MySpace to cut 30% of workforce

NEW YORK (CNNMoney.com) -- Social networking site MySpace said Tuesday that it plans to slash nearly 30% of its workforce, leaving it with 1,000 employees.

Once the world's largest online social network, MySpace has struggled to compete with the rapid user growth of rivals Facebook and Twitter. Usership and average time spent on the Web site have decreased over the past several months.

"Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company," said MySpace Chief Executive Owen Van Natta. "Our intent is to return to an environment of innovation that is centered on our user and our product."

MySpace was purchased for $580 million by media mogul Rupert Murdoch's NewsCorp (NWS, Fortune 500) in 2005, when it was the leading social network.

The company's success and growth continued until last year. In April 2008, 73% of the total time spent on social networks was spent on MySpace, according to a recent Nielsen study. Social network users spent just 23% of their time on MySpace in April 2009, compared to nearly 66% for Facebook.

"MySpace grew too big considering the realities of today's marketplace," said Jonathan Miller, News Corporation's CEO of Digital Media. "I believe this restructuring will help MySpace operate much more effectively both structurally and financially moving forward."

A new leader. Facebook has taken over the social networking crown in recent months because it appeals to a broad age range and continues to unveil diverse applications for gaming, music and social interaction.

MySpace, on the other hand, has a much younger audience and is the Internet leader in media downloads, including streaming movies and music.

As a result, experts say MySpace may continue to pursue its niche, allowing Facebook to remain social networking leader for the time being.

"MySpace is not currently in a situation where they feel they can win this social networking battle," said Josh Bernoff, social networking analyst at Forrester Research. "It has become difficult to take the leader head on, so there's less need for the number of developers they had."