Music Biz: MySpace Music

by Howie Cockrill

The music industry is all abuzz over the long-awaited announcement from MySpace executives that the social-networking behemoth is moving forward with extensive, formal integration of music into the website. 

MySpace’s initial focus as of the April 3rd launch is on bringing in major label content. 

MySpace has officially partnered with three of the four majors – Sony BMG, Universal and Warner.  EMI is expected to join up soon, with delays being attributed to recent management restructuring.

MySpace members have been incorporating music into their profiles for some time, but until recently the functionality and aesthetic have been relatively unsophisticated – limited mostly to links to favorite bands and streamed songs from independent artists. 

A couple of years ago, MySpace and the major record labels began dating publicly in a budding relationship with significant rocky patches. 

Label interest was cautious and tepid at best, and only Warner Music, with its insistence on DRM, participated in the since-failed SnoCap MyStores download project. 

Things seemed to be looking up last year though, when Sony BMG began allowing free music video streaming in exchange for an advertising revenue split with MySpace. 

Of the four major record labels, MySpace’s relationship with Universal has been the rockiest. 

Back in late 2006, Universal hit MySpace with a copyright infringement lawsuit in which Universal’s attorneys alleged that “Myspace has turned MySpace Videos into a vast virtual warehouse for pirated copies of music videos and songs.”

It is unclear right now how MySpace Music will affect the lawsuit, but at first glance – cooperation and even partnership with MySpace seems like an about-face for Universal.

The new project will be a joint venture based out of Los Angeles and owned by MySpace and the major labels.  Because Universal is an equity-holder in the venture, it seems unlikely that Universal would move ahead with a lawsuit that would bleed its new business partner.

The new MySpace Music will enable the estimated 100 million active members of the site to take their music fanaticism to a whole new level. 

Users will now be able to stream ad-supported major label artist audio and video content and create personalized storefronts for their favorite bands where others can buy DRM-free downloads, ringtones, wallpaper images, concert tickets and physical merchandise.

Fans are not the only ones to get special attention in this deal.  The new service is expected to build upon the already-existing sponsorship opportunities for MySpace live and webcasted events. 

In addition to fans and sponsors, MySpace Music will no doubt reinvigorate the social network that is already home to an estimated 5 million independent artists. 

Though it has not been formally announced yet, once MySpace has solidified its relationship with the majors, it is only a matter of time until independent labels and digital content aggregators are brought into the fold.

With such broad industry participation, MySpace Music will be fertile soil for advertisers.  MySpace is already awash in advertising dollars, reportedly bringing in $500 million in revenue last year.  It seems likely that 2008 and 2009 will see that number grow. 

MySpace CEO Chris DeWolfe has indicated that the roll-out of these services will occur over the next few months, with a target for full integration by this summer.

Comments

This is a blatant attempt on the part of the labels to raid what was ostensibly a home for independent artists, but it shows how desperate they are to maintain their declining market power. And the fact that MySpace is willing to let them raid their user base shows that MySpace is not really serious about the independent market. So where does that leave the artists on MySpace, who will now have to cut through even more distractions as the majors spam and shill their artists all over the site? It's looking bad for MySpace, in my opinion. Whether this is a competitor for iTunes or not is not the point. It's understood that the labels don't like Apple's deal, they're greedy and want to charge more money for their subpar product. That's normal for them. What matters is that this changes nothing for the artists or the fans, and it may even be worse for both.