It’s hard to say that Rupert Murdoch’s $550m acquisition of MySpace in 2005 wasn’t a savvy move. Last year alone, despite missing revenue targets, MySpace pulled in more revenue than Murdoch paid to acquire the popular social network.

But all does not appear to be well at the world’s second-largest social network. Despite the fact that under News Corp., MySpace has become the
best-monetized social network, it has lost significant ground amongst
consumers. Last year Facebook surpassed it as the world’s largest social network
and it’s poised to become the largest social network in the United
States as well, a country that MySpace had previously dominated.

In the buzz category, Facebook and other hot social media properties like Twitter still gobble up media attention, MySpace doesn’t seem to be generating a whole lot of excitement these days.

With payments guaranteed to it under its search deal with Google set to end in 2010, it’s unclear if MySpace will start to lose out in the monetization category as well.

The media has been bearish of late when it comes to MySpace and the news that three MySpace executives have departed the company is perhaps the strongest sign that people within the MySpace organization are losing confidence in the company’s prospects.

MySpace’s COO Amit Kapur, SVP of Engineering Jim Benedetto and SVP of Product Strategy Steve Pearman have all left to start their own venture.

In a staff memo obtained by TechCrunch, MySpace CEO Chris DeWolfe wished the trio the best of luck but reiterated that he was still as confident as ever about MySpace’s future:

Despite what the market tells us, 2009 will be a big year for our business.

Tom and I want to reiterate how passionate we are about MySpace—we love the people, the product, and we believe in the future of the company. MySpace has a dedicated team of senior executives and I’d like to take the opportunity to spotlight some of these individuals. I encourage everyone to get to know our executive team as they are an enormously capable group of professionals from successful media and Internet powerhouses such as eBay, Yahoo!, MTV, and Symantec that will lead our company into its next phase.

DeWolfe’s memo sounds reassuring but these things always do. The bottom line is that three key people at MySpace all felt that starting their own venture (in the midst of a recession no less) provided a better opportunity. No matter how you look at it, that doesn’t inspire confidence.

Personally I think it’s interesting to watch the development paths taken by MySpace and Facebook. Both companies have come a long way in a short period of time in the same space but have taken very different paths.

Facebook has managed to stay relevant with users and is only growing in popularity. But its financial future is anything but sure and it has to figure out monetization before its popularity turns into a problem.

MySpace, on the other hand, impressed with its finances but has not been able to match Facebook in the staying relevant category. That may put its financials at risk and it may also make it more difficult to retain key employees.

Which company will come out ahead? Maybe both. Maybe neither.

If there’s anything I take away from this it’s that sometimes you have to do everything right. You can’t focus on the bottom line but lose focus on your product. At the same time you can’t focus on the product and ignore the bottom line. 1 out of 2 probably doesn’t cut it. Right now MySpace and Facebook are both batting .500.