As part of its big new site redesign, MySpace has introduced a new Facebook integration that is supposed to let you sign up for MySpace using Facebook Connect. The feature isn’t currently working — you click on the Login with Facebook button, give MySpace extended permissions to access Facebook data, and then nothing happens. But the fact that Connect is here is the latest sign of the News Corp. company’s self-described move away from being a social network to being an entertainment site that relies on its multiple social networks to engage users.

Sources told us last fall that we should expect to see Facebook “everywhere” on MySpace this year, and until now that hadn’t really happened. There was a video application made by a partner in the UK back in January, that happened to use Connect. More significantly, MySpace began letting its users syndicate their status updates to Facebook at the end of this past August — that integration has led to 66,472 daily active users and 490,000 monthly active users as of today, according to our AppData tracking service.

The Facebook Connect option is currently  buried off the main page, within the “Sign up” page; you’ll see it on the right-hand side once you click through.

The details of what we’re seeing: Once you enter your Facebook login information and allow MySpace permission to your data anytime, your email, etc., you don’t seem to be logged into MySpace. We tried different browsers — Chrome, Firefox, Safari — to no avail. Facebook Connecting on MySpace.com logs you into Facebook, but not MySpace, and you still have to manually log into MySpace.

We’ll update this article with more details once the feature works.

Facebook confirmed that it hired three employees from messaging startup Zenbe in a small talent acquisition. They were part of the team working on the new Messages product Facebook launched yesterday, according to Zenbe.

Yesterday, the social network overhauled its private, one-to-one messaging system, re-imagining Facebook as a central hub of informal, social communications through e-mail, text and chat.

Zenbe, a New York-based startup, was known for experimenting with new forms of collaborative communication. Last year, the startup launched a product called Shareflow, which lets users see a flow of communication around specific topics.

“A few months ago, three of our engineers joined Facebook as part of a talent acquisition,” Zenbe said in a statement on its blog. “We believe that messaging and collaboration on the web are on the cusp of a new wave of innovation, and we’re excited to be playing a role in that.”

While there had been ongoing discussions for years about how to revamp Messages, efforts began in earnest earlier this year as the company began assembling a 15-person engineering team — the biggest ever involved in a single project.

Yesterday, Facebook launched its new Messages product, allowing users to see their communication with someone over email, Facebook Messages, Facebook Chat, instant messages, and SMS in the same thread. Facebook automatically delivers messages where it thinks a user is most likely to see them, creates a unified history of the messages, and filters the threads by relationship with the sender to create a Social Inbox.

Here’s a closer look at exactly how the new Messages product works:

Setting Up Messages

Facebook will be rolling out access to the new features over the next several months. Members of the press have been set up with accounts, and can invite two friends each using the multi-friend selector. These invites are not delivered immediately, though, and instead put the recipient near the top of the queue for the roll out.

When a user gains access to the new Messages product, they’ll see a prompt at the top of their home page. From there, they’re directed to claim their new [public username]@facebook.com email address. Emails from friends and friends of friends are routed to their primary Messages folder, while emails from other senders are filtered into the Other Messages folder. Users can still change their privacy settings to prevent non-friends from sending them messages. Emails from anyone who isn’t authorized by this settings are not delivered, and no bounce message is returned.

Next, users are asked to connect their mobile phone to their Facebook account “so friends can use Messages to send you texts”. In the same way that users have activated Facebook for mobile through Account Settings, users get a confirmation code texted to them, which they enter online to confirm their phone number. Lastly, users are asked to go online through  Facebook Chat to receive Messages over this medium as well.

The Social Inbox

Once set up, users will see that they now have two folders. The “Messages” folder defaults to hold all of a user’s Messages with friends or friends of friends. “Other Messages” holds Messages with those who aren’t connected to a user, Page updates, Event messages, and messages from old groups. When a user has new Messages, they’ll see counters next to the Messages navigation links in the Facebook home page’s left sidebar.

Users can move conversations between folders to increase or decrease their visibility. Messages from friends of friends display how a user is connected to the sender.

Each thread has a radio button next to it allowing users to toggle it between read and unread. Within each thread, the medium from which a Message was sent is denoted with icons for email or chat. At the bottom of the inbox, users see options to view their Archive or Junk, to which Messages can be assigned to reduce clutter. Users also have the option to permanently delete conversations.

Sending and Receiving Messages

When a user sends a Message, Facebook processes several signals to determine which medium to route it to. If the recipient is actively online on Facebook they’ll receive the Message as a Chat. If the Message is a reply to an email, it will be sent to email. Users can check a box next to the reply field to purposefully send a text message. Regardless of the delivery medium, all Messages appear in the inbox in a thread with the recipient, creating a history of the conversation. This is the first time Facebook has offered users a record of their Facebook Chat, and this functionality could pull users away from GChat, which many people use for its instant message log.

If a user opens a Facebook Chat, the last few Messages from the thread are displayed in the Chat window for context. When users receive email from Messages, the previous few Messages in the thread are included with the new Message.

When replying to a Message, users can toggle a checkbox to use Quick Reply mode, in which hitting ENTER sends the reply, similar to instant messaging. Facebook has integrated user requests for a forward button, allowing users to add people to conversations. Users can upload multiple attachments, including photos, or take a single photo with their webcam. Users must download attachments to view them, unless they are Microsoft Office documents, such as .doc or .xls files, in which case users can follow a link to Office.com where they can see a preview.

How Messages Will Change Communication

The new Messages product will not immediately disrupt the institution of email. Information which only comes in that medium, and which rarely requires interaction a human, such as bank statements or newsletters, is best kept within one’s email inbox. Exchanges in which users share lots of attachments, especially in formats other than Microsoft Office’s, will benefit from in-line previews and mass downloading offered by established email services.

Over time, however, social conversations may be pulled into Facebook. If a conversation naturally occurs across mobile, synchronous, and asynchronous mediums, such as day-to-day exchanges with a friend, using a system which automatically optimizes for immediacy will make the exchange easier. Once part of a conversation occurs through Facebook Chat or private messages, email and text messages will soon feed back to the Social Inbox. Having a centralized, persistent record of the distributed conversation will also make Messages useful for organizing groups, perhaps better than Facebook’s Groups product which doesn’t encompass SMS or record Group Chat.

While the aggregation of additional mediums is useful, Facebook has also solved the biggest problem with its old Messages product. By filtering Messages according the user’s relationship with the sender, users will no longer lose an important one-to-one conversation amongst low-content Event messages, broadcasted Page updates, and other noise. When a user visits their main Messages folder, they’ll only see active conversations with the people they choose. By making it so easy to continue the conversation, Messages will keep us in direct contact as effectively as the news feed keeps us in indirect contact.

2010 will be remembered as the year that games on social networks became a billion dollar business and transformed the way millions more people socialized with friends online. With an up-to-$750 million acquisition of Playdom by Disney, Playfish’s integration across Electronic Arts, the continued growth of Zynga, the rise of CrowdStar and Kabam, and continued venture investments, social games are impacting businesses across the media landscape. Despite the challenges facing the market, it’s become clear that there are still substantial opportunities for social game developers with virtual goods revenue models, but the market is still evolving rapidly.

Inside Network is proud to announce the release today of a new original research report by Justin Smith and Charles Hudson that is exclusively focused on the future of the social gaming market, entitled Inside Virtual Goods: The Future of Social Gaming 2011. This is Inside Network’s second annual edition of the Future of Social Gaming report. The big picture? The social gaming market will reach $1.25 billion overall in 2011.

Where will social gaming go in 2011? How will existing players fare as Facebook shifts the social gaming landscape through the rollout of Facebook Credits and continued changes to the platform? Inside Virtual Goods: The Future of Social Gaming 2011 provides deeper insight into social game monetization, development, customer acquisition, and the key questions facing the space in 2011 than you’ll find anywhere else.

About the Report

Inside Virtual Goods: The Future of Social Gaming 2011 gives you an inside view of the future at this critical juncture in the intersection of social networking and online games.

We have compiled months of original research from dozens of top executives and entrepreneurs from all parts of the social gaming ecosystem to produce eye-opening source data and analysis that is not available anywhere else. Inside Virtual Goods: The Future of Social Gaming 2011 takes the closest look at the present state of social games and the future of this strong but still rapidly changing industry.

What We Cover

1. Social Game Development and Studio Models – There is an emerging consensus around how social game developers are choosing to organize themselves for game development. How do small, medium, and large developers organize their teams? What do development cycle times for original titles and “expansion packs” look like? What is the role of testing and metrics in the development process?
2. Social Game Design and Mechanics – The emergence of a few key game genres with proven mechanics and monetization have spawned dozens of fast followers. Understand how publishers are continuing to innovate as we head into 2011.
3. Monetization Data and Payment Trends – Now that developers have proven the virtual goods model, what are ARPUs, ARPPUs, and LTVs really like for different game genres? What is the lifetime value of users, and how long do players stick around? We take an in depth look at monetization methods and rates, and shed light on where payments are headed in the coming quarters. One more note on monetization – you may be wondering about everything you’ve heard about the rollout of Facebook Credits. We cover:
   • Both the goals and benefits, and challenges and costs, of Facebook Credits for developers
   • Changes that developers have – and haven’t – made
   • How the rollout of Facebook Credits will affect the payments ecosystem (looking at both direct and alternativee payment methods globally)
4. Customer Acquisition and Marketing Trends – As the social gaming landscape has evolved over the past three and a half years, so have the ways that developers acquire and retain new users. How have user acquisition costs changed, and what do Facebook’s changes spell for the future of the marketing funnel? We take an in depth look at data and trends.
5. Facebook’s Platform Changes, Credits, and What’s In Store for the Future – Facebook has continued to change Platform communication channels and functionality over the last year, significantly altering the way social games reach users through Facebook. Continued change is likely – what will it be, and how will it impact the industry? In addition, as Facebook rolls out its much-discussed Credits currency, how will monetization and the payments landscape be affected? Finally, will we see another dominant platform emerge? Our overview covers these developments, their impact on the industry, and what else is in store.

What you get

In addition to our deep dive into key aspects of the social gaming ecosystem, the report also offers extended coverage on:

• A brief history on the evolution and growth of this space in the US, including a description of all key players and how they rose to the top.
• Total social gaming market size estimates for 2011, including estimates on the “big four” developers.
• Our take on the key issues facing the growth of social gaming, including our outlook and projections for 2011.

See the full table of contents below:

Table of Contents

More Data, More Actionable Insights

In 2010, social games began to show what kind of value can be created on top of social networks. 2011 will be an even more important year.

Social gaming, powered by virtual goods, is this year’s industry to watch. If you’re involved, or are considering jumping in, Inside Virtual Goods will be one of your most important tools.

One year of original data and exclusive in-depth reports delivered on a quarterly basis is $2,495 and contains:

• A detailed overview of the current state of the industry
• Specific estimates on market size by segment
• Diagnosis of key opportunities and issues by segment

The Facebook Chat system has never really felt as robust as many of the standalone instant messaging systems such as Yahoo! or Windows Live Messenger. However, with so many users connected to Facebook, it’s certainly something that’s been made use of with Facebook Connect on ICQ or instant messaging clients such as Pidgin. And, actually, Windows Live Messenger has also turned into a hit with users lately.

Well, here’s another option from a small UK startup by the name of Chit Chat.

Its product of the same name is a quick and lightweight downloadable Windows app that lets you use Facebook Chat in a more traditional IM interface. Automatically filling the friends list with everyone befriended on Facebook when you log in using Connect, it provides a windowed means to chat with friends online without having to be on Facebook.com itself.

The application has a few features beyond Chat as well, that are more typical of most other IM programs. This includes access to emoticons within the chat, status alerts, and the all-important ability to save your chat history. It also allows for small amount of text formatting in forms of color, size, boldness, and so on. As it stands, however, there is no window customization as with programs such as Windows Live. Still, there is some minor sound customization when it comes to alerts and notifications (e.g. friends signing in).

In line with the Facebook connectivity, Chit Chat also has quick access to everyone’s Facebook Walls. Directly from the program, users can not only post and update their status, but are also able to make Wall postings to anyone on their friends list. Also, there is a “music status” icon by the status updates as well as options in the app preferences, but there isn’t any clear indication (on the website or otherwise) as to what it is for. That said, it actually will post status updates based on whatever music the user is currently listening to. The update is a little delayed, however.

There are really no significant issues with the Chit Chat app, but it does have a few minor qualms. One of the nice things about windowed chat, is that users can alt tab through them. Unfortunately, Chit Chat puts all conversations in a single window with tabs within it (tabs in Firefox or Internet Explorer). This isn’t a bad thing, but it would be nice to have the option to make them all independent windows. Additionally, it is a bit slow on the uptake when it comes to online/offline updates. A couple of times, it wasn’t until we sent a message from another account to the Chit Chat user that it went recognized that person as online. Even so, it’s an extremely minor issue, as it does, eventually, update.

Overall, Chit Chat is another IM option for Facebook users that utilize the network for all their social communication. It isn’t as sophisticated as some of the stand-alone programs out there, but it gets the job done and is far more convenient than Facebook Chat itself. That in mind, it’s another decent, and free, option for users to download and try.

Our weekly AppData lists of fastest-growing Facebook apps and games by monthly active users have settled into a routine of late: on our Inside Social games list, game developer Digital Chocolate is generally at the top, while here it’s Phrases, an ever-expanding quiz and quote app with over six months of nearly continuous growth under its belt.

Nothing lasts forever; Phrases may be showing early signs of a fall in user numbers following its recent shutdown for American users. But it’s too early to tell for sure, since Phrases’ daily active user count, the fastest-responding indicator for any app, has gone through significant fluctuations before.

Here’s the full list:

	Name	MAU	Gain	Gain,%
1.	Phrases	52,473,837	+1,668,524	+3%
2.	Badges	2,796,449	+1,522,841	+120%
3.	Hollywood City	1,385,829	+1,115,666	+413%
4.	Crime City	5,022,481	+899,882	+22%
5.	Simply Hospital	2,125,612	+874,967	+70%
6.	Social Fun	3,222,553	+585,679	+22%
7.	Ravenwood Fair	3,078,325	+557,680	+22%
8.	BandPage by RootMusic	10,091,820	+502,992	+5%
9.	لعبة الحقيقة	2,278,355	+499,659	+28%
10.	Entrevista Amigos	609,070	+496,890	+443%
11.	Windows Live Messenger	12,198,853	+477,021	+4%
12.	Vegas City	589,649	+470,790	+396%
13.	Social Statistics	2,485,160	+430,727	+21%
14.	恐龍王國	1,102,939	+428,357	+63%
15.	THE WTF GAME	597,719	+366,966	+159%
16.	Island God	429,620	+362,640	+541%
17.	Birthday Cards	10,754,293	+359,953	+3%
18.	iHeart	1,500,672	+355,715	+31%
19.	My Photos	1,580,564	+330,614	+26%
20.	Frases Diarias	9,989,102	+311,255	+3%

Badges comes up second, with 1.5 million new MAU. The Momentus Media app has a simple, but apparently effective business plan: it creates badges for companies and non-profits, which can then be shown in a user’s profile.

The three games that follow Badges are all fairly new, but we expect all of them to last for some time — especially Crime City, which appears to be the Mafia Wars of 2010.

Skipping down, BandPage by RootMusic has just crossed 10 million MAU, suggesting that Facebook is becoming the new place for bands to create their homepages. And Entrevista Amigos you may recognize from its cousin Entrevistas Tus Amigos, which appears to have become “Friend Quiz”, in English. The new Entrevista is in Spanish.

The latest update to the Facebook for iPhone app includes links to a user’s Account Settings, Privacy Settings, and the Help Center. The links open these areas of the Facebook web interface through the app’s internal web browser, and allow users to alter all of their sharing, security, and other settings. Having easy access a one’s mobile settings, such as the hours of the day during which you receive text messages from Facebook, will be important as users begin having their Facebook Messages routed to SMS.

Facebook released a significant upgrade to its iPhone app last week, which included Groups, Deals, and enhanced Places functionality, but which prevented users from uploading photos to a specific album. Version 3.3.2 fixes this bug, allowing users to click an ‘+’ button while viewing an existing album to add a photo to it.

Earlier this year, Facebook added a lock icon to the iPhone app’s status composer, allowing users to set the distribution parameter for that update. However, until now users had to access rudimentary privacy controls via m.facebook.com, or manually navigate to Facebook’s web interface using a mobile browser to alter the distribution of new or existing photos, change what parts of their profile are visible to who, or edit block lists. When Facebook updated its privacy controls in May, we said that offering these controls to mobile users was a crucial next step.

Now, where users previously saw a logout button in the top left of the app’s home page, they’ll see an “Account” button which reveals options to logout, or visit Account Settings, Privacy Settings, or the Help Center. Access to privacy controls should encourage users to share more frequently by restricting content to fewer people. Notification settings access will make it easier to quiet Facebook if a user is receiving unwanted mobile or email alerts.

Facebook’s new Messages product delivers email, Facebook Messages, Facebook Chat, and text messages to whichever channel a user is currently using, including their phone via SMS messages. However, it’s possible that users who’ve connected their mobile phone number to their Facebook account won’t be aware of the volume of SMS they’ll begin to receive, or the charges associated with these messages. Therefore, giving iPhone users quick access to their Account Settings->Mobile where they can turn off SMS from Facebook, alter which actions trigger SMS messages, or set a daily limit will be helpful for mitigating any ill will against Facebook stemming from the charges.

While the settings panels are only linked to and not full integrated into the application, they make Facebook for iPhone practically a standalone version of the site. For those who don’t often sit down with a computer to access Facebook, the update should lead to a safer, more customized experience.

In a slight tweak to a policy that inflamed relations with Google earlier this month, Facebook will allow users to export their friends’ @facebook.com email addresses to other services. They won’t, however, be able to export email addresses from other providers, according to spokesperson Larry Yu.

For the past few weeks, Facebook and Google have been embroiled in a very public dispute over contact importers. Google for years has allowed Facebook users to import their friends’ email addresses into the social network. But Facebook has not given users the opportunity to send their friends’ information and email addresses back to Gmail, creating as Google called it — a “data dead end.”

Google changed its terms of service a little over a week ago in a very pointed move at Facebook, asking the social network to reciprocate. Facebook declined, arguing that a social network is fundamentally different from email and that because of privacy concerns, users can’t own or share the email addresses of their friends (although it has made special exceptions for partners like Yahoo and Microsoft).

Today the company launched a new Messages product that integrates email and gives users @facebook.com addresses, which would seemingly invalidate the company’s earlier arguments.

However, Facebook’s new policy is that users will be able to export their friends’ @facebook.com addresses, but not email addresses from other providers.

It doesn’t particularly help Google though. Even if Google or another company managed to recreate parts of the social graph by importing @facebook.com addresses, these companies would still have to contact these users by their @facebook.com accounts, leaving the social network as the middleman.

One more important note: Theoretically, because Facebook email addresses are made up of the vanity URL and then @facebook.com, Google and other bots should be able to crawl all public Facebook.com URLs and come up with a list of many, if not most, of the social network’s users’ email addresses.

But because of Facebook’s spam protections, even if a bot or Google crawled the web for @facebook.com addresses, they wouldn’t be able to spam it because a user can only receive messages from friends and friends of friends in their main inbox.

In another move highlighting Facebook’s strategic relationship with investor Microsoft, the company has given the established office software provider special online access to users in its new Message Inbox system.

Users who upgrade to the new version of the Inbox will see the option to view Doc attachments online — but not anything else.

Message attachments generally work as you’d expect. Click on the paperclip logo in the message creation form, then select the document on your desktop that you’d like to upload. Send it — to yourself, if you’re looking to test the integration out for yourself.

The sent message will show your attached documents. If they end in a Doc format for Word, Excel or Powerpoint, you’ll also see a dropdown that includes two links — one to download and one to see the preview on Microsoft’s Office Live site. No other types of documents will be available in preview mode.

Also, if you want to edit, save and download the attachments, you’ll need to have a desktop version of Office installed.

We talked to Facebook engineers about this integration, to see if any other formats (like PDFs) might somehow become available in preview mode. They said it wasn’t what they’re focusing on now.

So, Microsoft gets a subtle but powerful promotion in Facebook, while users can only view Docs inside Facebook, or otherwise download the document and read it that way — a less convenient choice.

Gmail and other email programs have tried to make previewing as easy as possible for all formats. For Facebook, one ramification of Microsoft’s special access is that the product offers less value for users who want to share a document in any other format. For those people, the company could one day decide to provide a more universal uploading feature.

Last week, we broke the story that Facebook employees might get even shorter email addresses with a domain @fb.com. Hours later, the fb.com address was publicly transferred to Facebook from the American Farm Bureau.

Today the company confirmed our story. While users will get @facebook.com addresses, the company’s employees will change to @fb.com.

Founder Mark Zuckerberg said the company had long internal discussions about what to give users.

“If we could give users our very best with @facebook.com, we would,” he said.

After making the decision, the company went searching for an alternative domain for employees. In September, the American Farm Bureau sold its domain, fb.com, to an undisclosed buyer represented by MarkMonitor, an expensive brand protection agency that has served Apple in the past. On Friday, the domain’s owner was finally disclosed as the social network.