The restructuring will affect about 500 employees, or 47 percent of the company, across all divisions and regions, Chief Executive Mike Jones said in a statement on Tuesday.
"These changes were purely driven by issues related to our legacy business, and in no way reflect the performance of the new product," Jones said.
Once the top Internet social networking site, MySpace has been eclipsed in recent years by Facebook.
In October, MySpace launched a new version of the website centered around music and entertainment designed for the 35-year-old and under crowd.
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MySpace said on Tuesday it will be entering into "strategic local partnerships" in Britain, Germany and Australia to manage advertising sales and content. In Britain, MySpace will work with Fox Networks, while details about partnerships in Australia and Germany are still being finalized.
