Speculation arose this past week that News Corp.-owned MySpace Music is considering moving to a paid model, as the cost of free streaming is making its current model unsustainable. News Corp. digital chief Jon Miller expressed some interest in such a move in an onstage interview conducted by paidContent’s Rafat Ali in Monaco on Thursday, noting that he believes in the “freemium” music model conceptually, even if a practical and sustainable version hasn’t appeared yet. (The audio and video are out of sync, but the segment concerning MySpace begins around the 7:15-minute mark, with deeper discussion of MySpace Music after 12 minutes.)
What could MySpace deliver that people would pay for? Neither charging to hear music that used to be free nor crippling the free service by taking away music from people’s playlists are very good options, and violate the 10 commandments of freemium. Building a premium ad-free desktop, browser-based or mobile service would merely put MySpace in more direct competition with Spotify — which is having its own troubles satisfying content owners — and other music subscription services that are still seeing more experimentation than customer traction. And for a company that’s already admitted it’s long stopped innovating, MySpace would have to overtake more nimble competitors to draw users to a paid music service while overcoming the perception that it’s a messy-but-free one.
Asked if MySpace Music is nearing profitability, Miller told Ali, “On an operating basis, it’s getting there, but no, because of the payments to the music companies,” adding that he considers a paid model “something to look at.” Fourteen months after MySpace Music’s launch, with the four major labels on board as equity partners, time appears to be running out for its free ad-supported model. It’s worth revisiting Om’s remarks from back then:
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 looking hapless and, well, unable to deal with change.
This article also appeared on BusinessWeek.com.