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Bad times at MySpace

June 24, 2009 Leave a comment

Hot on the heels of the news that they are to cut 30% of their US workforce, is the announcement that they will now cut two thirds of their international staff. In Adam Ostrow’s post on Mashable, MySpace blame the cuts on the company becoming too cumbersome in the current market, both in the US and overseas. It seems clear that the company cannot continue for much longer in its current form and I wonder if it may be the first ‘major’ social network to diversify away from being a one size fits all, behemoth to a more niche community.

Michael Arrington’s Techcrunch post last month, speculated that the $900m ad deal with Google will not be renewed when it expires next year, which will be a huge hit and I think we will see display ad revenue decline further this year. Lancing staff costs is probably a good move to buy some breathing space but this problem isn’t going to go away.

I remember discussing the future of social networking sites, with my colleagues, when social networks first came to prominence and we always believed that the networks would ultimately fragment into smaller more niche communities, as all other types of media have done over time. I am wondering if now isn’t the time for MySpace to look at what they are good at – Music, and focus on that.

I can’t see them regaining ground on Facebook anytime soon, that battle may be lost, but they do have a very active and loyal community based around music, which was what drove its popularity in the first place. Music lovers are about the most brand loyal group in the world (actually, I think they are second; ahead of sport but behind religion!) so there are worse target audience’s to build and sustain a community around.

Even though MySpace Music isn’t setting the world alight just yet, if they integrate the service more with the main site, it can become a major music sales window, plus they already have a vibrant music community to build upon and deals with major record labels in place. I would forget ads completely and concentrate on selling music.