News Corp has announced further restructuring at MySpace, whose staff will get cut by almost 30 percent.
MySpace's staff is "bloated" considering the "realities of today's marketplace", which prevents it from operating with efficiency and innovation, MySpace said.
The layoffs will affect all US divisions and will leave MySpace with about 1,000 employees in the country.
Once the undisputed champion of social networks, MySpace has seen its growth stagnate over the past year, while Facebook surpassed it to become the most popular social-networking site in the world.
In April, News Corp announced that Chris DeWolfe would hand over his CEO title at MySpace and that president Tom Anderson was in discussions to take on "a new role".
Soon after, News Corp announced it had picked former Facebook executive Owen Van Natta as DeWolfe's replacement.
Van Natta, a former Facebook chief revenue officer and vice president of operations, reports directly to Jonathan Miller, the former AOL CEO who also came on board in April as News Corp's CEO of digital media and chief digital officer.
In March 2008, the Fox Interactive Media sites, including MySpace, had 88.3 million US unique visitors, a figure that dropped to 85.1 million in March of this year, according to comScore. In that same time period, Facebook's US unique visitors grew from 36 million to 61.2 million.
Globally, Facebook sped past MySpace last year, according to Nielsen Online. Facebook recently announced it had reached 200 million monthly users. MySpace has 130 million "passionate followers" worldwide, according to News Corp.
Between December 2007 and December 2008, time spent by users on Facebook exploded by 566 percent, from 3.1 billion minutes to 20.5 billion minutes, Nielsen Online said in a report released in March. With this user engagement, Facebook had the highest average time per person - 3 hours and 10 minutes - of the 75 most popular online brands worldwide, according to Nielsen Online.
Experts attribute Facebook's popularity rise to several factors, including its appeal to a broader scope of people thanks to what many perceive as a more organised and controlled environment. For example, most Facebook members use their real names, which isn't the case with MySpace, and Facebook's layout is more streamlined and clean.
Facebook also offers very granular privacy controls, giving members many options to fine-tune access to their profiles and data. In addition, Facebook was first out of the gate with opening its site to applications from external developers, a move that has helped to increase its attractiveness to users.
Facebook, MySpace and other advertising-supported social-networking sites have found it more challenging than originally thought to generate revenue that is consistent with their massive user bases. Conventional online ads, like pay-per-click text ads and graphical banner ads, don't work as effectively in social networks. Consequently, social-networking sites are busy trying to design new ad formats that will yield better results for marketers.