We’ve seen this once before in rumor form; MySpace is essentially on a downward spiral with no end in sight. The company is losing money and users to Facebook, which has become the dominator in the social networking world. In MySpace’s official announcement today, CEO Mike Jones indicated that 47% of the staff of the company will be cut from various positions.

Since late December, these rumors have been floating around the news sites; today the cuts are dramatic with approximately 500 employees losing their jobs.

Mike Jones said in his statement that MySpace will be working to focus more on being an entertainment destination for the Gen Y community. Mike Jones went on to explain that MySpace is streamlining the company and getting rid of what is unneeded.

To try and save itself from the grave, MySpace announced that it will be entering local partnerships around the UK and Australia to help manage advertisement sales and content. Additionally MySpace is hooking up with .Fot (dot-Fox) Networks, to help expand its entertainment base and get more local traffic by going straight to the source. Although these details have not been totally released, we should see more information very soon.

MySpace is acknowledging that Facebook is too big for it to compete with any more; now it has revamped its image to become more of an entertainment hub, going from a place to connect with friends to a central database for online entertainment. MySpace seems to be bouncing back a little with its competition shifted from Facebook.

Mike Jones confirmed this, saying that the new MySpace is picking up and trending positively, and seeing an increase of new users. Mike Jones threw some statistics out and said since the new relaunch, 3.3 million new profiles have been created, with a 4% ride in mobile users — bringing MySpace to a grand total of 22 million still active and newly active users.

With the change in MySpace’s direction, it is out searching for new competition and to show its old users what it is like at the new MySpace.