Myspace Plans to Lay Off 550 to 600 Employees Tomorrow
Myspace, which has been struggling to revitalize itself, is expected to lay off 550 to 600 of its staff of just over 1,000 tomorrow, according to several sources. — NetworkEffect first reported news of the large-scale cuts at the end of December.
Context & Ripple Effects
This is Myspace's second deep cut in eighteen months: TechCrunch reported in June 2009 that 25% or more of staff would be cut, and tomorrow's planned reduction of 550 to 600 from a headcount of just over 1,000 goes far beyond that. NetworkEffect first reported the scale of the new round at the end of December.
The cuts land on a company mid-pivot: Myspace launched its Mashup with Facebook in November 2010 to rebuild itself around personalized entertainment streams, released the Music Romeo iPad app over the summer, and spent December absorbing a confirmed Wall Street Journal finding that its apps were transmitting user data to brokers alongside public accusations it copied Pinterest's design.
First-order effects
- More than half of Myspace's employees lose their jobs tomorrow, leaving a core team to run an entertainment-focused product built on the November 2010 Facebook Mashup integration rather than on internally developed features.
- The company must execute the reduction while still managing the fallout from the data-broker disclosures its apps were confirmed to be making in December.
Second-order effects
- With internal development capacity halved, Myspace's dependence on Facebook's identity layer and licensed entertainment content deepens — the partner whose graph powers its streams gains leverage over a shrinking platform.
- A large bloc of experienced LA-based social and music-product talent enters the market at once, lowering hiring costs for competitors building in the same space.
Third-order effects
- Successive rounds of deep cuts — 2009's 25%-plus followed by a reduction past 50% — point to first-generation social networks being resized to a defensible niche rather than managed for growth, with headcount tracking a retrenched product instead of expansion.
- If the pattern holds, once-dominant consumer platforms become case studies in contraction economics: cut to the core, license what you no longer build, and cede infrastructure to the platform that replaced you.
The trend: First-wave social networks are being structurally downsized through repeated deep layoffs, trading broad in-house teams for partnerships and licensed content as they retreat into niches.