Social networking site MySpace, one of the big success stories of Web 2.0, is laying off about 400 staff in the US. Since it was bought by Rupert Murdoch’s News Corp for a remarkable $580m in 2005, MySpace has since seen its traffic slump, particularly in comparison to younger rival Facebook – and new CEO Owen Van Natta has decided to trim the fat in a bid to help the site recapture its former glories. In a swipe at his predecessors, Van Natta said staffing levels were 'bloated' and 'hindered our ability to be an efficient and nimble team-oriented company'. Ouch.
MySpace isn’t exactly a lame duck: it still has about 130m monthly visitors, and made $1.6bn in revenues between 2005 and 2008. But in the fickle world of Web 2.0, it’s lost its status as the world’s most popular social networking site. And its other big headache at the moment is the imminent expiry of a lucrative $900m advertising deal with Google, in 2010. The search giant said it may renew the contract; but if it does, it will be at a much lower price. Since this is MySpace's main source of income – the collapse of the deal could see it lose $100m annually – this would spell even more trouble.
According to Jonathan Miller, the head of News Corp’s digital business, MySpace just got too big. Advertisers still don’t generate much business from social networking sites, while global leader Facebook has muscled in on its home turf, attracting about 70m members. With MySpace already lagging about 10% behind NewsCorp’s financial projections, Miller instigated the recent reshuffle that ousted the site’s co-founder Chris DeWolfe and president Tom Anderson, to be replaced by Van Natta.
Clearly the new boss has been given carte blanche to make MySpace leaner and meaner – and inevitably that means job cuts. This round of redundancies only covers the US operations, but reports suggest that its 600 staff in France, Italy and Spain might be next for the chop. As for the remaining 1,000 staff, Van Natta says they’ll ‘return to an environment of innovation that is centred on our user and our product.’ Whatever that means….
But he faces an uphill task. MySpace may be popular within the entertainment and music sectors, but Facebook now seems to be the most popular way for people to share photos and news with their friends. And stalk people they went to school with, of course.
In today's bulletin:
UK unemployment hits 12-year high
Sainsbury's gets aggressive after latest sales boost
British Airways boss Walsh ask staff to work for free
'Bloated' MySpace to lay off 400 staff
Editor's blog: The abuse of power