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Behind MySpace cutbacks, a quandary over online ads

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If social-media websites are all about sharing, the social-media industry is all about winner-take-all.

Today's winner is Facebook. Tomorrow, maybe Twitter. MySpace, which once dominated the industry, announced Tuesday that it was laying off nearly 30 percent of its workforce – about 420 people.

“Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company,” MySpace CEO Owen Van Natta said in a memo to staff.

Left unsaid was the huge problem facing all media: The diffusion of ad revenue among so many technological platforms and channels that it's hard for any media business to sustain itself.

MySpace's dilemma

If anybody was poised to succeed in this digital melee, it should have been MySpace. Last year, it made some $585 million in US ad revenues, by one estimate, far more than Facebook's estimated $210 million.

But MySpace's ads have been turning off subscribers. The Conference Board reported Tuesday that Facebook is used by in 78 percent of online households, while MySpace has only 42 percent,


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