MySpace, the ex-social networking site has been taking the fall ever since the launch of Facebook. It did nothing to rebound and looks like its going through a very tough time now. MySpace just fired almost 50% of its employees worldwide!
Struggling entertainment site MySpace said Tuesday that it is cutting nearly half of its staff worldwide, or about 500 people, after an extensive revamp in October overhauled its look and allowed it to be run with fewer people. The cuts, part of a two-stage layoff plan, better position the site for a possible sale or spin-off by parent News Corp.
Mike Jones, the chief executive of MySpace, called the cuts “tough but necessary” but said they put the site on a path to profitability while making it more nimble and entrepreneurial.
MySpace declined to say how much the cuts would save.
A person with close ties to the site said that the cuts, combined with a previous round of layoffs and office closures in June 2009, would save more than $200 million a year. The previous layoffs eliminated about 420 jobs in the U.S. and 300 jobs overseas, and shut several offices abroad. For the latest move, MySpace said it will enter into ad sales partnerships in the U.K., Germany and Australia.
The person was not authorized to speak publicly and declined to be identified.
The recent relaunch focused MySpace on giving its users, mostly aged 13 to 34, more ways to consume music, videos and celebrity gossip. Before, MySpace tried to be an all-purpose social networking site like Facebook. MySpace recently said it is no longer trying to compete with Facebook.
Executives had expected the changes to turn off some users, and its visitor count has indeed fallen since the makeover. But the cuts and a tighter focus on younger users could still help it make money as a smaller company.
It is now relying more on selling space directly to advertisers, by integrating their ads with content, and less on its revenue sharing deal with search leader Google Inc. which it renewed in December, the person said.
Globally, MySpace had 81.5 million visitors in November, down from 88.0 million in October and down from 108.1 million in November 2009, according to tracking firm comScore Inc.
Meanwhile, Facebook visitors hit 647.5 million, up 48 percent from a year ago, comScore said. Microblogging site Twitter has grown 71 percent in a year to 103.0 million.
News Corp. bought MySpace in 2005 for $580 million, but it has been losing money consistently. In the three months through Sept. 30, the “other” segment housing MySpace lost $156 million, about $30 million more than the previous year, mostly because of lower search and ad revenue at MySpace.
By contrast, juggernaut Facebook is making money. According to documents recently shared with prospective shareholders, Facebook earned $355 million on revenue of $1.2 billion in the first nine months of last year.
News Corp. executives had put MySpace on a short leash to get profitable. News Corp. Chief Operating Officer Chase Carey told investors in November he would judge efforts to reboot the site “in quarters, not in years” and opened the possibility the site could be sold.
Since then, News Corp. executives have been fielding inquiries from strategic investors. Possible moves include an outright sale, taking on new investors, or merging the asset into a larger company for an equity stake, the person said.
News Corp.’s widely traded Class A shares fell 21 cents, or 1.4 percent, to close at $14.41 on Tuesday.
Looks like MySpace will soon completely disappear from the Internet……