MySpace: A social network with no employees
MySpace, the large social network that is part of News Corp. (NWS), has been losing ground to rival Facebook. Its answer to the trouble has been to fire people in an attempt to do what business school professors say is impossible -- cut costs as a means of saving a business.
A little over a week after dismissing 300 people in its domestic operations, MySpace is firing 300 people overseas, which will cut its staff outside the U.S. to 150, News Corp announced."With roughly half of MySpace's total user base coming from outside the U.S., maintaining productive and efficient operations in our international markets is important to users worldwide and our immediate financial strength," said MySpace Chief Executive Officer Owen Van Natta. It would seem difficult to provide service to all of those members without any substantial staff.
MySpace's struggles are really not unlike those of Facebook or fast-growing Twitter. No one has come up with a strategy to turn the hundreds of millions of users that the three sites have into substantial revenue. Industry insiders say that Facebook will lose money on $500 million this year. That is not much revenue for an internet property that has over 200 million members.
Social networks have so little revenue that they may be able to operate without any people at all.
Douglas A. McIntyre is an editor at 24/7 Wall St.