MySpace, a unit of media magnate Rupert Murdoch’s News Corporation, said it was cutting payrolls “as part of a plan to restructure itself into a more innovative, efficient, and entrepreneurial business.”<\/p>\n
The restructuring plan affects all US divisions of the company and the round of job cuts will lower the domestic workforce to 1 000 employees, it said in a statement.<\/p>\n
“Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company,” said Owen Van Natta, MySpace chief executive.<\/p>\n
“I understand that these changes are painful for many. They are also necessary for the long-term health and culture of MySpace.<\/p>\n
“Our intent is to return to an environment of innovation that is centered on our user and our
product.”<\/p>\n
Van Natta, who was named MySpace CEO in April, was a chief revenue officer and vice president of operations for Facebook. He resigned from the rival company in early 2008.<\/p>\n
Facebook replaced MySpace last year as the world’s most popular social network, and industry figures show it has been widening its lead.<\/p>\n
Facebook was the top social networking site when ranked by total minutes for the month of April, showing a gain of 700% from a year earlier, according to a recent study by Nielsen Online.<\/p>\n
MySpace was in second place, with its total minutes declining from 7.3 billion in April 2008 to 5.0 billion in April 2009, the survey showed.<\/p>\n
MySpace claims 130 million users compared with Facebook’s audience of 200 million.<\/p>\n
“The fact is that MySpace has lost a lot of momentum to Facebook,” said Forrester analyst Josh Bernoff, co-author of the book ‘Groundswell’ about the rise of online social media.<\/p>\n
“MySpace has become much more of a service where people connect around media as opposed to a success as a general site for social networking.”<\/p>\n
Despite the newly announced employee reductions, MySpace’s workforce will remain larger than Facebook’s staff of about 900.<\/p>\n
The job cuts are a sign that News Corp. intends to run MySpace like a division of a media company, according to Bernoff.<\/p>\n
“In a public company like News Corp, they don’t allow people to spend whatever money they need to in the hopes it will pay off some time in the future, which is sort of what is happening at Facebook,” Bernoff said.<\/p>\n
“Managers are expected to stay in line in terms of how a media company runs and have an expense base in line with revenues.”<\/p>\n
News Corp. could also be whittling expenses in preparation for the expiration next year of an advertising contract with Internet powerhouse Google, according to the analyst.<\/p>\n
“MySpace grew too big considering the realities of today’s marketplace,” said News Corp. chief executive of digital media Jonathan Miller.<\/p>\n
“I believe this restructuring will help MySpace operate much more effectively both structurally and financially moving forward.”<\/p>\n
Social networking websites are evolving with a trend toward people being able to take online identities with them as they shift between services.<\/p>\n
MySpace has been positioning itself as a community for musicians and music lovers.<\/p>\n
“You may very well have a lot of sites around everything from parenting to motor boats,” Bernoff said.<\/p>\n
“I think this is the beginning of an environment where you have a lot of niche social networking sites, and MySpace may be the largest of those niches.”<\/p>\n
MySpace remains a “very successful” enterprise, but “needed to be more focused” in terms of keeping staffing in line with revenues, according to Bernoff.<\/p>\n
MySpace, which launched in 2003, was bought by Murdoch’s News Corp. in 2005 for $580-million.<\/p>\n
Van Natta, who left Facebook in February 2008 for Project Playlist, an online music site, helped negotiate Facebook’s $240-million investment from Microsoft.<\/p>\n
The US software giant’s purchase of a 1.6% stake in Facebook in 2007 valued the social network on paper at $15-billion.<\/p>\n
Van Natta also previously served as vice president of worldwide business and corporate development for online retail giant Amazon.com<\/p>\n