MySpace Layoffs: Slashing Workforce 30%
LOS ANGELES — MySpace said Tuesday it is cutting nearly 30 percent of its work force in a bid to become more efficient, bringing its staffing level more in line with its more popular rival, Facebook.
The move, the latest cost-cutting effort at the site, comes less than two months after the unit of Rupert Murdoch's News Corp. hired former Facebook executive Owen Van Natta, 39, as its new chief executive.
It also comes a day after data from tracking firm comScore show Facebook has caught up with MySpace in monthly U.S. visitors for the first time.
"Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company," Van Natta said in a statement.
The cuts amount to about 420 people, bringing the total number of MySpace's U.S. staff to 1,000. As of May, Facebook had about 850 employees worldwide, the vast majority in the United States.
MySpace's user base has stagnated at about 125 million worldwide users, while Facebook said its usage has doubled to more than 200 million in less than a year.
Until now, MySpace still had the edge among U.S. users. But numbers from comScore show that in May, MySpace and Facebook both had about 70 million users apiece in the United States.
MySpace generates more revenue, according to Internet research firm eMarketer; it estimates that MySpace generated about $605 million in global advertising revenue last year, compared with $250 million for Facebook. MySpace's revenue is expected to shrink next year while Facebook's is seen as growing.
The company said the restructuring crosses all of its U.S. divisions.
Jonathan Miller, the former AOL chief executive hired as News Corp.'s chief digital officer in early April, said the social hub's work force had grown "too big considering the realities of today's marketplace."
Van Natta said the goal was to put the site on a more entrepreneurial footing and "return to an environment of innovation."
But eMarketer analyst Debra Aho Williamson said that could prove difficult for an organization that has lived under the corporate structure of News Corp. for the past four years.
"Thirty percent is more than a haircut. It's chopping the head off," Williamson said. "It's obviously a very aggressive move by Owen Van Natta and Jon Miller to send a message to the marketplace that they're really taking the turnaround of MySpace seriously. It says, 'Wow, we're really going to try to change this culture.'"
Along with its user growth at a standstill, Williamson said MySpace has failed to match Facebook in developing innovative applications for mobile phones, especially Apple Inc.'s iPhone.
The cuts follow the departure of MySpace co-founder Chris DeWolfe as CEO in April. Co-founder Tom Anderson, who is every account holder's first friend and acts as its glitch fixer, is also in ongoing talks about taking a creative product role away from his day-to-day responsibilities.
Earlier, Beverly Hills, Calif.-based MySpace decided against moving this month into a brand new 500,000-square-foot office complex in the west Los Angeles district of Playa Vista. It is still on the hook for a 12-year, $350-million lease, however, and is looking to sublet the space, according to building owner Lincoln Property Co.
Last month, Van Natta said he took the job at MySpace for the opportunity to build the site. He said MySpace has distinguished itself from Facebook by allowing users to be "super-creative" in designing their pages.
"I'm a big believer in personalization," he said then at a technology conference in Carlsbad, Calif. "Our job is to make MySpace really, really great for everybody, and that means that the experience has to be different for everybody."
News Corp. has said MySpace is unusual for a social-networking site in that it is profitable, but noted that ad revenue in the quarter through March fell 16 percent and costs rose due to last fall's rollout of MySpace Music, a song-streaming joint venture with major recording companies.
The media company's "other" segment, which houses MySpace, posted a loss of $89 million in the quarter, much worse than the $7 million loss a year earlier.
News Corp. shares were down 33 cents, or 3 percent, to close Tuesday at $10.73.
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AP Technology Writer Barbara Ortutay in New York contributed to this report.
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RYAN NAKASHIMA | June 16, 2009 04:46 PM EST |
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