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MySpace Slashes Workforce by 30 Percent

Asterisk

June 16, 2009

MySpace Slashes Workforce by 30 Percent



Giving way to drops in ad sales and numbers of users, MySpace (News - Alert) today announced that it’s laying off about 30 percent of its staff.

 
The move ends weeks of speculation about layoffs at the News Corp (News - Alert).-owned social networking site, and reduces the Los Angeles-based company to about 1,000 employees.
 
News Corp. Chief Executive Officer Owen Van Natta – former COO of rival Facebook (News - Alert) – described MySpace’s staffing levels as “bloated,” preventing the group from being “an efficient and nimble team-oriented company.”
 
“I understand that these changes are painful for many,” Van Natta said. “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.”
 
IT insiders for weeks have been calling for “massive” layoffs at MySpace, especially as cost cuts forced Fox Interactive Media – which oversees the business operations of News Corp. – to abandon a plan to move into expensive new offices in the Los Angeles area.
 
The head of News Corp.’s digital business, Jon Miller, who oversees FIM, told workers in a memo recently that the company is streamlining expenses.
 
“Since coming on board, it’s no secret that I have asked each of the executive teams within FIM to conduct a comprehensive strategic review of their businesses to ensure that we are operating as efficiently and effectively as possible,” Miller wrote in his memo.
 
In many ways, layoffs at MySpace aren’t a total surprise.
 
As TMCnet reported, News Corp. in April announced that one of the social networking site’s co-founders – Chief Executive Officer Chris DeWolfe – would be leaving the company.
 
About a year ago, Facebook eclipsed MySpace in overall users. Facebook has more than 200 million to MySpace’s approximately 130 million. MySpace remains the largest social network in the United States, but membership is slowing and even falling. According to comScore (News - Alert) Inc, U.S. membership fell 4 percent year-over-year in April, to 70 million.
 
Those are troubling numbers for Rupert Murdoch, especially considering this one: The media behemoth’s News Corp. paid $580 million nearly four years ago for the site.
 
News Corp shares reportedly were down 33 cents, or 3.36 percent, to $9.48 on the Nasdaq stock market.
 

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Michael Dinan is a contributing editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Michael's articles, please visit his columnist page.

Edited by Michael Dinan


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