Facing financial woes and static growth, social-networking site MySpace has cut roughly 30 percent of its workforce — 425 employees — in a "return to start-up culture."
The Beverly Hills, Calif., company’s roster now stands at 1,000 people. MySpace said the cuts were evenly distributed across all U.S. divisions of the company.
The long-rumored layoffs come after measurement firm comScore reported that Facebook in May surpassed MySpace for the first time in both monthly visitors and page views both in the U.S. and worldwide.
Facebook had 70.28 million U.S. users last month, topping MySpace’s 70.26 million. MySpace has lost 5 percent of its users since last year, while Facebook has almost doubled its membership.
"Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company," Owen Van Natta, CEO of the News Corp-owned site, said in a release. "I understand that these changes are painful for many. They are also necessary for the long-term health and culture of MySpace.
Our intent is to return to an environment of innovation that is centered on our user and our product."
Van Natta, Facebook’s former chief operating officer, was tapped as CEO of MySpace in April after former CEO Chris DeWolfe stepped down earlier that month. Van Natta is heading a new management team alongside former MTV digital executive Jason Hirschhorn and former senior vice president of AOL, Michael Jones.
"MySpace grew too big considering the realities of today’s marketplace," said Jonathan Miller, News Corp’s newly appointed CEO of Digital Media and Chief Digital Officer. "I believe this restructuring will help MySpace operate much more effectively both structurally and financially moving forward."
Rupert Murdoch’s News Corp purchased MySpace for $580 million in 2005. At the time, it was the most popular social networking site. But the site has failed to maintain its cultural relevance. Nielsen recently reported that 73 percent of the total time spent on social networks in April 2008 was spent on MySpace. A year later, social network users spent 23 percent of their time on MySpace and 66 percent on Facebook.
Still, MySpace execs remain optimistic.
“We have focused relentlessly on profit,” one News Corp senior executive told TheWrap in April, speaking on condition of anonymity. MySpace is projected to make about $900 million in revenue this year, and may break even by year’s end, these executives say.
But a large part of those revenues are due to a $300 million deal with Google for search business. That deal, which delivers only about half that amount of value in advertising returns, ends in summer 2010.