MySpace lays off 500 employees
January 11, 2011 | 9:48 am
News Corp.'s struggling social network, MySpace, on Tuesday formalized an anticipated restructuring that will result in the loss of 500 jobs worldwide, or about 47% of the workforce.
MySpace Chief Executive Mike Jones said the job cuts were necessary to streamline operations and put the site on a path toward profitability, following its relaunch last fall as an entertainment destination for Gen Y.
"These changes were purely driven by issues related to our legacy business, and in no way reflect the performance of the new product," 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 sought to detail how the social network's makeover has resulted in an "uptick" in returning and new users. Since the worldwide roll-out, he said, there have been more than 3 million new user profiles created, and more than 134,000 topic pages that provide news about music, movies, TV and celebrities. Moreover, people who follow the site's "Curators" -- or taste-makers with strong opinions in a given discipline -- increased the frequency of visits by 35%.
"While it's still early days, the new MySpace is trending positively," Jones said.
MySpace executives are under pressure to reverse the site's fortunes and arrest the loss of subscribers and advertising revenue. The number of monthly visitors dropped to 54 million in November -- down 3.7 million from a month earlier, according to measurement firm comScore Media Metrix. Advertising revenue has fallen to $347 million, down 26% from a year ago, based on researcher eMarketer's most recent estimates.
News Corp. acquired MySpace in 2005 for $580 million, with Chief Executive Rupert Murdoch outmaneuvering rival Viacom Inc. to seal the deal at a time when the social network was surging in popularity. In 2006, the site scored a $900-million deal with Google for the right to sell advertising next to searches on the site. MySpace and the search giant renewed their search and advertising relationship in December, although terms weren't disclosed.