MySpace is coming under a lot of pressure to cut overhead costs,this could also be evident from its recent move to lay off around 30% of its workforce. Currently it employs 1400 people which would see some 400 employees been handled the pink slips.
Loosing steam to Facebook?
The woes do not end here as recently Facebook outpaced Myspace in U.S, a major market for Myspace. Until recently Myspace was banking on its U.S market to deliver significant revenues but after the Facebook outrun it looks a farcry.The difference is even wider on a global basis as MySpace currently attracts 123 million unique visitors compared with Facebook’s 307 million.The event is also set to have rub-off effect on its advertising deal with Google.
Cost-cutting measures coupled with revenues losing steam ?
According to Myspace, “Simply put,our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company. I understand these changes are painful for many. They are also necessary for the long-term health and culture of MySpace. Our intent is to return to an environment of innovation that is centered on our user and our product.”
The company is also rumored to be moving to a less posh and small office in order to save money. Many social networking giant bolstered their employee strength on the basis of expected revenue flows and to match the strength of their positioning.Some companies where even reported to hire large number of employees for manual profile checks and site monitoring.
It also signed an advertising deal with Google way back in 2006 which guaranteed minimum revenue share to the tune of least $900 million for 3 years based on some conditions.The bosses at Google are definitely in no mood to renew the deal which comes up for renewal in 2010 as they were seen loosing money in the deal by coughing out more money in order to keep Microsoft at bay.
Fox Interactive Media, Owner of MySpace, earlier fell short off its projected revenues by 10% and would also continue to lay off on a separate scale. Such moves by Myspace could be a preparation to fight slump in revenues by non-renewal of its earlier advertising deal contributing significant amount to its kitty.
MySpace India Strategy
Myspace has been a late entrant in India and since launch its strategy has been one of offline + online connect. We have blogged about its Black Curtain events and its recent association with bands to launch Myspace Nights in India.
We have been of the view that though its great to have an offline strategy it doesn’t always translate into online interaction and this is where we feel MySpace India is losing the plot.
Way Forward ?
Monetization of Myspace is becoming a tougher job as the site supports complete modification of profiles by users with multimedia tools therefore increasing the page size and thus lower CTR’s. Its projection as an entertainment social network is also not helping its case.
Myspace should indeed try to regain its position in U.S market as facebook has inched forward by a small margin, Numero Uno position in U.S market could alone increase its bargaining power with advertising giants. At the same time it should re-iterate its recent focus on Emerging markets if it wants to fulfill its dream of becoming largest social network even though audiences in these markets are less enthusiastic about entertainment based social networks.
