MySpace to ‘shut down the majority of its international operation’
MySpace, the beleaguered social site, is set to announce a major restructure which will see its international workforce reduced to a skeleton staff, ahead of an expected sale.
The site, which is owned by New 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 redundancies are expected in the coming weeks.
The axe is expected to hit the social network’s international offices the hardest. “Everybody is expecting some kind of announcement next week,” said a digital executive close to MySpace. “And there is not much hope left for the international offices.
A few staff will probably remain, but essentially, everybody at MySpace is expecting the international operation to be closed down. MySpace isn't making money and News Corporation needs to cut more costs dramatically.”
After last years swingeing cuts, the only MySpace international offices which remain are in London, Berlin and Sydney.
London and Sydney’s respective offices employ around 55 people each, while MySpace’s Berlin office employs around 20 staff.
A MySpace spokesman refused to comment.
The news of the major international reduction follows reports from earlier in the week that MySpace is set to axe 50pc of its total workforce, the majority of which are based in the US.
A different digital executive added: “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.”
In November 2010 Mike Jones, MySpace’s chief executive, 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”.
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 in 2008. The asset was briefly valued at $12bn when News Corp attempted to merge it with Yahoo in 2007.