Monday, January 17, 2011

MySpace Staff Reduced By Almost 50%

Remember back when MySpace was the hottest teen social networking site out there, and people barely knew about Facebook? Just three years ago, Rupert Murdoch, the head of the media giant News Corp., was praising MySpace for offering so much more than the ability to “just looking up friends” like Facebook.

Well, these days, things have definitely flip-flopped.

On Tuesday, January 11 MySpace announced that they were laying off almost half of their staff so that they could have a “much tighter focus.” This layoff is affecting close to 500 people. These cuts come after the redesign of the site that occurred in October. According to chief executive Mike Jones, the Web site redesign was an attempt to illustrate the positive direction that the company is going in.

"The new organizational structure will enable us to move more nimbly, develop products more quickly and attain more flexibility on the financial side," Jones said in a statement.

Dave McClure, founding partner of 500 Startups, a company that invests in early-stage Internet ventures, said that MySpace had a ton of potential and could have definitely beaten Facebook, Twitter, or Zynga, but now all of those Web sites overshadow MySpace.

"MySpace never really figured out which one it wanted to be," McClure said. "For the life of me I don't know why they weren't able to pull it off."

Honestly though, the layoffs were kind of expected. Top executives were calling MySpace’s losses in November “not acceptable or sustainable.”

Jones explained that the layoffs were necessary to cut costs for the company. "Today's tough but necessary changes were taken in order to provide the company with a clear path for sustained growth and profitability," Jones wrote, according to reports. "These changes were purely driven by issues related to our legacy business and in no way reflect the performance of the new product. The new organizational structure will enable us to move more nimbly, develop products more quickly, and attain more flexibility on the financial side. We are also committed to rebuilding the company with an entrepreneurial culture and an emphasis on technical innovation."

According to an e-mail written by Jones, MySpace’s U.K. business will be falling under the control of Fox Network, while the business that MySpace has in Germany and Australia will be managed by “strategic local partnerships.” "MySpace will retain a core, dedicated international team to work with partners in order to ensure users, content partners and advertisers continue to be served," Jones said.

The statement also claimed that MySpace is “trending positively.” The company said that 3.3 million new profiles have been created, as well as 134,000 more Topic pages. Between November and December MySpace said that they have already seen a four percent rise in mobile users, which now total more than 22 million users.

Despite this, MySpace still has not had the success that so many other social networking sites have shared. Twitter and Zynga continue to thrive, and Facebook has exploded. Facebook now can boast more than 500 million users. Analysts say that Facebook had the best plan of all the sites. They had a very clear vision: they wanted to connect people, and they aggressively did everything they needed to do to achieve their vision.

Meanwhile, while all of the layoffs and rebuilding are occurring, it appears that certain companies are talking to News Corp. about possibly purchasing MySpace. According to reports, Yahoo Inc. is one of the possible interested companies. As of now, Yahoo has not commented on the claims.

It’s sad to see the social networking site of my teen years slowly disappearing, but Facebook is simply a much more useful social networking site. MySpace had its unique qualities, but Facebook definitely wins the fight in my opinion, and the numbers seem to show that as well. I don’t think MySpace will be completely disappearing anytime soon, but I also don’t think it will be really making much of a comeback either.

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