Myspace announced last night that it was cutting around 500 jobs, nearly half its staff, in a move seen as potentially setting the stage for a sale of the social network owned by Rupert Murdoch's News Corp.
'Today's tough but necessary changes were taken in order to provide the company with a clear path for sustained growth and profitability,' Myspace chief executive Mike Jones said in a statement.
News Corp bought Myspace for $580m in 2005 but it has been overtaken in recent years by Facebook, which has grown to more than 500 million members while Myspace's numbers have dwindled.
In November, News Corp president and chief operating officer Chase Carey said the losses at the social network were 'unsustainable'.
With tens of millions of users, Carey said Myspace still had the potential to be 'an exciting business for us', but needed to be brought to a sustainable level.
The Myspace CEO said the company would be entering into partnerships in Australia, Britain and Germany to manage advertising sales and content.
In Britain, Mr Jones said, Myspace would partner with Fox Networks, another property of Murdoch's News Corp, he said, while details about Australia and Germany were being finalised.
He said an October redesign of Myspace, which has been fashioning itself as more of a hub for music, had resulted in more than 3.3 million new profiles being created on the site. Mr Jones said mobile users of Myspace rose 4% between November and December and now total more than 22 million.
News Corp does not release figures for Myspace but the 'other' category in its most recent quarterly financial statement showed a loss of $156m. Facebook, meanwhile, earned an estimated $400m on revenue of $2 billion last year.
