SAN FRANCISCO, January 11, 2011 (AFP) – Myspace announced Tuesday it was cutting some 500 jobs, nearly half of the staff of the troubled News Corp.-owned social network, which has been eclipsed by Facebook.
“Today’s tough but necessary changes were taken in order to provide the company with a clear path for sustained growth and profitability,” Myspace chief executive Mike Jones said in a statement.
“The new organizational structure will enable us to move more nimbly, develop products more quickly, and attain more flexibility on the financial side,” Jones said.
He said the restructuring would “result in a 47 percent staff reduction across all divisions globally and impact about 500 employees.”
News Corp. bought Myspace for 580 million dollars in 2005 but it has been overtaken in recent years by Facebook, which has grown to more than 500 million members while Myspace’s numbers have dwindled.
In November, News Corp. president and chief operating officer Chase Carey said the losses at the social network were unsustainable and there needed to be improvement in the next few quarters.
With tens of millions of users, Carey said Myspace still “has the potential to be an exciting business for us” but “we need to make real headway in the coming quarters to get this business to a sustainable level.”
Jones, the Myspace CEO, said Myspace would be entering into partnerships in Australia, Britain and Germany to manage advertising sales and content.
In Britain, Myspace would partner with Fox Networks, another property of Rupert Murdoch-owned News Corp., he said, while details about Australia and Germany were still being finalized.
Jones said a late October redesign of Myspace had resulted in more than 3.3 million new profiles being created on the site.
“With our recent relaunch as an entertainment destination for Gen Y, we introduced a much tighter focus, a significantly streamlined product and an updated technology platform,” Jones said.
“While it’s still early days, the new Myspace is trending positively and the good news is we have already seen an uptick in returning and new users,” Jones said.
“We have already seen a rise of four percent in mobile users just between November to December, now totaling over 22 million,” he said.
He said the layoffs were “purely driven by issues related to our legacy business, and in no way reflect the performance of the new product.”