MySpace lays off 425 employees [UPDATED]
News Corp.'s struggling social network MySpace said it would lay off nearly 30% of its staff -- or about 425 people -- as part of a plan to restructure the business.
“Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company,” said MySpace Chief Executive Officer Owen Van Natta. “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.”
When Rupert Murdoch struck a deal to buy MySpace for $580 million in 2005, he was hailed as a a new media visionary, the mogul who got the Internet. News Corp. had out maneuvered rival Viacom for the site, which so annoyed Sumner Redstone that he pushed out his CEO Tom Freston.
Soon after the MySpace deal, Murdoch told Wired Magazine that the Internet "is media's golden age." That's yet to be proven but later in the interview he was a little more prescient. "God knows what we're going to do with MySpace," he said.
Now four years later that's what everyone else is wondering that as well. Facebook has surpassed MySpace as the top social network site in the United States. It has little buzz anymore and its advertising revenue has dropped over the last year. Its groundbreaking $900-million advertising deal with Google ends next year and that revenue will be hard to replace.
Inside News Corp., integrating MySpace into the rest of the spawling media company has proven a challenge. MySpace has never become the platform for News Corp. content that many thought it would be when it acquired the company. MySpace co-founder Chris DeWolfe often clashed with other executives and left the company last spring, succeeded by Van Natta, Facebook's former chief revenue officer.
Bringing MySpace back to the top may be a steep challenge for Van Natta and Jonathan Miller, News Corp.'s new chief digital officer. Unlike television where everyone is one hit away from returning glory, social network sites that start to fade tend to keep fading. Anyone remember Friendster?
--Dawn C. Chmielewski and Joe Flint
Photos: Top left: Owen Van Natta, courtesy News Corp. Bottom right: Rupert Murdoch. Credit: Vince Bucci, Getty Images.