MySpace Layoffs? How Murdoch Can Save His Social Network

With new rumors of massive layoffs, here are a few things the News Corp. boss can do to salvage his $580 million investment

On the eve of 2011 comes word that a new round of mass layoffs will soon hit MySpace.

According to All Things Digital, the cuts could comprise up to 50% of the social network's staff of 1,100. Management of the site, whose revenues and traffic are in severe decline, are reportedly in the throes of deep cost-cutting measures — which included sending the staff home for the last week of the year.

Little wonder that everybody in the digital world seems to be expecting a sale. In late November, News Corp.'s Chief Operating Officer Chase Carey admitted the company is open to all options when it comes to MySpace, and alluded to that possibility.

“There are opportunities here to do 20 things but that doesn’t mean you’re going to do any of the 20." Carey said at the Reuters Global Media Summit. “If there’s something there that makes sense you ought to think about it.”

Chase may have thought of 20, but TheWrap has boiled it down to five for Rupert Murdoch & Co. (any more, and we’d have to bill ‘em a consulting fee).

So here, in no particular order, they are:

1. Call It Something Other Than 'MySpace'

I’ve been preaching this one for years. When something crosses over the line separating “cool” from “uncool,” kids, in general, are not quick to gravitate to that which is no longer cool (think: UGGs, silly bands, boy bands, Friendster) until it becomes a nostalgia thing ('80s synth pop, boy bands, TAB, etc.). And even then it’s fleeting.

Rupe should take a page out of the Abercrombie & Fitch playbook. When A&F’s “cool” factor plateau-ed among the 14-18-year-old set, they simply launched another one – Hollister. (Perhaps a better example, courtesy of MTV:  “Laguna Beach” > “The Hills” > “The City.”)

Bonus tip: If you do go the rebrand route, don’t tell anyone you’re doing it. Launch “NewSpace” as a completely new product. (Also, don’t use “space” or “book” in the name.) You’ve already done the redesign — though I would’ve saved that for the New Coke.

2. Kick Out Anyone Without a Band

This is a radical idea that would certainly help return MySpace to “cool,” at least in terms of fans using the site to access band information. Rope it off. Make it a VIP, invite-only network. Sure, you’d lose more traffic — but you’re losing it anyway.

As a focused, destination site for artist information, MySpace would become a much more desirable place for advertisers than, say, a site featuring thousands and thousands of abandoned profiles. "MySpace and Facebook really aren't even competing in the same category any more," EMarketer analyst Debra Aho Williamson said recently. "Which is good. For MySpace to be successful they need to carve out their own place." That space has historically been bands, and MySpace is still useful for musicians looking to stream songs and post tour dates for fans.

But even that usefulness has waned. Time to retrench.

3. Partner With Apple

This would be another tough pill for Murdoch to swallow, though perhaps less so, given his love for the iPad. I could easily see MySpace and Ping — Apple’s newish social network within iTunes — commingling. Apple’s cachet — combined with Steve Jobs’ turtlenecked touch — might just be the “cool” infusion MySpace so desperately needs right now.

Desperate-sounding partnerships with Facebook (Mashup? I still don’t even know what that is!) just aren’t cutting it.

4. Sell to Facebook or Google
In the four years since Murdoch bought MySpace for $580 million, Facebook has rocketed past it in terms of cachet — and users. Facebook now boasts more than 500 million members — MySpace, just 120 million. (Even Twitter now has more monthly unique visitors than MySpace.) And both Google and Facebook have shown a willingness to pursue acquisitions (see Google’s reported $6 billion offer for Groupon) — some for innovation, others for clear-cutting even low-level competition. 

Buying MySpace could potentially serve both interests. Google, for one, has shown interest in breaking into the music business, and MySpace — for all its problems — is still a desirable brand, at east for bands. The problem is Murdoch. Selling MySpace now would be admitting failure – something someone with an outsized ego like Murdoch hates to do. 

But for the right price ($200 million?) and spin (giving MySpace a chance to truly grow, News Corp. a chance to focus on its core properties in media, television and film, blah blah blah) perhaps Rupe would be into it.



5. Close It

Admitting defeat is something Murdoch rarely does — and in this case it would be a black eye the likes of which News Corp. has never seen (like Antonio Margarito after a Manny Pacquiao fight).

"We've been clear: MySpace is a problem," Carey told investors during a recent conference call, adding its current path is "not acceptable or sustainable." And with the site’s staggering losses — $156 million for News Corp.’s digital media arm the last quarter alone — killing the thing might be the best thing for it. And for us all.

[Murdoch/MySpace photo illustration by TheWrap]