A few years ago, MySpace was one of the hottest sites on the Internet.
Now, the site has in the midst of a rebranding and is forced to lay off close to half its workforce.
The move was announced yesterday according to USA Today.
The social-networking company lopped 500 jobs, 47% of its 1,100 employees.
“Today’s tough but necessary changes were taken in order to provide the company with a clear path for sustained growth and profitability,” MySpace CEO Mike Jones said in a statement.
“These changes were purely driven by issues related to our legacy business, and in no way reflect the performance of the new product,” said Jones, who declined an interview request. “The new organizational structure will enable us to move more nimbly, develop products more quickly, and attain more flexibility on the financial side.”
The Beverly Hills, Calif.-based company, which is owned by News Corp, has burned through CEOs, performed a couple of facelifts on its design and even inked a content-sharing deal with Facebook to reinvigorate its flagging audience. But the company’s latest machinations haven’t done the trick, analysts say.
Jia Wu, an analyst at Strategy Analytics, estimates MySpace’s third-quarter revenue was down 25%, to $163 million, from the same quarter a year earlier. He said the company’s fourth quarter was down 30% to 40%.
MySpace’s audience, meanwhile, tumbled to 81.5 million members in November 2010 from 108.1 million in November 2009, according to market researcher comScore.In the past year, Facebook zoomed to 500 million members from about 350 million.
“The end was in sight before (former CEO) Chris (DeWolfe)left (in 2009),” says Jeremiah Owyang,an analyst at market research firm Altimeter Group.”They didn’t innovate for years, while Facebook did. It comes down to culture and leadership. MySpace did not evolve its business model. It stuck with its young demographic, and made minimal changes until it was too late.”
The rapid rise and fall of MySpace underscores a classic cautionary tale in the tech industry: The high-flying startup that comes crashing down to Earth when the next big thing — in this case, Facebook — comes along.
“It speaks to how fortunes change so fast in tech,” Wu says. “News Corp couldn’t figure out how to run the company.”
MySpace employees were packing their belongings and writing goodbye notes to their colleagues on Monday and today, say sources within the company.
Myspace lost its mojo several years ago when Facebook became available to everyone and it continues to suffer at the hands of Facebook and others, including Twitter and Yelp.
Indeed, Owyang openly wonders if Facebook — flush with cash — might approach News Corp about scooping up Myspace and consolidating an otherwise crowded market.
Facebook has reportedly raised another $500 million in funding from Goldman Sachs and a Russian investor. The investments have helped balloon Facebook’s valuation to an astounding $50 billion — more than either Yahoo, eBay or Time Warner.
An initial public offering is expected in 2012.
MySpace is still concerned with Growth? No wonder they’re laying off people.
I just goes to show that these compaines have no real value. Make your money and run. Facebook will be next to go. AOL Who?