MySpace Layoffs Coming To Countries Where It Is Getting Trounced By Facebook


This morning, when MySpace announced the decimation of its international staff (300 out of 450 non-US staff will be let go), CEO Owen Van Natta pinpointed the global offices he considers dispensable. He released a statement saying that while the London, Berlin and Sydney offices will be preserved, MySpace will look to “restructure” the offices in Argentina, Brazil, Canada, France, India, Italy, Mexico, Russia, Sweden, and Spain and plans to close four offices all together.

Considering Facebook’s massive growth both internationally and now in the U.S., we thought it would be instructive to compare the number of unique visitors to Facebook and MySpace in each of the countries which MySpace has identified for layoffs and restructuring. All together, the countries account for only about 15 percent of MySpace’s global unique visitors (see chart at right). But more tellingly, in practically every single country where layoffs are coming, Facebook has already won.

The graphs below speak for themselves but here are a few numbers as well (all from comScore). In India, Facebook had 6.4 million unique visitors in May, compared to 848,000 unique visitors to MySpace. In Argentina, Facebook had 5.5 million unique visitors in May, compared to 611,000 unique visitors to MySpace. In Spain, 7.2 million for Facebook, versus 1.5 million for MySpace.

MySpace’s growth has been stagnating for quite some time now. Worldwide monthly page views for MySpace declined from 47.4 billion a year ago to 38 billion in April, a 20% drop. In that same period Facebook grew from 44 billion to 87 billion, a roughly 100% increase. MySpace’s user number growth has stalled out also, and developers are reporting that activity on MySpace is decreasing at a dramatic rate, as high as “half a percent a week.” And in our most recent model of the true value of social networks, MySpace fell below Facebook, dropping from the top spot last year.

Things aren’t going to get prettier for MySpace anytime soon. As Michael Arrington wrote in May, MySpace will receive its last “welfare payment” from Google (thanks to an advertising deal between News Corp. and Google struck in 2006), in 2010 and then it will be cut off. Under the terms of the agreement, MySpace will receive $300 million over the next year if the network makes certain search page view requirements.

When the deal is over, MySpace will have a social network that costs half a billion dollars a year to run. But as shown above, page views are decreasing and with Google’s yearly infusions of money gone there is a strong likelihood that the News Corp. subsidiary will be unprofitable a year from now, even with all of these cuts. It appears that Van Natta is using the layoffs to trim expenses but we estimate 720 total worldwide layoffs would only amount to about $7 to 8 million in monthly expenses (assuming $11K per head, including payroll, benefits and overhead).

MySpace could lay off its entire staff and still not be profitable.