Myspace is rumored to be cutting up to 300 employees from its workforce over the next few weeks. TechCrunch reports that 150 employees will receive pink slips tomorrow and probably another 150 will be shown the door over the next few weeks. This comes as the struggling company could have a new owner as soon as tomorrow.
MySpace currently has about 400 employees. The 300 cuts represent a 75 percent reduction in force, leaving about 100 workers. This is in addition to the 340 employees company let go in January. Since the start of the year, the number of employees will have dropped from 740 to 100 or by about 86.5 percent.
News Corp bought MySpace in 2005 for $580 million. Since then, it has faced intense competition from sites such as Facebook and Twitter. Last quarter, it reported a loss of $165 million. The number of unique visitors for April, the last month reported on, dropped to 37.1 million, a decrease of 46 percent.
In April, News Corp, put its social networking subsidiary on the auction block, looking for a partnership or a straight divestiture. TechCrunch speculates that a deal to sell the company may be reached as soon as tomorrow and announced Friday. Rumored potential buyers include Buzzmedia, Living Social, and a consortium led by Bobby Kotick, the CEO of Activision.
Talk about a fall from Grace. I remember so vividly like it was yesterday when Myspace was the biggest thing in the world! Every celebrity had a profile. Every movie studio and recording artist had a profile, and they all actively pushed marketing initiatives through them.
One thing I find to be incredibly interesting regarding this “mass firing squad,” is just how over-bloated Myspace was. I’ve been criticizing Myspace for YEARS about how “super-sized” their workforce was. When Myspace was led by the original founder Tom Anderson, Myspace was lean. It ran with less than 50 people. Then when News Corp. bought them, they went on a massive hiring spree. WTF!
Now that they’re firing 75% of their workforce it makes you wonder… If they can fire 300 out of 400 people so easily, what the hell have they been doing all this time and why did they have jobs to begin with? Did Myspace just enjoy giving money to people whom they really didn’t need? Or perhaps Myspace will now suffer even more because they cut their staff too low to function properly.
It will be very interesting to see what happens with Myspace from here. My bet is that they will be bought our for pennies on the dollar and go off into internet oblivion. They will still be around, but they’ll be completely forgotten about by the masses.
In order for Myspaces’ next buyer to survive, they need to keep Myspace lean and they need to re-discover what their core users enjoy and do NOTHING BUT THAT! They can’t be a one-size fits all anymore. They must carve out a niche. This means substantially less traffic and ad revenue but it doesn’t matter. It’s their only option as I see it.
- Michael Price
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