MySpace to shrink international staff, close offices abroad

The News Corp. social-networking unit will reduce its headcount abroad from 450 to about 150 employees

MySpace will slash its staff abroad and shutter several international offices, the News Corp. unit said on Tuesday, a week after announcing a big round of layoffs in the U.S.

MySpace will cut its staff outside of the U.S. from 450 to about 150 employees and close at least four offices abroad because its headcount has become "too big and cumbersome" for "current market conditions," the social-networking pioneer said in a statement.

MySpace will focus its international operations in London, Berlin and Sydney. The cutbacks will not affect its locally-owned and operated company in China nor its joint venture in Japan.

Under review for the chopping block are offices in Argentina, Brazil, Canada, France, India, Italy, Mexico, Russia, Sweden and Spain.

The international restructuring is intended to "transform and refine" MySpace's operations abroad, not dismantle them, since about half of MySpace's users are located outside of the U.S., the News Corp. unit said.

Last week, MySpace announced plans to cut its U.S. staff by almost 30 percent to 1,000 employees because it had gotten "bloated", which prevented the organization from operating efficiently.

MySpace, once synonymous with social networking, has lost its leadership position in this market to Facebook both globally and in the U.S. specifically.

News Corp., which paid US$580 million in 2005 for MySpace's parent company, has been shaking things up in its Internet unit, Fox Interactive Media.

In April, MySpace got a new CEO when Chris DeWolfe left and was replaced by Owen Van Natta, a former Facebook chief revenue officer and vice president of operations.

Earlier in April, Jonathan Miller, the former AOL CEO, had come on board as News Corp.'s CEO of digital media and chief digital officer.

MySpace has about 130 million users globally, while Facebook has more than 200 million. Experts attribute Facebook's popularity rise to several factors, including its appeal to a broader scope of people thanks to what many perceive as a more organized and controlled environment.

For example, most Facebook members use their real names, which isn't the case with MySpace, and Facebook's layout is more streamlined and clean.

Facebook also offers very granular privacy controls, giving members many options to fine-tune access to their profiles and data.

In addition, Facebook was first to open its site to applications from external developers, a move that has helped to increase its attractiveness to users.

Facebook, MySpace and other advertising-supported social-networking sites have found it challenging to generate revenue from their massive user bases. Conventional online ads, like pay-per-click text ads and graphical banner ads, don't work as effectively in social networks.

Consequently, social-networking sites are busy trying to design new ad formats that will yield better results for marketers.

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Juan Carlos Perez

IDG News Service
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