Myspace in deal with "at least three major music companies" (including
universal) will launch "within 5 days"
MySpace Music to launch in days, sources say
3:23 PM PDT, April 2, 2008
NEW YORK -- News Corp.'s MySpace, the largest online social networking
site, will unveil a music joint venture with at least three major music
companies within 5 days, sources familiar with the matter said.
Called MySpace Music, the service will be integrated with popular teen
hangout MySpace.com and is being touted as a rival to Apple Inc's iTunes
online music store. It will offer music streaming, MP3 downloads,
concert tickets, ringtones and merchandise, the sources said.
News Corp, Sony BMG Music Entertainment, Vivendi's
Universal Music Group and Warner Music Group Corp. will each have a
stake in the venture, the sources said. It is not clear if EMI Group,
the fourth-largest music label, will be involved.
"It's really creating a robust monetization component to MySpace and
having a focused music effort that could be the MTV of a new
generation," said a music industry executive who asked not to be
identified before the deal is formally announced.
MySpace is already one of the biggest promoters of music on the Web,
with more than 68.6 million unique visitors in the United States in
January, according to data from comScore.
Music companies believe a large part of the site's success has been
driven by their artists' music, which fans upload and add to their
"If you give people content they want and you make it easy to use and
share, they won't even know they're in a commercial environment," said
Forrester analyst James McQuivey.
The music companies have been in talks with MySpace for several weeks,
but a key obstacle is a 2006 copyright lawsuit filed by Universal Music
against MySpace. One of the sources familiar with talks said progress
was being made and the suit could be settled in time for the
It was not clear when MySpace Music would be launched.
MySpace declined to comment. The music companies either declined to
comment or were not immediately available.
Faced with dwindling album sales, music industry executives have been
negotiating hard to avoid 'another MTV,' the music cable TV network
owned by Viacom Inc. Music companies had provided MTV with free music
videos, seeing the initiative as promotional, and failed to profit
directly from the channel.
Music companies "built MTV with free content and then MTV became more
valuable than the music companies," said the music industry executive.
Doug Morris, chief executive of Universal Music, the world's largest
music company, has led the challenge on MySpace. Late in 2006, Universal
sued MySpace for copyright infringement by enabling users to reformat
videos to be played back or sent to others.
That copyright suit has been one of the hold-ups in making an
Morris and other executives also toughened their stance with Apple's
iTunes, with some of the majors refusing to sign long-term deals with
the digital music retailer, now the second-largest retailer of music in
the United States.
MySpace has lacked a revenue stream for the major music companies to
make money before now, though it had started making moves to rectify
Last October, Sony BMG, the second-largest music company, reached a
licensing agreement with MySpace to stream music videos of its artists
including Britney Spears and Beyonce.
As part of the deal, MySpace shares advertising revenue with Sony BMG,
which is jointly owned by Sony Corp. and Bertelsmann.