MySpace to lay off 30 percent of staff

NEW YORK Tue Jun 16, 2009 2:27pm EDT

A screengrab taken on June 16, 2009 shows MySpace.com. REUTERS/MySpace.com

A screengrab taken on June 16, 2009 shows MySpace.com.

Credit: Reuters/MySpace.com

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NEW YORK (Reuters) - MySpace, the social network owned by Rupert Murdoch's News Corp, said it will cut 30 percent of its staff to lower costs as it struggles to stay popular in the face of rising competition.

MySpace will be left with about 1,000 employees, it said in a statement released on Tuesday. The company declined to say how many people work at the service, but the percentage suggests that about 400 people will lose their jobs.

The cuts, which were presaged in several blog reports in recent weeks, are the biggest move so far by new management at the social network and an attempt, it said, to return the service to a "start-up culture."

"Simply put, our staffing levels were bloated and hindered by our ability to be an efficient and nimble team-oriented company," MySpace's new chief executive, Owen Van Natta, said in the statement.

"I understand that these changes are painful for many. They are also necessary for the long-term health and culture of MySpace."

News Corp named Van Natta as CEO in April. He replaced Chris DeWolfe, one of MySpace's co-founders.

News Corp's new digital media chief, Jonathan Miller, said MySpace "grew too big considering the realities of today's marketplace."

The layoffs will happen across MySpace's operations, though many of its employees are based in Los Angeles. A company spokeswoman declined to say when employees will learn that they are losing their jobs.

MySpace is facing increasing competition from social network Facebook. Facebook and Twitter, a website that lets people tell others what they're doing, are surpassing MySpace in buzz and popularity in the technology and media worlds.

The job cuts came the same week as the number of Facebook users in the United States surpassed those of MySpace for the first time, according to Web measurement company comScore.

Facebook's edge was narrow, with 70,278,000 unique visitors to its website in May versus MySpace's 70,237,000. Still, the change marks a key triumph for Facebook. MySpace's U.S. user numbers have fallen since October 2008.

Worldwide, Facebook had more than 307 million unique visitors in April, according to comScore, the latest month for which data was available. MySpace had more than 123 million.

MySpace forms a large part of Fox Interactive Media, a News Corp unit that houses several of the company's digital operations. The unit, which people in the media business call "FIM," recently called off a move into a large office building in Playa Vista in Los Angeles.

MySpace also is facing the likelihood that an advertising deal with Google Inc that brought it $300 million a year over three years will be renegotiated on terms that will be far less lucrative to the social network when the original contract expires in 2010.

News Corp shares fell 41 cents, or 4.2 percent, to $9.41 on the Nasdaq stock market.

(Reporting by Robert MacMillan; Editing by Dave Zimmerman and Richard Chang)

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