff, the text of which was forwarded to me and is copied below.

The new execs are Manu Thapar, SVP of Engineering (formerly Yahoo VP Engineering), Angela Courtin, SVP of Marketing, Tish Whitcraft, SVP of Customer Care, Jason Oberfest, VP of Business Development and Abe Thomas, VP of Online Marketing

All of the new execs seems to be eating the MySpace dog food by at least having a presence on MySpace. Except former Yahoo’er Thapar, that is. He’s MySpace-free for now. I wonder how long that will last.

Email is after the break:

Read the rest of this entry »

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MySpace has starting laying people off, we’ve heard from a source close to the company. The final tally may be 5% or more of total staff, with engineering, sales and customer service taking the biggest hits.

MySpace parent company Fox Interactive Media recently missed their revenue target for the last fiscal year and fired their chief revenue officer Michael Barrett. The layoffs may be tied to that missed target.

On the other hand MySpace has undergone massive headcount growth over the last two years, sometimes adding as many as 100 employees per month. Two years ago MySpace had 300 employees; today it is rumored to have 1,500. This may be simply an exercise in pruning.

We’ve contacted MySpace for comment.

Update: I spoke with Amit Kapur, MySpace’s Chief Operating Officer, about the rumors shortly after writing the post. Kapur confirms that they are letting people go, but clarifies it’s entirely performance driven, not layoffs. He would not state the number of people who will be let go, but said it was “less than 5%” and that it is part of their standard yearly performance reviews.

“All of the employees we are letting go will be replaced,” he said, and “we are also rewarding top performers.” “This is an important way to drive a streamlined business,” he added. Kapur is also highlighting the upgrades being made to the MySpace management team. MySpace is continuing to hire aggressively, and plans to add up to 300 people in the coming months, he said. He also pointed out that MySpace is moving into new offices, with plenty of room to grow.

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The as-yet unlaunched MySpace Music will likely partner with Amazon to handle all music ecommerce transactions, we’ve heard from multiple sources. Apple and Rhapsody are also bidding for the business, however, and one source says a final decision hasn’t yet been made.

The project, which combines the music from three of the four major labels (Sony BMG, Universal Music Group and Warner Music Group) with $120 million in cash from MySpace along with MySpace’s existing music properties, is set to launch in September.

Music download sales are just one revenue stream for the property. In addition to sales of DRM-free music (singles, albums, playlists), MySpace Music will likely also offer ring tones, concert tickets, merchandise (tshirts, etc.) and branded advertising campaigns.

But downloads are going to be a big part of total revenue, and while margins on music sales are low, the volume could be massive as MySpace directs its traffic to the new site. The big three music providers are likely the only partners who can handle that kind of flow. And Amazon and Rhapsody need market share to effectively compete with market leader Apple/iTunes.

Another factor in bidding is likely the ability of the partner to easily handle signed, independent and unsigned artists. MySpace has 5 million bands with a presence on the site, so the long tail is a factor.

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MySpace’s upcoming music joint venture with 3 of the 4 major labels, first announced in April, will launch in September (EMI is still a holdout, but from what we hear they may be ready to fold soon). Chris DeWolfe, CEO of MySpace, mentioned that date and gave other details about the joint venture in an interview today with Adam Lashinsky at the Fortune Brainstorm conference in Half Moon Bay, CA.

Afterward, he told TechCrunch Co-Editor Erick Schonfeld, who is attending the event, that MySpace Music will be a combination music store/subscription service, with unlimited playbacks of full tracks, but for free. The revenue model will be advertising and paid downloads. Advertisers are already lining up, with some eight-figure deals being negotiated.

This is the first time a launch date has publicly been revealed. MySpace is counting on the music store as a new growth business - and bringing in the major labels as equity partners helps ensure their long term buy-in. The seemingly successful Hulu business model which brought in News Corp and other content owners last year will set the example.

Music almost certainly plays a part of MySpace’s continued dominance of Facebook in the U.S. Market. Facebook continues to rely on iLike for music - MySpace, by contrast, has already had a deep music offering and hosts pages for 5 million artists. MySpace says that 65% of their users embed music on their MySpace pages, and over 5 billion songs are streamed on MySpace each month.

There are still a lot of details that need to be explained about the MySpace music venture, and we still eagerly await announcement about the CEO of the new venture.

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MySpace is rolling out a couple of announcements this morning a day ahead of Facebook’s F8 developer conference.

The first is confirmation of our story that they are supporting OpenID, although they aren’t releasing any details (It’s our belief that they will first issue OpenID IDs, and possibly become a relying party later).

The company is also announcing the launch of two new Data Availability integrations: Flixster and Eventful (we built what we believe is the first Data Availability app last month).

MySpace is also making a core policy change to Data Availability. Previously third party services were not allowed to store any MySpace user profile information at all - they simply requested it from MySpace, used it to create a web page and then dumped it. Now MySpace is allowing 24-hour caches of profile information, and permanent caches of certain “core elements” of a user profile.

Screen Shots:

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MySpace will announce support for the OpenID single sign-on framework sometime this week, we’ve heard from multiple sources. This will be the second largest implementation ever and will bring the total number of OpenID-enabled accounts to over half a billion. MySpace’s 200 million user IDs join Yahoo’s 250 million or so accounts, plus accounts from a number of other large providers.

Like most large company integrations, MySpace is at first becoming an OpenID issuer only, and may integrate as a relying party down the road. We’ve argued that becoming an issuer is essentially a land grab for user identities. The integration work on accepting OpenIDs from others is harder, and the payoff is less.

MySpace may also be writing code to extend the OpenID spec and allow easy integration of their Data Availability product to sites that accept MySpace OpenIDs.

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