As has been rumored for weeks, MySpace (NSDQ: NWS) is cutting 500 employees, or nearly half of its workforce. The social networking, which made the announcement this morning as all eyes were on Verizon’s iPhone news, says it’s making the cuts “to provide the company with a clear path for sustained growth and profitability” and emphasizes they aren’t a reflection of the performance of the major remake of the site it introduced this fall, which it claims has been a success so far. [See our chart MySpace: From Hot To Not]
The job cuts are a reminder, however, that MySpace continues to be very much in rebuilding mode. In November, News Corp COO Chase Carey set a turnaround-or-offload-it clock for the social networking site: “This is something we judge in quarters, not in years.” MySpace is cutting jobs across the board, including in international markets. It will now depend on partners to manage ad sales and content in Germany, Australia and the U.K but will keep a small international team of its own to manage those relationships. (My colleague Robert Andrews has more on the international layoffs here).
This is the second round of major job cuts at the social network in eighteen months. In June 2009, then CEO Owen Van Natta cut 30 percent of the site’s workforce, saying MySpace’s staffing levels were “bloated” and adding that the job cuts would allow the site to “operate much more effectively both structurally and financially moving forward” — language that is extremely similar to that in the announcement the company made today.
The layoffs under Van Natta shrunk the site’s workforce to 1,000 from nearly 1,420. Today’s bring the staff count to roughly 560.
Here’s the full statement, which is attributed to MySpace CEO Mike Jones:
Today Myspace is implementing a significant organizational restructuring that will result in a 47 percent staff reduction across all divisions globally and impact about 500 employees. 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.
In international, Myspace, Inc. will be entering into strategic local partnerships in the UK, Germany and Australia to manage advertising sales and content. In the UK, Myspace will enter into a strategic alliance with .Fox Networks, with whom we have successfully partnered with in many international territories. Details about Australia and Germany are currently being finalized. 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.
Today’s tough but necessary changes were taken in order to provide the company with a clear path for sustained growth and profitability. These changes were purely driven by issues related to our legacy business, and in no way reflect the performance of the new product. The new organizational structure will enable us to move more nimbly, develop products more quickly, and attain more flexibility on the financial side. We are also committed to rebuilding the company with an entrepreneurial culture and an emphasis on technical innovation.
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. We also introduced Topic Pages, which connect users to entertainment-focused content from news sites and blogs all over the Web. Over 134,000 Topic Pages have been created since the introduction of the new Myspace. There has also been a boost in viral activities, with over 10 million social actions and 90 million “follows” within the Hubs and Topics categories. In addition, we are seeing Curators driving a lot of the engagement on our site. Users who “friend” one of our Curators increased their frequency of visits by 35 percent. Lastly, we have already seen a rise of four percent in mobile users just between November to December, now totaling over 22 million.