The Decay of MySpace

The company halves its workforce as morale and financial prospects plummet

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Just as Facebook climbs to new heights, its aging rival MySpace is slashing its staff in a last-ditch effort to save itself. On Tuesday, the company laid off 47 percent of its workforce, lopping off 500 employees from its nearly 1,100-person payroll. As company morale plummets, rumors that MySpace's parent company News Corp. wants to sell are everywhere. Meanwhile, industry observers are treating MySpace as a cautionary tale for those who would describe any social networks as "unstoppable."

  • What Went Wrong?  "MySpace was like a big party, and then the party moved on," says former MTV Networks President Michael Wolf. "These Internet businesses tend to have a cycle. There's a lot of people who wonder if the same thing will happen to Facebook." Jeremiah Owyang, a technology industry analyst at Altimeter Group, says the problem was innovation. "Myspace didn't change their design, upgrade their demographics to expand, and they didn't inject a culture of innovation. So they stayed complacent and they're seeing the results of that."
  • News Corp Is Mulling a Sale, reports Russell Adams at The Wall Street Journal: "Myspace notified staff of the long-rumored cuts Tuesday, weeks after parent company News Corp. put the one-time Internet pioneer on notice to shape up or potentially land on the auction block. While there are no signs that Myspace is actively being shopped around, according to a person familiar with the matter, News Corp. is open to the possibility."
  • Morale Is Suffering  TechCrunch's Michael Arrington received a letter from a purported MySpace employee who describes the attitudes of lower-level workers at the company. According to the disgruntled employee, MySpace executives had "driven hundreds of people to work hard for months, giving 20 hour days, even 48 hour sleepless stints" in the run-up to the layoffs:
As it turns out, Mr. Jones and his lieutenants knowingly *used* their employees, working them hard, making them give up time with their friends and families, knowing all along that no matter how hard they worked, and how successful their efforts, many of them would be rewarded with layoffs.
  • If You've Lost Tila Tequila, You've Lost Middle America  The New York Times finds that the social network's biggest celebrity doesn't even use the service anymore:
Even Tila Tequila, the model and rapper who achieved fame by building an audience on MySpace, has switched allegiances. In 2006, Time magazine called her the queen of MySpace, but these days she prefers Facebook.

“I just lost my passion for MySpace,” she said in an interview, adding that she does not even remember her MySpace password, even though her page still lists 3.7 million fans. “I haven’t logged on because it’s not simple anymore.”
  • There May Be Hope in MySpace's Redesign, notes Anthony Ha at VentureBeat: "As evidence that the redesign is starting to catch on, [CEO Mike] 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 percent between November and December, he said, to 22 million."
This article is from the archive of our partner The Wire.