MySpace poised for massive layoffs

Struggling social network MySpace is poised to lay off about half its staff, spurring speculation that it may be radically reducing overhead to prepare for a sale.

The News Corp.-owned site is expected to cut 50% of its 1,100 employees in mid-January, a person with knowledge of the matter confirmed. The reductions were first reported by the Wall Street Journal technology blog All Things Digital. The cuts are seen by some industry observers as a prelude to cuts necessary to restore the site to profitability and lure potential buyers. 

A MySpace spokesperson declined to comment on the report.

The clock has been ticking for MySpace since October, when News Corp. Chief Operating Officer Chase Carey pronounced during an earnings call that the site's losses were not "acceptable or sustainable," and that a turnaround would need to be effected in months, not years.

More recently, Carey has been quoted as saying the media conglomerate was weighing its options for the website -- raising the possibility of a sale.

"There are opportunities here to do 20 things [with MySpace], but that doesn't mean you're going to do any of the 20. If there's something there that makes sense you ought to think about it," Carey said in late November at the Reuters Global Media Summit conference.

MySpace sought to regain some of its sizzle with a relaunch last fall, in which the site underwent a makeover as an entertainment destination, where 13- to 35-year-olds could gather to discover new music, movies, TV shows and games.

The new look has done little to arrest the erosion of its user base. The number of monthly visitors dropped to 54 million in November -- down 3.7 million from a month earlier, according to measurement firm comScore Media Metrix. Advertising revenue has fallen to $347 million, down 26% from a year ago, based on researcher eMarketer's most recent estimates.

In a sign of the challenges ahead, MySpace sent plaintive e-mails to inactive users in late December that read, in part, "We've missed you at Myspace lately. Plain and simple, we think you should come back. And here's why." The e-mail goes on to tout the site's new features.

News Corp. acquired MySpace in 2005 for $580 million, with Chief Executive Rupert Murdoch outmaneuvering rival Viacom Inc. to seal the deal at a time when the social network was surging in popularity. In 2006, the site scored a $900-million deal with Google for the right to sell advertising next to searches on the site. MySpace and the search giant renewed their search and advertising relationship in December, although terms weren't disclosed.

-- Dawn C. Chmielewski

Photo: Chase Carey, chief operating officer of News Corp., speaks during the Reuters 2010 Global Media Summit. Credit: Shannon Stapleton / Reuters

Comments

[electric_fish]

My Space is for the teenie bopper set, too many graphics too much stuff going on.

[John Paul]

Chase Carey was given the opportunity to initiate a plan that would have generated net earnings of over one billion dollars for MySpace by the third year, and between 400 and 600 million dollars in net earnings over and above current net earnings (which there currently are none) generated by MySpace.

But Carey ignored the opportunity which is reflective of News Corp's Policy that "No One Knows More Than Us About Anything."

Representatives of News Corp attempted to obtain details of the plan on a verbal basis without a written agreement. When that was suggested News Corp reps were advised that their past practices in similar situations were well known and that they would not be provided details without a written agreement in place. At that time Carey is believed to have ordered discussions to be discontinued.

This while current MySpace users have rebelled against the new MySpace Chase Carey and Jonathan Miller authorized development of.

This is what happens when people that do not understand what a Social Network is think they know everything.

I guess when it is Rupert Murdoch’s money Carey and Miller have no worries.

[Ridunculous]

In the words of Rachel Zoe... "Shut it down!"

Nobody uses this dinosaur! Look at any promotion on TV, companies only refer to Facebook and Twitter. No one mentions MySpace at all anymore.

[Manuel]

I'm willing to buy MySpace: $100
That's my final offer.

[Newport]

Who cares? Who cares if a zillion people lose their interest in chatting in cyberspace to each other on this provider? Walk away from it all and connect with people in your immediate environment! At least for a few hours out of the day put the phone down, leave it at home and venture out into the world disconnected from your security blanket (blankie) for just a while. It will force you to get in touch with your surroundings.

[DG3]

NO ONE uses MySpace anymore.

[Eric of Reseda]

I hope they sell. That way, i can go back to MySpace. But as long as they have a FOX affiliation, forget it...

[David B.]

The danger of buying successful social networks is that they're the flavor of the month. Hot today, out to lunch tomorrow. Just look back at the past dot-com bubble, where $billions were lost through bad investments. Anybody even remember how hot Netscape once was? GeoCities? Excite? Dr.Koop.com?
And dozens of others that later fizzled. How long will Facebook last?

[MICHAEL WHITE]

It was Facebook that did it. Facebook is currently the "Walmart" of the internet. Can't understand why. Yahoo does pretty much everything Facebook does. Never visited myspace. You Tube on the other hand is quite innovative. You can create music videos or personal videos and post online for everyone to view and rate. Very fun. Facebook on the other hand is too much of a gossip website and I have seen it cause friction among families. Don't like it, plus the executives support marijuana.

[David Blackburn]

I quit using it when Murdoch bought it. He brainwashes people and I didn't want anything to do it. I don't read the Wall Street Journal anymore either.

[MWP]

I'll bet one of the "20 things" that to change, is Facebook's dominance of this market. Seems like FB is the elephant in the room that isn't being openly discussed by Fox. I think they may have waited too long to make a comeback.

[Jack]

It's hard to understand why Myspace couldn't simply mimic a lot of what Facebook started doing, recognizing their strategy was more successful in this arena, especially after several years of seeing Facebook grow and take over. This may have been the smartest strategic move. Why not? It just makes you scratch your head. I know News Corp. has this idea that they need to give everything a media/entertainment slant, and cross-promote their other properties as much as possible. However, sometimes you come across an product or service that is better off being left alone, and this was probably one of them. One of the great things about Facebook is it's simple, and you're not being hit over the head with all these ancillary things. Can't say the same for Myspace. But lastly, when is Google going to launch their social network, and how will it compete with Facebook? This will be very interesting.

[Kira]

MySpace's days are probably numbered. Almost all myspace users have a Facebook account and lots of them are starting to abandon MySpace completely.

[Ken]

This is the ahole that traded Mike Piazza.

[Joe]

Zero comments? Yep, that says it all. Look out Facebook. You're next.

[Rocco]

If for no other reason than the horrible redesign which was forced upon its users, myspace deserves to go under.

One big reason usage is down is because the new user interface is a disaster. We complained to myspace about it, and they chose to ignore us. They are going to get what they deserve. Plummeting valuation of what used to be a great service.

You've got no one to blame but yourself, myspace.

[Jim]

I received one of those emails, which reminded me that I had an account I no longer wanted.

While I was at it I also quit LiveVideo, as both sites have become magnets for spam promoting porn.

By-by, MySpace, I won't miss the emails.

[Hope]

I agree Rocco and I actually liked Myspace better than Facebook until that point.

[Hope]

In fact, I had quite a few friends on myspace that I would not have met otherwise...(not "real-life-face-to-face" friends) and it was fun posting blogs, etc. much of which I cannot do on FB (b/c) I do have friends and workmates on same...so that was one cool aspect of myspace, so there are pros and cons to everything I supppose...nostalgia....

[John Paul]

MySpace Provided Opportunity To Over Take Facebook Ignorned

Chase Carey was given the opportunity to initiate a plan that would have generated net earnings of over one billion dollars for MySpace by the third year, and between 400 and 600 million dollars in net earnings over and above current net earnings in the first year (which currently there are none) generated by MySpace.

But Carey ignored the opportunity which is reflective of News Corp's Policy that "No One Knows More Than Us About Anything."

Representatives of News Corp attempted to obtain details of the plan on a verbal basis without a written agreement. When that was suggested, News Corp reps were advised that their past practices in similar situations were well known and that they would not be provided details without a written agreement in place. At that time Carey is believed to have ordered discussions to be discontinued.

This while current MySpace users have rebelled against the new MySpace Chase Carey and Jonathan Miller authorized development of.

This is what happens when people that do not understand what a Social Network is think they know everything.

I guess when it is Rupert Murdoch’s money Carey and Miller are losing they have no worries.

[Barney Fife]

Let's say you're in the Indy 500. You have the fastest car and you lead the pack by a lap. You've got your foot down on the pedal and you're in position to win. The bad news is you've got 498 laps to go and the way you're pushing your car you'll inevitably have to pit....but you don't. You say the hell with it and go for broke and then in the 10th lap you're shocked and surprised that you've blown your engine. All of the cars that seemed like dots behind you are now flying past you...your fans begin to boo.

This is EXACTLY the way MySpace went down. The powers that be kept pushing and pushing for more and more revenue but didn't give a hill of beans about what the market place was really doing or what the users really wanted. When the money tapped out and people left for Facebook en mass nobody on the inside could possibly have been shocked...just shocked that it had taken so long to actually happen.

MySpace's re-launch was well intentioned, but it's still the same old racing mentality of pedal down while ignoring the race. Sure Fox could have infused millions more so that MySpace could hype itself across the airwaves. That might have have helped...but the inbound crowd would have been confused with the point of being there. What is MySpace anyway? Is it a social network? Is it a social content portal? Is a place where you tell other people what is cool so that they can go share that in other places that are cooler? Incoherent idealism welled in the walls of Maple for fall too long and I and many others are sad that they did not figure out the obvious paths sooner (or really at all).

MySpace will never go complete beneath the waves. It actually still makes more money the great majority of internet properties out there. However, it will continue to sputter haplessly until they go back to the basic notions about how to make people happy, social and engaged. Whether it can do so without getting out from under the heavy shadow of Fox remains to be seen.

[John Paul]

MySpace Provided Opportunity To Over Take Facebook Ignored

Chase Carey was given the opportunity to initiate a plan that would have generated net earnings of over one billion dollars for MySpace by the third year, and between 400 and 600 million dollars in net earnings over and above current net earnings in the first year (which currently there are none) generated by MySpace.

But Carey ignored the opportunity which is reflective of News Corp's Policy that "No One Knows More Than Us About Anything."

Representatives of News Corp attempted to obtain details of the plan on a verbal basis without a written agreement. When that was suggested, News Corp reps were advised that their past practices in similar situations were well known and that they would not be provided details without a written agreement in place. At that time Carey is believed to have ordered discussions to be discontinued.

This while current MySpace users have rebelled against the new MySpace Chase Carey and Jonathan Miller authorized development of.

This is what happens when people that do not understand what a Social Network is think they know everything.

I guess when it is Rupert Murdoch’s money Carey and Miller are losing they have no worries.

[Cecilia]

Ahhhh ha ha MySpace! That's why I'm on Facebook - even for musicians it's way better. Ya heard of BandPage? Yup. My music. On Facebook. Check it. http://www.insidefacebook.com/2011/01/05/rootmusic-bandpage-app-funding/?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed:+InsideFacebook+(Inside+Facebook)