The ‘bloated’ social-networking service MySpace grew too fast and now finds itself in the ignominious position of having to shed 400 jobs – or 30pc of its global workforce.
The company, which was bought four years ago by press baron Rupert Murdoch for nearly US$600m, is undergoing a major restructure.
“Our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company,” MySpace chief executive Owen Van Natta stated last night.
“I understand that these changes are painful for many. They are also necessary for the long-term health and culture of MySpace. Our intent is to return to an environment of innovation that is centred on our user and our product,” Van Natta said.
Murdoch’s US$580m investment in MySpace was recouped straightaway when the company struck a US$900m advertising deal with Google.
However, this deal is expected to end next year and a similar deal on similar terms is extremely unlikely.
But the stakes have changed in the social-networking game. MySpace was overtaken by Facebook last year as the biggest social-networking firm in the US. According to comScore, Facebook achieved 70.28 million unique visitors last year, while MySpace had 70.26 million unique visitors.
MySpace’s sudden reversal in fortunes calls into question the viability of other rapidly growing social-networking sites such as Twitter, which in the past year alone grew 3,000pc globally. Could it be dot.bomb all over again?
By John Kennedy