New Management at MySpace Cuts 420 Jobs

Aggressive Move Aimed at Addressing Social Net's Slow Ad Sales, Stagnant Growth

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NEW YORK (AdAge.com) -- It has a little more than half the global traffic of Facebook and, until today, nearly twice the staff. So this morning incoming CEO and former Facebook exec Owen Van Natta took a step to remedy that by cutting 30% of MySpace's work force, or about 420 jobs.

Owen Van Natta
Owen Van Natta
The cuts are the first major step from MySpace's new management, including Van Natta and News Corp. Digital Chairman Jon Miller, to address stagnant growth and slipping ad sales at the once-dominant social network. It also marks one of the most aggressive job cuts in what has been a layoff-filled six months for the media and ad industries.

Identity crisis
In a memo, Mr. Van Natta said all divisions would be affected in the restructuring, but declined to be specific. "Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble, team-oriented company," he said. Post cuts, MySpace will have about 1,000 employees, a bit more than Facebook's 850.

A person close to MySpace said affected employees were informed throughout the day and had their computers collected.

MySpace is undergoing what some might call an identity crisis, trying to figure out an audience strategy at a time when its growth has stagnated. It lost 5% of its unique U.S. visitors in May from 2008, according to ComScore. In addition to the hiring of Messrs. Van Natta and his boss, Mr. Miller, it has also brought on former MTV Networks exec Jason Hirshhorn and former AOL exec Mike Jones.

Facebook gains popularity
Incidentally, the restructuring comes the day after May ComScore numbers that showed Facebook passed MySpace for the first time in the U.S. with 70.3 million unique users. Globally, Facebook leads with more than 200 million unique visitors compared with MySpace's 120 million.

In the past year, Facebook has had a growth spurt as it is adopted by new demographics and new mostly international markets.

While Facebook has been growing much faster, MySpace has had much more success selling advertising to entertainment and luxury good advertisers. But even that onetime strength has taken a hit. MySpace had $620 million in global revenue in 2008, but that's expected to slip 16% to $520 million, according to eMarketer. Revenue at MySpace parent Fox Interactive Media dropped 11% to $187 million in the three months ended March 31. And things are about to get tougher for the social network in 2010, when a search deal with Google expires. That deal accounts for $300 million a year, or about half of MySpace's revenue.

Facebook, by comparison, had sales of $250 million in 2008 and is expected to have $300 million in global sales in 2009.

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