MySpace Music is launching today and will be accessible only to U.S.-based music fans. Some may call it a competitor to Apple’s music store, but that wouldn’t be entirely true, for Apple’s strength is downloads, while MySpace has made a name by allowing streaming of tunes in the past. There are other differences and even more challenges for this new audacious venture. Just to jog your memory, MySpace Music is a joint venture between MySpace, four major record labels (anti-trust inquiry anyone?) and others.
The music labels own 40 percent of the new venture and are discounting the licensing fees that News Corp., the owner of MySpace and majority owner of MySpace Music, must pay for each song that is streamed. (The New York Times)
It wants to stream music (ad-supported), sell downloads and merchandise. It views itself as worth a couple of billion dollars and still doesn’t have a CEO. Positioning it as an iTunes competitor helps with inflating the mystical valuation. Worried that my own initial skepticism might blind me from getting the facts, I decided to look elsewhere to get a clearer point of view on this experiment.
And knowing that some of our friends in the blog world are going to do a better job of reviewing the actual service than me, I decided to spend some time talking to guys in the music business, especially the small independent labels, to get a sense of what they thought about this new venture. For some odd reason, not many wanted to talk on the record, but still shared some nuggets that lead to the fact and and fiction of MySpace Music.
- MySpace is like an encyclopedia of music, good for discovering and streaming music, and this new venture plays to those strengths. MySpace in the past hasn’t done anything meaningful for digital downloads, and don’t expect that to change. In fact, none of the social networks did anything in terms of sales vs., say, an Apple iTunes store, which does result in actual digital download sales — though not gigantic by any means. Amazon shouldn’t be counting its millions just yet.
- If this works, then that is a good statement for the future of the music business. And if it doesn’t, then it tells where the industry is going. In other words, this is a must-win move for the record labels, who are increasingly looks hapless and, well, unable to deal with change.
- MySpace Music doesn’t fix the problems that plague the industry since the CD died. This is a band-aid to the problem for now. No one has a solution just yet for industry’s problems.
- The advertising revenues from MySpace Music are going to be spread amongst a lot of people, and nobody should count on becoming rich. All that streaming revenues are going to do is pay for recruiting more artists. The sad part is that artists are going to be the last guys to see the money — if any.
This assessment from music industry insiders is in sharp contrast to what Amit Kapur, MySpace’s COO, tells The Wall Street Journal. “”We’re not only going to be their home on the Web…We’re going to be the place they make a living.”
Perhaps Kapur is right, and as one of our readers pointed out, they will be able to generate a lot of revenue through ticket sales and merchandise. But I wonder how many ways that revenue will be sliced and how much will actually end up in an artist’s pocket. What do you guys think?