Mass Layoffs are signs of Rapidshare's demise

Rapidshare, once one of the world's premier file hosting and sharing websites has just laid off 45 of the company's 60 employees according to the Swiss news portal 20min. The company, once the epitome of file hosting on the Web is facing hard times after it changed its business model dramatically in the past year.

The company switched to a file owner paid hosting model back in November 2012 which moved it closer to regular web hosting companies. Previously, users who wanted to download files from Rapidshare had to either endure long wait times and slow downloads, or pay for a premium account to remove the limitations and speed things up.

The new model changed this significantly. Users who download files from Rapidshare were now able to do so without wait times or bandwidth caps. File uploaders on the other hand were limited by the new model. First, all of an uploaders files were capped at a specific transfer threshold per day that blocked further downloads for everyone but the uploader and contacts of the uploader until it reset.

Second, it impacted the third party industry that lived solely from referring new premium account owners to Rapidshare. With that option gone, these services looked elsewhere instead to earn money.

Alexa's traffic reach graph may not be the most accurate one, but it can depict trends with accuracy. As you can see from the screenshot below, Rapidshare's reach dropped significantly after the company made the changes to its business model.

Another move may have fueled the exodus of users from the file hoster. Rapidshare dropped unlimited storage plans back in March giving users no other option to delete excess data (over 250 or 500 Gigabytes depending on the account) or have the data deleted automatically by the company.

Users who paid for unlimited storage were suddenly in a position where they had to delete data even though they subscribed to a plan that said otherwise.

Rapidshare is not closing its doors, according to CEO Kurt Sidler. The mass layoffs are a cost cutting measure to bring the company's financials back on track.

Will it be enough to keep the site from falling apart completely? The next months may provide us with an answer, especially if the site's downturn continues. (via Deskmodder)

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