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Amid economic woes, stagnant growth, and a management shakeup, onetime social-networking pioneer MySpace has announced that it has cut its head count by slightly under 30 percent in what the company calls a "return to start-up culture." Well, that's a nice way to put it.

Reports had circulated that MySpace would be laying off nearly half its employees in a move that had delayed its relocation to a bigger office space in the Los Angeles area. With the layoffs, MySpace's full-time U.S. employee roster will be down to 1,000 people--which means somewhere just south of 500 jobs were cut.

MySpace said that the layoffs are evenly distributed across all U.S. divisions of the company. Since MySpace also operates a number of offices overseas, it's not yet clear how they were affected (if at all), and representatives declined comment as to whether international offices would be affected down the road. CNET News has heard rumors that there may be consolidation in some of MySpace's European offices, something that the company did late last year when it merged its Amsterdam and Berlin offices.

"Today the domestic restructure is the only info we can share," a MySpace representative said in a phone call Tuesday.

Owen Van Natta, CEO of the News Corp.-owned social site, said in a release: "Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company. I understand that these changes are painful for many. They are also necessary for the long-term health and culture of MySpace. Our intent is to return to an environment of innovation that is centered on our user and our product."

Van Natta, the former chief operating officer at Facebook, was hired as CEO of MySpace late in April after a short stint at the head of start-up Project Playlist. Former CEO Chris DeWolfe had stepped down earlier that month, reportedly at the behest of Jonathan Miller, the new digital czar at News Corp. Executive shakeups at MySpace had been happening sporadically for nearly a year at that point.

MySpace's new executive lineup gives it solid entertainment street cred: Van Natta was joined by former MTV digital exec Jason Hirschhorn and former AOLer Michael Jones. Late last year, another MTV digital-media executive, Courtney Holt, joined MySpace as the head of its new MySpace Music division.

A source with knowledge of the situation said that senior management was spared Tuesday's cuts.

Launching MySpace Music, which focuses on free streaming music supported by advertising, was a return to the company's roots: once a hub for indie band promotion and community, MySpace had grown massive before Facebook began to catch up to it in international and then U.S. traffic. Partnerships with the likes of Google and a prominent endorsement of the OpenSocial developer initiative didn't help it regain traction as a networking destination.

Holt told CNET News in March that MySpace Music's traffic was "huge." But record label executives--who are partners in the MySpace Music joint venture--reported dissatisfaction with the revenue it was generating.

Last update at 11:56 a.m. PT.

Yahoo is closing its GeoCities personal home page service, and with it will go an era of self-expression on the Web that's largely been replaced by social networks and blogs.

GeoCities rose to power during an era when publishing on the Internet meant setting up your own Web site. GeoCities simplified the process by helping people sidestep the complications of registering a domain and learning how to program HTML, the language that describes Web pages.

Yahoo is closing it GeoCities site this year.

(Credit: Screenshot by Stephen Shankland/CNET)

Yahoo bought GeoCities for more than $2.9 billion in dot-com-priced stock in 1999, when GeoCities had more than 1.1 million users. However, while the idea of having a personal presence on the Internet has caught on, GeoCities turned out to be a backwater, not the mainstream.

"We will be closing GeoCities later this year," Yahoo said in a note on the site. "We'll provide more details about closing GeoCities and how to save your site data this summer."

Goodbye Geocities, hello Facebook
Today, the way people choose to express themselves on the Internet is shifting away from isolated Web pages. Instead they use social-networking sites such as Facebook, with built-in features for creating a profile, staying in touch with contacts, and maintaining at least a little privacy; WordPress, where it's easy to post updates to a blog; or Flickr, where the photographically inclined can meet, share, and comment.

What these services and others including Twitter, YouTube, MySpace, and Blogger possess is a mechanism to notify interested parties of new activity, helping to keep social links pulsing with new information in a way that just can't be replicated by depending on a person to swing by a personal Web site.

That's not to say personal home pages are extinct. Google Sites is still around, and Yola, formerly SynthaSite, bought out search ads related to GeoCities searches on Thursday. But for most folks, it's easier to rely on more sophisticated pre-built services than to roll their own sites.

It's no surprise GeoCities is on the chopping block. Yahoo has its hands full trying to integrate its successful properties with the socially active parts of the Internet. The company hardly has resources to spare on last decade's trend.

Part of GeoCities' closure is related to Yahoo's circumstances. The company already was under financial pressure before the recession arrived in full force, but now things are even tighter, and new Chief Executive Carol Bartz is focusing on the company's core, successful properties--laying off about 675 employees in areas that don't pass muster.

GeoCities' vanishing sites?
Still unclear is what exactly will become of GeoCities pages. New sign-ups are already no longer permitted, but what about existing sites?

Here's how Yahoo put it: "You can continue to enjoy your Web site and GeoCities services until later this year. You don't need to change a thing right now--we just wanted you to let you know about the closure as soon as possible. We'll provide more details about closing GeoCities and how to save your site data this summer, and we will update the help center with more details at that time."

That leaves open the possibility that Yahoo will make it possible to move a site to another service, as it did when shutting down Yahoo Photos, but in the current climate, it's probably best not to expect such a graceful transition option. Yahoo wouldn't comment on its plans.

Another option is to upgrade to a separate paid Yahoo service: "You don't need to change your service today, but we encourage anyone interested in a full-featured Web hosting plan to consider upgrading to our award-winning Yahoo Web Hosting service."

But given how many GeoCities users weren't technical experts, it seems likely that a lot of amateur Web sites soon will vanish without a trace, a casualty of business priorities and the Internet's rapid changes.

In December, Yahoo all but killed its Jumpcut online video site by disabling new uploads and telling users to head to Flickr. Now the company said it's closing the site altogether in two months.

"After careful consideration, we will be officially closing the Jumpcut.com site on June 15, 2009," a note on the site says. "This was a difficult decision to make, but it's part of the ongoing prioritization efforts at Yahoo."

The closure is no surprise. Yahoo, with its own financial issues compounded by the recession, is under pressure to cut expenses. It's getting a $120 million infusion by selling its stake in South Korean e-commerce company Gmarket and could announce a new round of layoffs when it reports first-quarter financial results Tuesday.

Jumpcut let people upload and share videos, but also combine them into larger works. This option is still available for existing videos, but people's remixed videos can't be downloaded.

In December, Yahoo had said it would keep the site available "for the foreseeable future." Now it's telling people they'll have to retrieve their videos if they want to keep them.

"Very soon, we'll be releasing a software utility that will allow you to download the movies you created on Jumpcut to your computer. We'll send instructions to the email address on your Jumpcut account when the download utility is available," the company said.

Via All Things D

Everybody's playing the Facebook valuation game again, in light of persistent reports that the social network is in need of more cash to fuel its rapid and expensive global expansion.

The rumors aren't too surprising. Given the recession and the tough advertising climate, the numbers getting tossed around are some of the lowest we've seen recently.

Currently circulating: Facebook CEO Mark Zuckerberg rejected a fresh round of funding that would have valued the company at $4 billion. Another: one potential investor submitted a term sheet for a valuation in the neighborhood of $2 billion.

What we've heard: Facebook stock trades privately at between a $2 billion and $3 billion valuation. That's consistent with the numbers that everybody else is tossing around. And we've known for a while that when the ConnectU vs. Facebook legal spat was settled, Facebook valued itself around $3.7 billion.

What's new this time around is that reports indicate Zuckerberg is extremely adamant about rejecting investment cash at a valuation he considers too low. When Facebook took a $240 million stake from Microsoft in November 2007, the investment was at a $15 billion valuation. Since then, it's become clear that it was a preferred-stock deal and that Facebook's true valuation has never been that high. But from what it sounds like, Zuckerberg would like it to get up there.

It was long before the massive Microsoft stake, after all, that Yahoo offered to buy the social network for $1 billion. Considering how much Facebook has grown since then--not to mention the new investments--the valuation shouldn't be only two or three times that.

"As a matter of policy, we don't comment on financial matters such as company valuation," a Facebook representative told CNET News in an e-mail.

This post was updated at 8:41 a.m. PT.

Amid stormy economic seas, auction giant eBay has thrown overboard StumbleUpon, the recommendation and "discovery" start-up that it purchased in 2007 for approximately $75 million.

Replacing corny nautical puns with corny alcohol puns, this looks like a symptom of the hangover that followed eBay's acquisition binge during Web 2.0's heyday. Even though many speculated that eBay would use StumbleUpon's technology to power product recommendations, the two companies just didn't find a fit--or a way to make a decent return. eBay's acquisition habits have been more vocally criticized when it comes to Skype, the online telephony start-up that was acquired for $2.6 billion in 2005. It's a well-received product, but never had an obvious niche within eBay and observers have long speculated it would do better on its own.

Financial terms of the StumbleUpon spinoff were not disclosed, but it appears that the company was sold back to the two founders, Garrett Camp (who will serve as CEO) and Geoff Smith, and investors Accel Partners, August Capital, and Ram Shriram of Sherpalo Ventures.

"We are grateful to eBay for its guidance. However, we realized there were few long-term synergies between the two businesses. It is best for us to part ways and focus on our respective strengths," Camp said in a statement. "This change makes it possible for StumbleUpon to continue to innovate and focus on becoming the Web's largest recommendation service."

Last fall, a rumor spread that eBay had hired investment bank Deutsche Bank to help find a buyer for StumbleUpon.

The big question now: Will it do the same with Skype?

Where are the crowds? The Moscone Center was noticeably quieter this year at the Web 2.0 Expo.

(Credit: Evan Bartlett)

SAN FRANCISCO--Stepping off an otherwise quiet street and through the door of the downtown restaurant Roe on Thursday night was, at first, like a foray into a secret fantasy world where no market crash or economic recession had ever happened.

It was the launch party for Yola.com, a rebranded Web publishing platform formerly known as SynthaSite, in conjunction with this week's Web 2.0 Expo down the street at the Moscone convention center. There was an open bar, of course: The signature cocktail was a kir royale, a blend of champagne and blackcurrant liqueur, so champagne flutes were the drinkware of choice in the darkened room. The music was loud. Yola's logo was everywhere--projected on the wall, on T-shirts handed out at the door, on stickers scattered across the bar for the taking.

Yet if you surveyed the scene, there were signs of conscious frugality. The guest list was tight and the party was kept small, with only the ground floor of the two-story Roe booked; the open bar eventually ended, and the kir royales stopped flowing. While Yola was a "silver" sponsor of the conference, the event had not been heavily publicized. The same applied to many of the other scattered parties at the convention. If you knew the details, you could slip into a fun and relatively low-key affair that might even have free drinks and snacks. It was all about doing a bit of digging.

With a "doing more with less" theme, change was in the air at the whole Web 2.0 Expo: This edition of the biannual confab, co-presented by O'Reilly Media and TechWeb, felt like the recession had scooped a hole out of it with a spork. Attendance rates were slightly down, and even though conference representatives said more than 8,000 people came, the halls of The Moscone Center were noticeably quieter than in years past. Yet this is still a must-attend for the majority of the industry. Exhibitors from big tech companies like Microsoft and Adobe, courting developer talent to populate their various platforms and services, said that this is the best way to reach the biggest audience.

And here's what that audience was hearing: that with the harrowing financial climate, there is opportunity in casting off centuries' worth of old institutions that now only serve to hamper innovation.

"The current global financial crisis is the Web's fault," author Douglas Rushkoff said in his Wednesday keynote. "It's a good thing, and...it's really the arresting of a 400- to 500-year process from which value has been extracted from people and companies unfairly and unproductively."

"Six hundred thousand jobs were lost last month, and we've got to believe that the Internet has something to do with the massive restructuring, reorganization, and revitalization of what is our future," Meetup founder Scott Heiferman said in a talk on Friday morning. "They say that a crisis is a terrible thing to waste, so there is this opportunity for us to turn our backs to the screen, to turn our backs to a centralized 20th-century culture where we are dependent on these bloated banks and insurance companies."

That's so last century
The irony lies in the fact that with so many talks at the expo fixed on the opportunities presented by financial difficulties, and the final death knells of the 20th-century way of doing things, the convention itself was still an old-school trade show. The expo floor was full (though not as full as last year) of colorful booths and talkative PR representatives, the panel lineup still packed with the usual marketing and programming buzzwords--ROI, SEO, PHP, RSS--and the art of the business card swap still paramount.

"There's just not a whole lot that's cool this year," one disappointed attendee told me. Another said he'd found that after last month's South by Southwest Interactive Festival in Austin, Texas, there was something stale about the Web 2.0 Expo, even though it was much healthier than many had anticipated. Maybe it's time for a reboot.

You see, if you got past the surface, did a little digging--just like with the after-hours scene--there were some noteworthy talks at Web 2.0 Expo. There was a seminar about just how much you need to know about wine in order to impress business associates, a crash course from Digg's director of business development for old-media types who want to capitalize on the social news craze, and a session about marketing insights from the creator of the Burger King "Whopper Sacrifice" Facebook app. Keynote speakers like John Maeda, president of the Rhode Island School of Design, and the founders of indie T-shirt sensation Threadless, weren't exactly the sorts of conference highlights you'd expect.

In those talks, the lack of banter about monetization and user engagement was refreshing. The T-shirt clad Threadless guys, for example, didn't really seem to be in their element sitting on couches onstage for a keynote "conversation" in front of an auditorium of laptop-wielding conference-goers in uncomfortable chairs. They were 21st century dot-com heroes in a setting that some of the expo's out-with-the-old speakers would likely have characterized as so last century.

One of the biggest and most promising highlights of the conference was the after-hours Ignite offshoot, the latest in a series of wacky geek-culture seminars presented by O'Reilly and spearheaded by Web 2.0 organizer Brady Forrest. Seven hundred people packed into a nearby nightclub for a set of decidedly unorthodox presentations: a mandated number of PowerPoint slides, set on an automatic timer, so that no one could veer off topic or go over time. Ignite events are held all over the world and have quite a cult following; with presentations like "Mr. Hacker Goes To Washington" and "Demystifying Weird Japanese Toys and Tools," it wasn't your typical Web 2.0 Expo material.

Conference representatives seem to think that the conference format still has life in it. "The expo itself is not going to change. I think the content changes from year to year based on what the trends are like and what the market looks like," TechWeb community manager Janetti Chon told CNET News. "We try to be the conference that appeals to all Web enthusiasts...of course the conference will evolve as the market and industry evolve." She does have a point. Web 2.0 Expo is so big and far-reaching that putting any kind of new spin on it would risk alienating some sector of attendees.

Tim O'Reilly, founder of O'Reilly Media, said in his address to the expo on Wednesday that the term "Web 2.0" was "never intended to be a version number." But maybe it should've been. With all this talk, finally, about putting old institutions to rest, maybe the digerati should consider taking the plunge and making our industry gatherings something truly new. If we're going to talk about a fresh start, there are a lot of things that can be done to make our events reflect it.

From what it sounds like, many of us are ready for it.

Douglas Rushkoff at Web 2.0 Expo 2009

(Credit: James Martin/CNET)

SAN FRANCISCO--A conference about Silicon Valley innovation invariably will feature at least one talk about how the old order of American business is hopelessly broken and needs a tech-savvy recharge. At this year's Web 2.0 Expo here, it was author Douglas Rushkoff's "How the Web Ate The Economy, And Why This Is Good For Everyone."

It was a tantalizing title. But most of Rushkoff's talk wasn't about the Web or how it can help steer the world out of a global financial crisis. He focused instead on how the idea of "currency" as we know it, not to mention the notion of the "corporation," is profoundly archaic and that with the market meltdown, we have a golden opportunity to get rid of them altogether.

"We can make pretty much everything great," said Rushkoff, whose book "Life Inc." is coming out in early June, "and if we don't, they will recover and make us miserable for another few centuries."

Corporations and monetary systems, he said, are vestiges of the late Middle Ages when kings and aristocrats were struggling to exert some kind of authority over the fast-rising mercantile class and to rein in independent currencies before they became too powerful. "It was against the law to create value through one another. You had to do it through a corporation," Rushkoff explained. "That was what corporations were for. Centralized currency came up because most towns in late Middle Ages Europe had their own currencies...they had so much extra money they built cathedrals."

(Tip: if you want to make something sound really awful and backwards, talk about how it has roots in kings and feudalism.)

Tim O'Reilly speaks at Web 2.0 Expo 2009

(Credit: James Martin/CNET)

SAN FRANCISCO--The floor of the exposition hall at this year's Web 2.0 Expo has been a little bit lethargic, to say the least. "It's a lot emptier than last year," said one representative from a social gaming company that had set up a booth. "I think the 'Web 2.0' thing has become a bit of a stigma."

Indeed, these days the term goes hand-in-hand with broken business models and overblown expectations, as much as it does with innovation. With the economy in shambles, attendance at the semiannual conference is down. The show floor is sparser and the speaker lineup less impressive than in years past, and attendees have had to hunt a little harder to find parties after hours.

But conference czar Tim O'Reilly, founder of O'Reilly Media (which co-organized the conference along with TechWeb), said that "Web 2.0" is more relevant than ever.

"Web 2.0 was never intended to be a version number," O'Reilly said in his keynote address on Wednesday afternoon. "It was really a reflection of what happened after the dot-com bust."

Now, he said, the Web is maturing and getting smarter. "The baby that we built with technology is growing up and starting to go to work," he said, mentioning examples like energy metering aggregator AMEE, the Google search application that predicted where the flu would hit next, and iPhone apps that derive search results from voice recognition.

At last spring's Web 2.0 Expo, the market crash was still months off, but the early signs were starting to creep in: venture funding was harder to come by, company launches were growing less frequent, and it was starting to become evident that some of the most-buzzed names in Silicon Valley hadn't produced solid business models yet. Then, O'Reilly's address exhorted the audience to push beyond the Web's trendiest hype machines and start thinking about how to change the world. But now that the rest of the world is searching for answers, he explained, it's time to put that thought to work.

"We thought because of the downturn, because all of us are faced with the idea that maybe those ideas of perpetual increase were going to be a problem, that we might have to do more with less," O'Reilly said. "Maybe there's actually power in less, and that's one of the lessons of the Web...In technology we have this wonderful power of less where we get more for the same amount, and I think we need to start thinking about how we apply Moore's Law to the world's problems."

This year, the power of technological innovation to reach far beyond the Web has already been justified in the election of Barack Obama, which used consumer-grade Web technologies like Facebook, Twitter, and YouTube as powerful communication and organization tools: "The way that he used technology to transform politics, the way that he harnessed his audience to do something that was profoundly world-shaping," O'Reilly said on Wednesday. "History's on a different course because of somebody understanding how to apply technology more effectively in a new realm."

The most important part, he concluded, is that it's crucial to keep up that Silicon Valley attitude of positive change for the greater good as it brings its business principles to the rest of the world. Getting too self-serving was what ultimately caused the market collapse this fall, he said. The tech industry has its egos, too, and that's what got us all into trouble the last time around.

"There were a whole lot of people (in the finance industry) who said, 'Wow, I can get a lot for myself here, and the financial system is really a tale of how collective intelligence can go awry. Because, of course, our financial system is also networked collective intelligence and yet it was somehow hijacked by the spammers, the Ponzi schemers, and the people who thought, 'I want to get something for me.'"

"We know what happened," O'Reilly said, showing a slide of the now-famous Twitter outage graphic of a flock of birds attempting to lift a whale above water. "That's the fail whale."

A while back we predicted that Facebook founder Mark Zuckerberg was in danger of losing his title as the world's youngest billionaire due to the maddening ascent of teen diva Miley Cyrus. But, Forbes magazine says, Mark Zuckerberg, who's just shy of his 25th birthday, has indeed lost his title as the world's youngest billionaire--simply because he's not a billionaire anymore.

He's still fabulously wealthy, obviously, and clearly stands a chance of making it back onto the list. But his fortune is tied closely to Facebook's valuation, and with the worldwide recession in effect, that valuation has only gone down. The company still relies on advertising revenue, which has been hit hard by the market collapse. Forbes hasn't released a figure as to what they guess Zuckerberg's actual worth might be.

Even worse for poor Zuck: He's been replaced by a guy with the worst sideburns I've ever seen. The title of world's youngest billionaire has returned to Prince Albert von Thurn und Taxis, a 25-year-old German worth $2.1 billion, whose facial hair could only be at home in a 19th-century imperial army or a divey hipster music venue.

Kind of makes you appreciate Zuckerberg's trademark North Face fleeces and Adidas sandals.