PaidContent is reporting that imeem is laying off 25 percent of their staff as the economic woes begin to manifest. There’s no word about why they are laying off so many but I can only assume it’s related to the presentations provided by Sequoia VCs a couple weeks ago about how cutting staff early is how to survive through the economic downturn. Those that try to wade through the storm could get crushed.
Not only is the company laying off 25 percent of their staff but PaidContent is also reporting that the company has hired a bank and is trying to sell itself for at least $200 million since that was their latest valuation. The company is one of the largest social networks but according to Compete.com, domestic traffic has decreased around 20 percent since June, 13 percent alone in the last month.
Many have suggested that most social networks will be forced to shut down or get rolled up into other media companies as the top one or two become the dominant players. I think we are beginning to see this happen as Facebook spreads globally. Facebook continues to grow at an impressive rate. No other social network has ever reached as many people as they now have registered: more than 110 million.
It’s most definitely unfortunate for the imeem company as they have faced increasing competition from large social networks with the launch of MySpace music and Facebook’s rumored entry. It will be interesting to see how this story plays out in the next few months.