Kara Swisher

Recent Posts by Kara Swisher

MySpace: After the Layoffs, Here's What's What and What's Next

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Now what?

The party-all-night social-networking site that has been MySpace so far got a massive morning-after shock yesterday when 30 percent of its workforce–or 420 employees–was laid off.

And today, MySpace, which is still 1,000-strong, and its leaders have to face the cold, harsh light of day in the aftermath of the restructuring and get busy quickly figuring out a way to reinvigorate a brand that has suffered after a stunning rocket of a start many years ago.

That’s especially true since a report also just came out by market research outfit comScore (SCOR) showing that Facebook has surpassed MySpace in the key U.S. market as the top social-networking site.

So, based on many sources I have spoken to over the last week, here’s a rundown of the next steps MySpace will likely be taking and who’ll be making them.

MORE LAYOFFS?

“Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company,” said new CEO Owen Van Natta in a statement about the layoffs.

What he did not say was that cost-cutting via layoffs is almost always the first move in a turnaround.

These cuts have actually been long in coming, but it’s promising that they finally happened so quickly after Van Natta–along with COO Michael Jones and Chief Product Officer Jason Hirschhorn–were brought in by News Corp. (NWS) digital head Jon Miller to replace co-founder and CEO Chris DeWolfe.

(News Corp. owns MySpace, as well as Dow Jones, which owns this site.)

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“The layoffs were a total reset,” said one source, who noted that unless MySpace’s advertising business falls off a cliff, which it is unlikely to do in the short term, more cuts in the U.S. will not be needed for now. That might not be true internationally, where MySpace has not performed as strongly.

At this point, MySpace is now about the same size as chief rival Facebook’s staff, which has been growing much more quickly (you can see my video tour of its new Silicon Valley HQ here).

Except for not making the move to new offices in Los Angeles, the Beverly Hills, Calif.-based MySpace is also not going to be closing offices elsewhere, as has been reported, most especially its San Francisco one.

In fact, Van Natta is traveling to visit all of them, his memo said, over the next several days.

LEADERSHIP

Despite the large number of layoffs and the departure of DeWolfe, most expect there to be very little change in the top ranks of MySpace leadership for the time being.

While Jeff Berman, MySpace’s president of sales and marketing, has been rumored to be on the bubble, multiple sources said he would be staying in his job.

He’ll continue to be aided by Angela Courtin, SVP of marketing, who is well-regarded.

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The same is true of the other major question mark, co-founder Tom Anderson (pictured here), who has held the president title at the company and was in charge of its products.

Anderson does not have a new title yet and will no longer be in a key operational role, but many sources said his historical knowledge and his tight relationship with the MySpace community make it important that he remain at the company.

“Tom is clearly in touch with what has made MySpace special,” said one source. “And it is important that he remain to keep the culture alive.”

Also staying for now is Tom Andrus, who has been SVP of product management under Anderson and is now reporting to Hirschhorn. While initially upset by being supplanted so quickly by new execs, most sources told me that he is a solid and well-liked exec.

The same is said of Jason Oberfest, SVP of business development, who is also staying. So too, CTO Aber Whitcomb, whom many thought would be leaving.

The only major exec departure I could confirm was Fox Interactive Media CFO Ed McKenna, who was in charge of MySpace too. Sources said will be leaving the company as his function gets consolidated into higher corporate units at News Corp.

PRODUCT REHAUL

Lastly, most noted that MySpace cannot cut its way back to health, which is why sources said its execs are now beginning to engage in a major overhaul of the product itself.

While leadership had considered bringing in a separate new skunkworks-type team to do that, it has been decided that the current staff–helped by some outside consultants–will be doing a top-to-bottom redo of MySpace.

MySpace could use it. As you can see from the charts below from a poll that we did for the seventh D: All Things Digital conference recently–and where Walt Mossberg and I interviewed Van Natta and Miller onstage (see the highlights video below)–it has a lot to fix, including reengaging users, improving technology and differentiating itself from Facebook.

And, in fact, carving itself out as a different product than Facebook is one major aim because the offerings–while both are social networks–are quite different in approach. Facebook has evolved into more of a utility, while MySpace has made better inroads as an entertainment hub.

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Whatever changes are made, most sources note that MySpace needs to try to remain true to its original frisky and fun start-up core, while innovating a next-generation product and continuing to goose its advertising business.

That also includes starting up renegotiations with Google (GOOG) about its search-advertising partnership, talks that are just getting started now (more on that soon).

Most of all, said one person, pointing to the long and painfully public struggle at Yahoo (YHOO), leadership has to stop the focus on MySpace being broken as soon as possible.

“MySpace needed to be shaken up, but it is still a very powerful brand and has huge traffic,” said the source. “Its management has to project a sense inside and outside that it is not only fixable, but also can lead again.”

As with Yahoo, Time Warner (TWX) online unit AOL and many others before it, that’s no easy task for MySpace, starting today.

In any case, here’s the highlights video of the Miller/Van Natta interview at D7:

And here are three not-so-upbeat poll charts about MySpace and how users think about it (click on them to make them larger):

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The center of gravity at the university appears to have shifted. The school now looks like a giant tech incubator with a football team.

— Nicholas Thompson, in a New Yorker article entitled, “The End of Stanford?”