MySpace to Cut Two-Thirds of Staff Outside U.S.

MySpace to Cut Two-Thirds of Staff Outside U.S.



PARIS — MySpace, the online music sharing and networking service owned by News Corp., said Tuesday that it planned to close at least four international offices and eliminate two-thirds of its staff outside the United States as it tries to adjust to slowing audience growth and falling advertising. The decision reflects the service’s difficulty in competing with Facebook, whose international audience dwarfs that of MySpace, as well as local players and newly popular services like Twitter, analysts say.

“Facebook seems to have been better at opening up its appeal to more age groups, in more markets,” said Karin Von Abrams, an analyst at eMarketer, a research firm. “Once the momentum begins to build for one site, there’s a kind of self-fulfilling prophecy to it.”

MySpace said that it intended to cut 300 of 450 jobs outside the United States. The announcement followed news this month of plans to cut about 400 jobs in the United States, about 30 percent of the total there.

“As we conducted our review of the company, it was clear that internationally, just as in the U.S., MySpace’s staffing had become too big and cumbersome to be sustainable in current market conditions,” said Owen Van Natta, chief executive of MySpace. Mr. Van Natta, a former Facebook executive, was named to the post in April, succeeding Chris DeWolfe, a co-founder of MySpace.

In May, MySpace had 125 million users ages 15 and older, nearly half of them in the United States, according to ComScore, an online audience measurement service. Facebook had 316 million users, nearly four-fifths of them outside the United States. Over the past year, Facebook’s user numbers have grown by 155 percent, according to ComScore, while MySpace’s ranks have grown by only 9 percent. Despite their popularity, social networks have been slow to attract paid advertising — in part, analysts say, because marketers can use these services more effectively by getting users themselves to spread the word about a music band or a brand.

MySpace, which News Corp. acquired for $580 million in 2005, still collects more advertising than any other social networking site, but sales are falling. EMarketer predicts that MySpace’s ad revenue this year will drop to $520 million from $605 million last year. And outside the United States, advertising has barely caught on; EMarketer expects it to total only $25 million this year.

Facebook does not report its advertising revenue, but EMarketer estimates that it will collect a world total of $300 million this year, up from $250 million in 2008, with non-U.S. markets expected to contribute $70 million of that, up from $40 million last year.

Under the reorganization, MySpace said it would put offices in Argentina, Brazil, Canada, France, India, Italy, Mexico, Russia, Sweden, and Spain “under review for possible restructure.” At least four of the offices will be closed, and offices in London, Berlin and Sydney will become regional hubs, MySpace said, adding that the plans were subject to consultation with employees in some of the countries.

Despite its far greater user numbers, Facebook has a significantly smaller international footprint than MySpace, with offices in Britain, Ireland and France. In some big markets, like Germany, both MySpace and Facebook have struggled to catch up to local players like StudiVZ and Wer-Kennt-Wen.

Meanwhile, the fastest-growing major social networking service worldwide has been Twitter, whose user numbers have grown more than tenfold over the past year, to 37 million in May, according to Comscore.

News Corp. said Tuesday that it had named Rebekah Wade, editor of the British tabloid The Sun, as chief executive of its British newspaper arm, starting Sept. 1, Reuters reported from London.

As head of News International, Ms. Wade would continue to report to James Murdoch, News Corp.’s chairman and chief executive Europe and Asia, who will also become executive chairman of News International from the same date, the company said.

Posted in: Social sites