MySpace, 3 major record companies to launch music service

Friday, April 4, 2008

LOS ANGELES -- MySpace, which has lured millions of big acts and garage bands alike to build profiles on the popular social networking hub to attract fans, said Thursday it will turn those pages into portals for selling music, merchandise and more.

Helping back the new MySpace Music are three of the biggest recording companies: Vivendi SA's Universal Music Group, Sony BMG Music Entertainment and Warner Music Group Corp.

Financial terms of the partnership were not disclosed, but each of the music companies will receive an unspecified equity stake in the new company, said Chris DeWolfe, MySpace co-founder and chief executive.

The fourth-largest music company, EMI Group PLC, is not part of the deal.

DeWolfe said MySpace is in licensing talks with "everyone" but declined to say where discussions stand with EMI, home to artists such as Coldplay and Norah Jones.

MySpace Music, which will roll out gradually in coming months, will enable artists to sell music downloads, concert tickets and merchandise such as T-shirts through their profile pages and to offer ringtones through a unit of MySpace parent News Corp.

"We believe that the Web is becoming increasingly more social," DeWolfe said during a conference call. "MySpace Music is a new way of experiencing music online that everyone can participate in."

Facing competition

Fans also will be able stream audio and video for free through musical artists' profile pages.

DeWolfe said some tracks will be sold without copy-protection safeguards but noted that the major labels had committed only to experimenting with offering content in an unrestricted format.

Selling music without the copy protections that make such tracks incompatible with Apple Inc.'s iPod music players could place MySpace Music in direct competition with existing digital music stores such as Apple's iTunes, and Napster Inc., analysts said.

"It's definitely got a lot of potential to it, but how much it really changes the game is yet to be determined," said Michael Gartenberg, vice president and research director for JupiterResearch. "This is one of those important events in the history of digital music and it has a lot of potential going forward."

MySpace may also be looking for ways to maintain its lead on rival social network Facebook.

James McQuivey, digital music analyst for Forrester Research, said the venture is wisely aiming to serve as a one-stop portal for music fans.

"A MySpace music store is exactly the right step to get the music industry to the next level because it recognizes that consumers don't just buy music, they experience it ... That's what people do with music already on MySpace, it's what has made Last.FM and so popular so quickly," he said.

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