MySpace to cut half its workforce
MySpace’s chief executive, Mike Jones, has confirmed that the company is letting go 500 employees around the world and stripping back its international operation.
In a statement he said: “Today MySpace is implementing a significant organisational restructuring that will result in a 47pc staff reduction across all divisions globally [which will] impact about 500 employees.”
MySpace employs around 1,000 people in the US and approximately 120 people globally, spread between London, Sydney and Berlin.
The UK operation, which employs around 50 people, will be largely folded into Fox Networks, also a News Corporation-owned business, in a new partnership deal.
Fox Networks will assume responsibility for all UK sales and sponsorship sold across the UK arm of the site.
It is understood that the majority of UK employees will be leaving the company, with only a skeleton staff remaining to work with Fox on the commercial side of the site.
Jones added: “Details about Australia and Germany are currently being finalised. MySpace will retain a core, dedicated international team to work with partners in order to ensure users, content partners and advertisers continue to be served.”
However, the “core international” team is to be greatly reduced to a skeleton staff while the MySpace staff around the world, enter into a consultation period.
The site, which is owned by News Corporation, has been struggling to keep apace with Facebook for the last two years.
However, despite having made a major round of redundancies last year, which saw its US workforce reduced by 400 jobs to around 1,000 and its international operation reduced from 450 to 150 personnel, more cost cutting has been needed to make up for its big financial losses and while it is believed to be being prepped for a sale.
The latest round of redundancies follows the news that MySpace’s European commercial chief, Simon Daglish, is leaving the company to become ITV’s director of multiplatform and partnerships. He is not expected to be replaced.
A senior digital executive said last week: “MySpace lost $100m in the first quarter last year. To get it back on track is going to require a massive investment – one which News Corporation it not prepared to make. It has many other priorities to put its money into. So instead, it needs to keep taking costs out of the business while it's still in its hands.”
Jones added: "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. Since the worldwide rollout of the new Myspace, there have been more than 3.3 million new profiles created."
In November 2010 Jones admitted that MySpace had finished being a social network and direct rival to Facebook.
Jones said the bold statement: “MySpace is a not a social network anymore. It is now a social entertainment destination.”
The troubled site is pinning its hopes of renewed success with a return to its music and content roots.
Jones’s remarks just preceded Chase Carey’s, News Corporation’s chief operating officer’s comments that the company was actively considering selling off the asset, he described publicly as a “problem”. This latest round of job cuts will prompt further speculation that the site is being prepped for a sale.
Carey said a sale or partnership with internet giants such as Yahoo or AOL were two or a number of options under consideration.
“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,” he said.
Carey, who has previously described MySpace’s losses as “neither acceptable or sustainable”, refused to set a deadline for the social networking site to return to profitability before it push ahead with a sale. “I’m not going to break down [the number of] quarters,” he said. “It’s not years ... we need to deal with this with urgency.”
Carey said the company’s engineers had done a “very good job” at redesigning MySpace to help it better match market leaders Facebook and Twitter. He said it would have been “pretty tough” to sell MySpace before the revamp.
News Corporation bought MySpace for $580m (€445m) in 2008. The asset was briefly valued at $12bn when News Corp attempted to merge it with Yahoo in 2007.