MySpace shakeup: News Corp.'s morning-after plan

    Founder, CEO DeWolfe is out. What will Murdoch's digital chief Jon Miller do now?

    By Jessi Hempel

    Less than a month after former AOL chief Jonathan Miller joined News Corp to oversee the digital media business, he's cleaning house at MySpace.

    On April 22, Miller and MySpace CEO Chris DeWolfe announced DeWolfe will soon step down from the top job. He will remain on the board of MySpace China for now, and continue on as a strategic advisor.

    MySpace cofounder Tom Anderson, long every user's first "friend" on the site, remains president, but is also in talks with Miller about a new role at the company.

    Though Miller had been considering a management shakeup at the social networking site that Murdoch bought for $580 million in 2005, he had not planned to announce the change for some time.

    (The company had to act fast after a TechCrunch posting forced a flurry of speculation over DeWolfe's departure.)

    Miller is now in a hurry to fill the position and has narrowed down his list of candidates. The assumption is that the job will go to former Facebook operating chief Owen Van Natta, but an official announcement has not been made.

    One thing's for sure: the company's next CEO will have a great challenge. The site is off to a rough year. The number of U.S. visitors has dropped off to just 70 million in March after hovering around 75 million for the last seven months. Top talent like former chief operating officer Amit Kapur is leaving the company. And like other media companies, MySpace is feeling the effects of the slowing economy.

    This all comes after a disappointing 2008, in which analysts estimate MySpace posted revenue of about $600 million -- far short of the $1 billion target set by its parent company.

    MySpace seems to be falling behind Facebook in the all-important race to sign up new users. Facebook now has more than 61 million U.S. visitors, up 70% from a year ago, according to ComScore. And internationally, the site has leapt ahead with 296 million visitors to MySpace's 126 million in March, according to Comscore measurements.

    But Miller and News Corp. (NWS, Fortune 500) know the battle to be the top social networking site is not won. MySpace has a great deal going for it. Its loyal fan base spends a whopping 266 minutes a month on the site, according to Comscore, more time than on any other social network.

    And MySpace is the only social network so far to come up with a business model that squeezes substantial revenue out of the site. It now falls to Miller to figure out how to jumpstart growth and make MySpace popular again.