Several months ago, MySpace joined forces with Facebook to allow Facebook users to login to MySpace using Facebook connect. If that wasn’t a white flag, here it is officially: NewsCorp said today that it is exploring “strategic options” for MySpace including a sale, merger or spinoff.

NewsCorp, headed up by Rupert Murdoch, bought MySpace for $580 million in 2005 – around the same time Facebook began to emerge. Now, with Facebook boasting over 500 million users, MySpace is struggling for its last breath – last week MySpace cut 500 employees, nearly 50 percent of its staff.

The  Wall Street Journal, which is owned by NewsCorp, reported on Thursday that MySpace chief executive Mike Jones told employees in a company wide meeting on Wednesday that News Corp. is exploring a sale, merger or spinoff of MySpace.

However, citing a “person familiar with the matter,” the Wall Street Journal said News Corp. is still in the early stages of the process and plans to conduct meetings with potential partners in the near future. (If this doesn’t sound like a discussion amongst close family members about a DNR, I don’t know what does.) The layoffs last week are also indicative off a potential sale, as getting rid of assets such as employees makes it easier to sell the company. It also makes it easier to profit from the sale, as News Corp. president and chief operating officer Chase Carey said the losses at the social network were “unsustainable.” The division of NewsCorp that owns MySpace lost $156 million in the last quarter.

Somehow, though, MySpace still thinks MySpace has a future. Carey said MySpace still “has the potential to be an exciting business for us” but “we need to make real headway in the coming quarters to get this business to a sustainable level.” With the growth of Facebook and smaller, more focused mobile and social applications, MySpace has lacked any sort of use-value in years. If MySpace really is selling, the ship has clearly sunk. If anything is worth salvaging otherwise, MySpace needs to realize it’s not 2003, autoplay on profiles and glitter text is about as cool now as wearing rainbow toe socks ever were, and we would rather be friends with Tom on Facebook.

And if MySpace has a future at all, it will be interesting to see if, and how, they use their rebrand (as “My___”), and what approach MySpace takes with mobile. Music has always been a pinnacle of MySpace; if MySpace doesn’t fizzle entirely, this may very well be their saving grace.

What do you think? Does MySpace still have any life left? Do you even still use MySpace?