Myspace, the once-mighty social networking rival to Facebook, continues its fall from grace as the company recently announced it plans to lay off 500 employees.

By cutting the jobs of 500 workers, Los Angeles based MySpace slashed its workforce by 47 percent. Since 2009, MySpace has cut more than 1,200 jobs. The company, which is owned by News Corp., was once the most active social networking site on the web in the early to mid 2000s.

However, it's since been repeatedly lapped by Facebook, which has been reported to have a $50 billion valuation and 500 million users. By comparison, Myspace has about 130 million users.

Today's tough but necessary changes were taken in order to provide the company with a clear path for sustained growth and profitability. These changes were purely driven by issues related to our legacy business, and in no way reflect the performance of the new product, Myspace chief executive Mike Jones said in a statement.

According to media reports, Myspace maintained the company's developers while eliminating every other position. Other media reports have stated News Corp. is actively looking for buyers for the social media site.

Lou Kerner, social media analyst at Wedbush Securities, says in order to survive Myspace needs to recognize and build upon the various niche opportunities in social media.

Facebook is the dominant player in social media in terms of connecting everyone, that race is over in that regard. However there are other sites that provide other opportunities, Kerner said. LinkedIn is a good site for connecting with your business contacts. Que Pasa is a growing site for Hispanic people to connect. MySpace has tried to become the entertainment favored social network.

While Kerner said he is not sure there is a need for this niche, and MySpace will likely continue to shrink in the meantime. This likely means NewsCorp will likely throw in the towel and sell the asset. This is probably a prelude to that, he said.

Rob Enderle, analyst at the Enderle Group, is unsure where MySpace may find a suitor, though he does say the company could recover. Because it is trending down the perceived value to a buyer and the perceived value of the seller would likely be far apart making closing a deal difficult. Properties like Facebook and Google likely feel they could build the same market share for less than what it would cost them to buy and integrate MySpace, Enderle said.

Myspace did not respond to inquiry for comment.

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