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The Fact & Fiction of MySpace Music

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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?

17 Responses to “The Fact & Fiction of MySpace Music”

  1. I think what is going to anger many of the artists is the point at which an artist will get paid. Will it be 10,000 streams a month? A day? Can unsigned artists make money from the streams or must they be part of a label who is approved to make money from the ad support? MySpace is doing a good job of making sure the big 4 and their artists make money, but MySpace music has always been about promoting and benefiting the little guy. Don’t forget your roots man, there must be a way for the small gys to make money besides downloads via amazon. The ticket and merch applications will be nice for them, but not enough if there are guys getting rich offf the streams. What do yoou think Om?

  2. @ranndino

    40% of the company is owned by major record labels. It is a reason to bring up the anti-trust argument. They are giving the new company a special price versus other online services who pay a more premium price for playing back music. Of course, no one is talking specific terms of the deals, so we don’t know.

  3. #1 – Facebook has revenue

    #2 – Anti-trust matters here and not iTunes because only Apple owns iTunes while the only major labels in the space co-own this with MySpace.

    That is called a “cartel” just like OPEC.

    #3 – I am just as skeptical as Om because I work with bands everyday and they are pissed at their labels. Merchandise and ticket sales will generate revenue but bands already depend on that so much for their money that giving MySpace and the labels a cut on top is bad.

    If someone sign a record deal with you and kept poking you in the eye, then when their money started to dry up they tried to take some of your other money – merch. and touring – would you want to play with them?

    The dynamics of the music industry today will make artists avoid 360 deals with labels and do it themselves, find cheaper partners or do what Madonna did with LiveNation – tell the labels to @%&* off.

  4. It’s a solid piece of UI and I’ll be using it over for listening. But unless I’m missing something, there’s no category/tag/genre browsing, and no music discovery beyond playlists. And no social listening, no ratings, no popularity rankings? I’m surprised.

  5. Seems like the guy writing this is quite biased. I don’t understand what anti-trust laws have to do with this. iTunes also has an agreement with a bunch of major music labels.

    I’m not a big fan of News Corp either, but this could work, IMO. It’s a natural extension of what Myspace already is and frankly I’m very surprised it took them this long to get this going (maybe if the music industry honchos moved at a 21st century pace they wouldn’t be in the position they’re in now).

  6. Brian Pennington

    I think this is a good move. You’re correct that they’re overstating it as a competitor, but it has the potential to find a good niche. Bands, DJs, promoters and venues overwhelmingly call Myspace home, and thus many music consumers, at least on a relatively grass-roots level, are using Myspace to find out what’s going on with their favorite bands. To add in streaming with revenue-shared download links is really just an extension of this, and a much more natural one than trying to get consumers to head out to, Hype Machine or Pandora for this. Really this is more aimed at those services than iTunes.