MySpace is planning to lay off 300 of its 450 non-U.S. employees, it announced this morning, confirming our earlier report. Just one person in three gets to keep his or her job. The company has now announced that over 700 of it’s 1,800 total employees have been or will be laid off – 30% of U.S. staff last week, and 66% of non-U.S. staff today.
The company will not confirm whether Managing Director Travis Katz is still with the company (we reported earlier this evening that he has left the company). Update: sources at MySpace are saying that Katz will remain with MySpace and that “his role hasn’t changed.” The company will still not respond to an on-the-record request for comment about Katz.
TechCrunch Europe has the press release and email from MySpace CEO Owen Van Natta to what’s left of staff.
The company also says that it will close “at least 4 of its offices outside the United States,” adding “Upon completion of the proposed plan, London, Berlin, and Sydney would become the primary regional hubs for MySpace’s international operations. Under the proposed plan, MySpace would place all existing offices in Argentina, Brazil, Canada, France, India, Italy, Mexico, Russia, Sweden, and Spain under review for possible restructure. MySpace China, a locally owned, operated, and managed company, and MySpace’s joint venture in Japan would not be affected by the proposed plan.”
The email to employees notes absurdly that the “restructuring steps we have taken have laid the groundwork for an exciting new chapter of innovation for MySpace” (with nearly half of MySpace staff now laid off, the few that are left are thinking about everything except innovation). He also says “I look forward to working with you all and speaking with you in the coming days.” I’m sure he’ll get something less than a warm reception.
From: Owen Van Natta
To: FIM MySpace All
Subject: IMPORTANT: PROPOSED INTERNATIONAL RESTRUCTURE
Importance: High
Everyone,
Last week we made a number of changes to MySpace’s domestic structure in order to create a leaner, more nimble organization. Today, we are announcing the next step in our overall restructuring effort – a proposal to streamline our operations abroad.
Unlike our recent domestic restructuring announcement, what we are announcing today is a formal proposal we intend to implement, rather than an executed plan. As required by laws in countries where we operate, we will not implement the plan until we have consulted with potentially affected employees. As a result, even though the plan we are proposing today would apply to all international divisions of the company, a finalized international restructuring will be put into action over a period of days.
Similar to our domestic restructuring, our international plan is designed to rein in growth in staff and expenses that we cannot sustain. Our proposal would reduce MySpace’s international staff from 450 employees to approximately 150 employees and close at least 4 of our offices outside the United States.
Upon completion of the proposed plan, London, Berlin, and Sydney would become the primary regional hubs for MySpace’s international operations. Under the proposed plan, MySpace would place all existing offices in Argentina, Brazil, Canada, France, India, Italy, Mexico, Russia, Sweden, and Spain under review for possible restructure. MySpace China, a locally owned, operated, and managed company, and MySpace’s joint venture in Japan would not be affected by the proposed plan.
We are focusing on London, Berlin, and Sydney for two very simple reasons: (1) these are markets where we have a lot of MySpace users as well as the resources to allow us to compete effectively and (2) these are major international commerce centers where a robust MySpace presence can help our company develop new and innovative business partnerships.
As with the domestic changes we made last week, these proposed international reductions and eliminations will be extremely challenging – professionally and personally. These are difficult decisions and they are essential to our financial well-being and the re-establishment of our overall growth strategy.
Our goal to tap into as many international markets as possible drove us to create too many offices around the globe, and with them came inefficiencies. Under the new plan, we will refocus our efforts on regional business partnerships and integration in a smaller number of territories, while retaining a robust international presence. We remain steadfast in our commitment to reaching a global audience.
The last two weeks have been tough for everyone. The employees who leave us played an important role in the successes of MySpace in these international markets, and I thank them for their hard and dedicated work. The restructuring steps we have taken have laid the groundwork for an exciting new chapter of innovation for MySpace. I look forward to working with you all and speaking with you in the coming days.
Thank you,
Owen
“The restructuring steps we have taken have laid the groundwork for an exciting new chapter of innovation for MySpace.”
…is that some kind of spin sell talk or what?
Of course it is spin talk.
rhetorical question.
Just sayin’
Myspace had offices in all those countries? No wonder it needs restructuring.
They have more offices than users
Oh don’t be silly with that comment.
What do you have?
Exactly Rohan. What did they need all those international “hubs” for? Teenage emoticons or rapper videos? hehehehe. Sydney? Berlin? Come on.
I’m left wondering what they mean with ‘regional business partnerships’.
local biz dev/sales/marketing integrations/partnerships – simple.
I think MySpace just need to start from scratch by rebuilding the social network from nothing or just shutdown everything apart from MySpace music as the music section seems to be the only successful part of the company.
There are 125 million users on MySpace, worldwide.
It’s hardly not successful or just about Music.
However, it stopped growing and needs to revamp its product and operations to grow again.
125 million registrations, perhaps. How many regular users now?
Thats UVs (every month).
Dont show your ignorance of data.
Its a grim day for social media. If you cant make money with > 100M users and a ton of innovative things for advertisers (Their revenue was $880M to FB’s $280M in 2008-09), whats to say you can make money with more users.
FB – pay attention. Stop mouthing off on “we are acquiring users and dont care about money” and learn that this is not the Stanford PhD program. With the exception of 1-trick pony Google, no one else can afford to have nerds playing games with their money. Build a biz model or we will read about you folding next year on another tech blog. (I assume TechCrunch might fold soon too, and have another blog gleefully talking about it).
We are all ‘eating our own’ (social media) here people. Dont you see it?
Well said, you have a point there. Good business practice must always apply!
Its a grim day for social media. If you cant make money with > 100M users and a ton of innovative things for advertisers (Their revenue was $880M to FB’s $280M in 2008-09), whats to say you can make money with more users.
It isn’t a grim day for “social media” on whole but for clueless companies with way too much staff and not much to show for it
I even question how successful there streaming music service is doing. It is by far the worse experience in comparison to other services I use. I have no doubt that artists profile do quite well.
I disagree. The music sucks and you can never figure it out. I have been tring for a year now.
If you can help please do.
Times are getting tough it seems.
Why did they need those 1800 employees in the first place? It’s almost 1/10th of what Google has! MySpace just had too much investors’ money to burn.
there was is another post about “MySpace International Head Travis Katz Is Out”. we are waiting to know final news. in the post he also mention that ‘30% of U.S. staff last week, and 66% of non-U.S. staff ‘ will be fired..
I heard that the new COO Mike Jones from Tsavo is a dedicated lean machine. I’m sure this has a lot to do with him as well as the expiring contract with Google.
Myspace should tell their users that their shrinking user-base will lay the ground work for exciting innovations for spammer girls to get people to visit their site.
Recession is the main problem or others?
The poor economy is forcing companies to take a deeper look at their operations.
In the case of FIM/MySpace, the good times was hiding deep structural, operational and product issues.
MySpace will be better for it. Its getting a needed wake up call.
Unfortunately some great people are loosing their jobs out of it.
This was about a top down cost reduction target from News Corp to appease the street.
New management had to make decisions before they had a chance to understand the business.
This didn’t have much to do with the recession. Online advertising may be down but is not down 50%!
It’s simply the fact that Google waaaaay overpaid on their initial ad agreement thinking that Myspace would be full of users clicking on ads. Myspace has been living off that $900m from Google for the past couple of years.
When Google realised that the clickthroughs were a lot lower than expected they indicated that they now were only willing to pay $50m a year.
“The restructuring steps we have taken have laid the groundwork for an exciting new chapter of innovation for MySpace.”
a new chapter?… is that chapter 11 by any chance?
MySpace is a profitable business, 100% owned by one of the biggest media conglomerates in the world (very profitable in its own right).
Do some research
considering they’re on a very steep downward trend (traffic and user wise) due to falling way behind in the social networking landscape, they’re about to come to the end of what will likely be their last decent advertising deal for a while (read: bye bye revenue) and they have quite alot of overheads (bandwidth, salaries, blah blah blah).
Add the gloomy economic forecasts and I’d say there is potential for trouble at some point in the near future.
Myspace aren’t laying of almost a third of all employees because everything’s peachy
Everything is far from peachy there, but they are nowhere near chapter 11 as suggested.
The owner of myspace is one of the few profitable global media companies in the world at the moment.
The idea that the winner of the social network race gets all the spoils and everyone else gets nothing and dies is far from the truth. There’s room for facebook being the #1 social network (outside of china
). Theres also room for other players doing something different, myspace almost has that with music. They just need to execute better product strategy and be leaner/meaner.
a-goddamn-men.
right on.
Myspace is profitable in the short term thanks to Google overpaying.
no CG, check your facts they made close to another $500K last year.
The brazilian press is reporting that employes were notified yesterday that the office is being completely shutdown on july 1st. They also claim that the brazilian operation is profitable and has the 8th biggest revenues among all other 30 offices. Althoug Brazil’s market is owned by Orkut, i don’t think that MySpace was doing bad here and don’t understand why they are closing a profitable operation in latin america’s biggest and fastest-growing market. MySpace is screwed.
because they can run the brazilian site from an argentina HQ and local people on the ground in brazil.
Maybe they can run the Brazilian site from an Argentina HQ and local people on the ground in Brazil.
they closed down Argentina as well
@grant: I agree. After finally getting fed up with the “check out what’s going on at myspace” emails I finally canceled my account.
The repeated emails about the stupidest things are definitely getting super annoying. Before, I wasn’t visiting MySpace even though I have an account. But now, I’ll actually go in and delete my account.
Restructuring is a good thing. At least they are not filing for bankruptcy. I feel this downsizing has to do with the music business getting crushed.
Phil Jackson (Lakers) has been consulting with MySpace management. Watch for the site to once again regain its position of dominance. 10 minutes after winning the NBA title, Kobe was overheard saying that he couldn’t wait to get back to his home and update his Profile Page! Stay tuned for the most unprecedented turnaround in Internet History.
what was that?
This shows the ignorance of a senior mgmt team who are completely US centric.
If you kill your growth engines in Latin America, India etc how exactly do you plan to grow your base? Your brand needs a major makeover in the US, and UK & Oz have been struggling for a while. Shows how little they understand. Their only hope was to win emerging markets.
Must be the killer biz skills learnt at that brilliant internet co. called AOL. You guys have shot yourself in the “you know whats”
Also the email smacks of insensitivity. Someone who was better suited as COO, rather than CEO?
Myspace shouldn’t have opened so many (large) offices around the world in the first place but rather have most everything run from the US, like FB did. For a more detailed explanation as to why they failed internationally, read The Starfish and the Spider-The Unstoppable Power of Leaderless Organizations. Lean and mean is the only way they’ll survive.
No my friend, this is not how it works. The guys who have successfully built businesses in Asia, Latin America etc have lean but very much local offices. Google, Yahoo, MSN etc have all built good businesses this way.
FB is a pure utility – it has no localization and no local activities. So, its easy to scale. However, those are users, not dollars. The few hundred dollars it will earn from these countries show its easy to grow users remotely and impossible to a grow a ‘business’. Also in most emerging markets, FB has a low barrier to entry as it has no real utility (unlike some of the cool, functional apps in US and western Europe). I wont be surprised if it starts tapering off soon. Whos next?
What works in the US does not work everywhere, when it comes to monetization. Good companies realize this. A social net which realizes this and executes well will make money in other countries. Else all are doomed to be unmonetizable money suckers.
As mentioned, countries like Brazil, etc actually were profitable for MySpace and doing well. The new mgmt has actually undone a good plan which was being executed well. If you actually went to some of these countries you will find MySpace earned real dollars, had a good reputation and was growing users. Not like the US or UK. So, dont sit in one of these countries and assume you know whats going on in other territories, else you are no better than Van Natta and co.
Maybe so many countries were not needed, but hacking through all the muscle with the fat, has left them to follow AOL and Geocities in a slow death spiral.
Dribbling on for paragraphs does not make your point correct, just long winded. As for your assertion that I have a one sided view of the world, I actually lived and worked outside of the US (Asia) for most of my adult life. From those experiences, I believe I have far from a myopic view of the world.
I never said that they didn’t need offices internationally, rather that they didn’t need as many people as they had. They concentrated their efforts and built offices in the most profitable countries, to get the maximum return on their investment, they just went resource heavy in certain places.
Just a few years ago, the half a billion that News corp paid for myspace was considered “a steal”. Anyone who had a sense for the faddishness of social network (or just common sense) disagreed.
And within the first year of that half a billion dollar acquisition, MySpace made over 700mil in revenue.
Rupert has made his money back on this “short term investment”…time to flip it.
Sad but expected.
What a good way for Owen Van Natta to increase the value of his Facebook stocks.
You have to question MySpace suits…
Hiring guys from the rivals, like Facebook and AOL? Really? What kind of loyalty can you get from these guys?
Also, they ousted Tom Anderson and Chris Dewolfe and bring in four other guys to replace them? How is that efficient?
So long MySpace!
You won’t be missed.
restructuring steps.. it means that u’ll close your offices all around the world. but, what about thinking of your tech and services almost one year before???
This absolutely made my week. About time, MySpace was bloated and overstaffed, by people that barely used the service themselves hilariously.
I think we all mentioned the Google deal, so I won’t bother
It appears MySpace is doing its best impression of a slowly sinking company.
What a great time for my SN.
“restructuring steps we have taken have laid the groundwork for an exciting new chapter of innovation for MySpace”
omg that statement is so full of shit! why can’t executives be blunt?
MySpace had too many people. Its sad to see so many go. MySpace hired many and then let them go. I hope they do better resource management.
MySpace has an excellent engineering team. Its no small feat to manage a high traffic site like MySpace. Unfortunately these engineering excellence does not get credit outside MySpace.
The focus now should now be on creating great product features that users would like to use time and again and focussing on the features that are already popular.
I think with the right focus and product team dedicated to MySpace with the help of the excellent engineering team can do great things.
Reminds me of Geocities…
Rumour has it that the Toronto office will be closed by the end of the week…
rumor has it that there will be 200 more jobs cut at the end of sept
Why anyone opens up an office in France is beyond me. They’ll probably be paying their salaries for the next 6 months or so.
Myspace (L)
ad3m
koyulhisar
yemek tarifleri
burs
sivas
Its a pity because they had just started building great traction in India. Revenues, users and brand – everything was looking good as per internet industry sources.
Well the India team is a bunch of Indian internet all stars – Good job guys.
Sad for MySpace. MySpace is launching a new open source website performance tool. TechCrunch should consider writing about that too.
Sad day for MySpace. MySpace is launching a new open source website performance tool. TechCrunch should consider writing about that too.
it was “martedi”
The neat 1/3rd shave off in the US and 2/3rd shave off globally tells me not much ’strategic thought’ has gone into this downsizing move! Life is never so ‘neat & simple’. Further the inclusion of Brazil & India (China escaped because of a JV situation) in the closure list tells me the Top Management has no ‘Global experience’, certainly not on future trends! What a shame; running a global business with no global foresight!! Aren’t the USA & UK ‘degrowing’??
U are spot on, mate! I couldn’t agree with you more.
And wonder why Australia is left intact..*Any guesses*.
Same for China. JV is a just an excuse.
Maybe the “Innovation” is to make MySpace ‘ready’ for sell out…..to, lets say, Viacom, maybe??….*Any takers?*
Makes Owen Van Natta more an Investment Banker (who’ll net his pound of flesh, for sure) than a CEO!?