MySpace finally rolls out music service

[Bogan]

THE world's largest social networking site, MySpace, has unveiled a long-expected joint venture with all four major music companies in a bid to compete with Apple's market-leading iTunes store.

MySpace Music is designed to win fans with a mix of unlimited free music, comprehensive music catalogues, concert tickets, merchandising and other entertainment features.

However the new service is currently only available in the US, MySpace Australia business development manager Nick Love said in a statement.

"It is a phased global launch and at this time MySpace Music are not committing to any specific dates for roll out outside of the US," he said.

"As with any global new product launch, the team at MySpace Music want to ensure we have the right local partners, market environment and ecosystem in place to ensure success, therefore beginning in the US and rolling out globally from there.

"MySpace Music are currently in talks with the music industry in the Australian market.

The new service was announced as fresh figures from industry tracker Hitwise showed US social networking traffic to MySpace had slipped to 67.5 per cent, down from 75 per cent in August last year, while Facebook's figures had doubled to 20.5 per cent.
Label mates

The launch of MySpace Music had been dogged by speculation on the start date and the ongoing search for a chief executive.

But the biggest challenge for the new venture was signing a deal with the fourth-largest music company EMI Music, which had held out until just hours before the announcement of the service's launch.

MySpace Music also signed late licensing deals with The Orchard, a large distributor of independent music from hundreds of small labels and music publisher Sony/ATV, a joint venture between Sony and pop star Michael Jackson.

In April, MySpace confirmed it agreed to create a joint venture with Vivendi's Universal Music Group, Sony BMG Music Entertainment and Warner Music Group

The majors agreed to take small equity stakes in the new business at a ratio which approximately reflects their respective market shares. This would mean Universal would have the largest stake and EMI the smallest.

The labels, who are struggling with shrinking recorded-music sales, are keen to benefit from the overall diversified revenues of MySpace Music — making money from premium advertising, music download sales via Amazon.com, ringtones and eventually concert tickets and merchandising.

MySpace itself is driving premium advertising through its service by understanding users' interests and has signed major advertising deals with McDonald's and Toyota.

"We see ourselves as a social port where we filter information based on what's of interest to you," MySpace chief operating officer Amit Kapur said.
Apple dominance

The music industry has become frustrated with the dominance of Apple in the music business through both iTunes and popular iPod music player.

Music executives have said the refusal of iTunes to agree to variable pricing, rather than pricing every song at a fixed rate ($1.79) or selling all albums as individual songs, has harmed sales and their bottom line.

One executive, who spoke on condition of anonymity, said the labels will try strategies such as giving exclusive album releases first to MySpace to help support the new service in which they now all have a vested interest in helping to succeed.

"MySpace Music gives fans a reason to buy music on somewhere other than iTunes," said the executive.

"iTunes is a very static proposition and doesn't aid discovery of new music like a MySpace community."

Since its beginning, music has been one of the strongest attractions of MySpace, particularly for up and coming artists. In the last few years, major name artists have also taken to promoting their songs and albums through the site's artist pages.

But until the creation of MySpace Music, there had been few avenues for artists to sell their songs or other related music services.