Murdoch’s crew has already made a major round of redundancies, cutting its US workforce by 400 last year to around 1,000, and reducing its international operation from 450 to 150, in London, Berlin and Sydney. The international staff will now be reduced to nothing more than a skeleton crew.
The news comes as little surprise. When was the last time you heard MySpace mentioned in casual conversation, or went a day without people discussing some Facebook-based news? The numbers are just as ominous. MySpace lost $100m in the first quarter of last year, and its UK audience halved to 3.3m monthly visitors in July. It lost nearly quarter of its users in the year to November. Meanwhile Facebook was en route to becoming the world’s most visited site – with more than 500m users compared to MySpace’s 81.5m.
It’s a startling demise, and will provide a stark lesson for any site currently basking in the online social networking spotlight – Facebook included. As recently as 2007 a proposed merger with Yahoo valued MySpace at a staggering £7.7bn. Facebook may be wise to keep that in mind as it toasts its $50bn Goldman valuation.
As for News Corp, famously sluggish when it comes to the web, it must be kicking itself for making a similar mistake to that of ITV, which paid through the nose for Friends Reunited just before it effectively died a death. That same error was then repeated by AOL, which bought the now-defunct Bebo. And it was only a matter of time before MySpace, which cost it $580m in 2005, bit the virtual dust too. More specifically it could be considered a black mark against James Murdoch, who recommended and led the deal.
As it stands News Corp is left with a costly thing that it doesn’t know what to do with. COO Chase Carey last month talked about the ‘urgency’ with which it had to sort out a future for MySpace. It’s been redesigned and refocused back to its music roots, and it’s set to sell this year or next, with no chance of recouping anything like the £375m it cost.
So while Murdoch is left scratching his head over how he can repeat his print and TV success in the digital sphere, the bods at the current social networking darlings may wish to hold off on the schadenfreude. Rumours are currently circulating of Facebook’s imminent demise, born of a report from the Weekly World News website that saying that owner Mark Zuckerberg is planning on pulling the plug on 15 March to get his old life back. This is of course utter tosh, and has been rubbished by Facebook in a status update.
But past evidence suggests Facebook might well bite the digital dust at some stage – and it’ll be fascinating to see what kind of nimble digital behemoth deals the deadly blow.