MySpace lays off 500 employees. Is the race against Facebook lost forever?

MySpace, the site that helped launch the social media revolution, today announced that it would cut nearly half its staff in an effort to make MySpace profitable again. According to the Associated Press, nearly 500 employees in all will be let go – this on top of the 420 employees terminated in June of 2009. MySpace CEO Mike Jones said in a statement that the cuts were "tough but necessary."

"My belief is that MySpace got very, very diverse in its offering, and didn't really have a specialized service that users understood," Jones said in an interview with Fortune magazine late last year. "As we broadened our service over time, I think we lost some of the core strategic functions that MySpace offered early on that delighted its customers."

The AP notes that MySpace, which was purchased in 2005 by Rupert Murdoch's News Corp. for $580 million, "has been losing money consistently." Meanwhile, as Facebook membership swells past the 500 million mark, MySpace has struggled to remain relevant among users. (In the Fortune interview, Jones put the number of "regular" MySpace users at 130 million – not bad, but not good either, especially compared to Facebook.)

Last February, social media guru Owen Van Natta stepped down as MySpace exec; in 2010, Jones took over. Van Natta's departure was seen at the time as reflective of internal turmoil at the ailing social network. But Jones has apparently been unable to right the MySpace ship, although he told Fortune that he sees at least one area where MySpace remains king.

"The music component of MySpace remains very, very strong, and the music origins of MySpace are definitely part of what drove MySpace into its current strategy of social entertainment," he said.