MySpace said Tuesday that it is laying off 500 employees, cutting its staff by 47%.
"Today's tough but necessary changes were taken in order to provide the company with a clear path for sustained growth and profitability," CEO Mike Jones said in a written statement. "These changes were purely driven by issues related to our legacy business, and in no way reflect the performance of the new product."...
Once king of the social networking world, seven-year-old MySpace has fallen behind younger and nimbler rival Facebook. Acquired by News Corp. in 2005 for $580 million in cash, the site's active user base now hovers around 130 million -- far short of Facebook's 500 million.Projections for Facebook's future have gotten a bit out of hand, which is hardly anything new for tech companies. I think Facebook is a very fine company in many ways, but one that continues to struggle a bit with how to properly monetize their large subscriber base. They're definitely doing some things better than MySpace did, but there was a time when people predicted similar explosive growth for MySpace (it was once the second-most visited site on the internet behind Yahoo), and we see now how that story has ended.
Before we start investing our lives' savings in Facebook and predicting that it will take over the internet, we need to remember just how vulnerable tech companies can be in their early stages, and just how quickly the industry can change completely on them (hello, AOL, Gateway, Netscape, and Lycos).
Facebook may indeed be primed to join the big players with explosive growth. Or, it could end up like MySpace, just another company that never quite figured it out. More likely, it'll be in for a decade-long bumpy ride--much like Microsoft, Amazon, eBay, etc. If they can wait out those bumps while not overplaying their hand, they'll do just fine. But there are definitely warning signs, and MySpace is a cautionary tale.
[CNN Money]
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