Looks like Facebook is not only taking eyeballs, but ad dollars from the first major social media site Myspace. The company announced 1/11 it was cutting some 500 jobs, nearly half its staff. It dubs it as an “organizational restructuring.” CEO Mike Jones is that the “tough but necessary changes” don’t reflect anything bad about the new redesign, which refocuses the company on “social entertainment” rather than trying to compete with Facebook directly.
“Today’s tough but necessary changes were taken in order to provide the company with a clear path for sustained growth and profitability,” Jones said in a statement. “The new organizational structure will enable us to move more nimbly, develop products more quickly, and attain more flexibility on the financial side,” Jones said.
Jones said the layoffs will cut the elements of the company’s legacy business that weren’t working. Jones said that since the redesign rolled out at the end of last year, more than 3.3 million new profiles have been created as well as 134,000 topic pages. The number of mobile Myspace users increased 4% between November and December, he said, to 22 million.
News Corp. bought Myspace for 580 million dollars in 2005 but it has been overtaken in recent years by Facebook, which has grown to more than 500 million members while Myspace’s numbers have dwindled. Its most recent quarterly financial statement showed a loss of $156 million. Not good.
RBR-TVBR observation: News Corp. bought Myspace for 580 million dollars in 2005. Five years later (last November), News Corp. President and COO Chase Carey said the losses at the social network were “unsustainable.” This cutting-to-the-bare-bones move is most likely getting the company ready for a sale. We assume Facebook may end up absorbing it. They already have linked together, in fact.