MySpace isn't doing so great lately. Sure, it's raking in the cash for the time being, but it has fallen way behind Facebook, not to mention Twitter, in buzz and popularity. The fact that Facebook has just recently become the biggest social network in the US isn't helping either. And now the company will apparently fire a "massive" number of employees as part of a bigger layoff campaign in its parent company Fox Interactive Media.

Between 300 and 500 people are expected to be let go, from a total of 1600 at MySpace, the TechCrunch blog, citing multiple sources “close to the company,” reported yesterday. MySpace, expectedly, did not confirm the report but has issued a statement. “Like any company with new leadership, Fox Interactive Media is reviewing every aspect of our operations, performance and structure. It’s no secret that we are looking for ways to improve our products, increase the value of our digital assets, and enhance the overall financial strength of the company,” said a MySpace spokeswoman in the statement.

If the rumors turn out to be true, it would be a clear sign that MySpace realizes it’s losing ground and is taking steps to prevent it. Though how exactly laying off 25 percent or more of your workforce will help you deliver a better product isn't that clear, it should help the social networking site streamline its efforts, or, rather, profits. MySpace has been dropping in traffic and its biggest revenue source, Google, isn't likely to update the deal the two companies had.

MySpace has previously had several rounds of layoffs, 5 percent last summer and a further 45 employees last month. The service is part of Fox Interactive Media, which in turn is News Corp's online division. News Corp has replaced its CEO of Digital Media recently and has also restructured other parts of the management team. These are all part of the cost-cutting measures that should help MySpace better deal with the loss of the Google revenue and the drop in popularity.