Myspace slashing 500 jobs, nearly half its staff

January 11, 2011 by Chris Lefkow
Myspace announced Tuesday it was cutting some 500 jobs, nearly half of the staff of the troubled News Corp.-owned social network, which has been eclipsed by Facebook.

Myspace announced on Tuesday it was cutting some 500 jobs, nearly half its staff, in a move seen as potentially setting the stage for a sale of the social network owned by Rupert Murdoch's News Corp.

"Today's tough but necessary changes were taken in order to provide the company with a clear path for sustained growth and profitability," Myspace chief executive Mike Jones said in a statement.

"The new organizational structure will enable us to move more nimbly, develop products more quickly, and attain more flexibility on the financial side," Jones said.

He said the restructuring would "result in a 47 percent staff reduction across all divisions globally and impact about 500 employees."

News Corp. bought Myspace for 580 million dollars in 2005 but it has been overtaken in recent years by Facebook, which has grown to more than 500 million members while Myspace's numbers have dwindled.

In November, News Corp. president and chief operating officer Chase Carey said the losses at the social network were "unsustainable."

With tens of millions of users, Carey said Myspace still "has the potential to be an exciting business for us" but "we need to make real headway in the coming quarters to get this business to a sustainable level."

Wedbush Securities' Lou Kerner, a top Wall Street social media analyst, said the deep staff cuts at Myspace may be laying the groundwork for a sale.

"I think this is likely a first step to selling the asset," Kerner told AFP.

"It certainly makes sense for News Corp. to take a hatchet to the company as preparation for a sale so when somebody acquires it that's not the first thing that they have to do." he said.

"Generally with social networks if they're not growing they're shrinking," Kerner said. "And Myspace has been shrinking for an extended period of time.

"They've brought in multiple management to try and turn things around and nobody's been successful," he said.

The Wedbush Securities analyst said probably the single biggest technical innovation by Facebook that allowed it to leap past Myspace was the creation of the "news feed," which aggregated updates from a user's Facebook friends.

"On Myspace you needed to go 500 profiles to see what all your friends were up to," he said. "Myspace architecture just wasn't flexible enough to implement that kind of change in a timely fashion."

Jones, the Myspace CEO, said Myspace would be entering into partnerships in Australia, Britain and Germany to manage advertising sales and content.

In Britain, Myspace would partner with Fox Networks, another property of Murdoch's News Corp., he said, while details about Australia and Germany were being finalized.

Jones said an October redesign of Myspace, which has been fashioning itself as more of a hub for music, had resulted in more than 3.3 million new profiles being created on the site.

"With our recent relaunch as an entertainment destination for Gen Y, we introduced a much tighter focus, a significantly streamlined product and an updated technology platform," Jones said.

"While it's still early days, the new Myspace is trending positively and the good news is we have already seen an uptick in returning and new users."

Jones said mobile users of Myspace rose four percent between November and December and now total more than 22 million.

He said the layoffs were "purely driven by issues related to our legacy business, and in no way reflect the performance of the new product."

Jones said the company will "retain a core, dedicated international team to work with partners in order to ensure users, content partners and advertisers continue to be served.

"We are also committed to rebuilding the company with an entrepreneurial culture and an emphasis on technical innovation," he said.

News Corp. does not release figures for Myspace but the "other" category in its most recent quarterly financial statement showed a loss of 156 million dollars. Facebook, meanwhile, earned an estimated 400 million dollars on revenue of two billion dollars last year.

Explore further: MySpace deepens ties with rival Facebook

Related Stories

MySpace deepens ties with rival Facebook

November 18, 2010

MySpace on Thursday began letting members tap into entertainment preferences expressed in Facebook profiles in a deepening of ties with the firm that snatched its social networking crown.

News Corp. puts Myspace on notice

November 3, 2010

Rupert Murdoch's News Corp. put Myspace on notice on Wednesday, saying the losses at the ailing social network were unsustainable and there needs to be improvement in the next few quarters.

Google to keep powering MySpace ads, search

December 16, 2010

MySpace on Thursday announced that Google will continue to power advertising and search at the flagging online social network under pressure to improve its financial performance.

MySpace co-president steps down

June 17, 2010

MySpace said Thursday that co-president Jason Hirschhorn has decided to leave the social network, four months after being named to the job.

Recommended for you

Cryptocurrency rivals snap at Bitcoin's heels

January 14, 2018

Bitcoin may be the most famous cryptocurrency but, despite a dizzying rise, it's not the most lucrative one and far from alone in a universe that counts 1,400 rivals, and counting.

Top takeaways from Consumers Electronics Show

January 13, 2018

The 2018 Consumer Electronics Show, which concluded Friday in Las Vegas, drew some 4,000 exhibitors from dozens of countries and more than 170,000 attendees, showcased some of the latest from the technology world.

Finnish firm detects new Intel security flaw

January 12, 2018

A new security flaw has been found in Intel hardware which could enable hackers to access corporate laptops remotely, Finnish cybersecurity specialist F-Secure said on Friday.


Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.