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MySpace Cuts 400 Staff as Facebook Takes the Lead in U.S. Visitors

In the largest de-friending in its history, MySpace cut 30% of its workforce today in an effort to save money and offset falling advertising revenues. Ominously, the layoffs came the same day reports emerged that rival social networking site Facebook overtook MySpace in U.S. visitors in last month.

The MySpace layoffs were rumored for weeks beforehand; the top management was reshuffled in April when News Corp., MySpace's parent company, replaced founder and CEO Chris DeWolfe with former Facebook exec Owen Van Natta, and the Web was rife with murmurs of an imminent retooling of the rest of the office.

Just one year ago MySpace was dominating Facebook in the U.S., pulling in 73.7 million users per month in May 2008 to Facebook's 36 million. While Facebook had surpassed MySpace in global unique visitors the previous month, MySpace's vast advantage in the U.S. still gave the site clout with advertisers.

What a difference a year makes. Last month, Facebook edged ahead of MySpace with 70.28 million unique U.S. visitors to MySpace's 70.26 million. Globally, MySpace is looking no better, with 127 million users to Facebook's 307 million. Facebook's breakneck growth has drawn some marketing dollars away from MySpace, but its stagnancy has hurt the company equally if not worse; as such, marketing dollars are expected to decline by 14% this year at MySpace, while Facebook's revenue is expected to climb 20%.

Part of that stagnancy, MySpace admitted in a statement, stems from the fact that the company has become too large for the realities of the marketplace, and its bloated machinery was stifling innovation and efficiency. Today's layoffs are an effort to bring the company back in line with its needs, paring the office from 1,400 to a more manageable 1,000 workers, or one employee for every 127,000 users. Facebook currently has 850 people on the clock, or one employee for every 361,176 users.

[via Bloomberg, Los Angeles Times]

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