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MySpace challenges Apple in digital music

News Corp’s MySpace social networking site will attempt to challenge Apple’s hegemony in the burgeoning digital music market after signing a deal with three of the largest record companies to launch its own music service.

MySpace Music is expected to debut later this year, and will enjoy backing from Universal Music, the largest record company, Sony BMG and Warner Music – all of which have received equity stakes in the venture. EMI, the remaining major, is still in discussions and is also expected to join.

The service is an attempt to marry MySpace’s vast online audience and its social networking capabilities to the catalogues of the largest music companies. Fans will be able to listen to free streams of music, which will be supported by advertising, pay for downloads and ring-tones, and buy concert tickets and merchandise.

Chris DeWolfe, MySpace’s co-founder, called the venture “the next generation of music” and noted that its catalogue would be as large as Apple’s iTunes store.

Mr DeWolfe also said the partnership would boost record companies’ efforts to move beyond compact disc sales, which are rapidly collapsing, into other music-related revenue streams.

The urgency to do so has increased as Live Nation, the concert promoter, has begun to encroach on the record companies’ traditional turf by signing artists such as Madonna, U2 and Jay-Z to long-term, all-encompassing deals.

If successful, MySpace Music could also give the music companies a long- desired counterweight to Apple, whose iTunes store controls about three-quarters of the digital music market.

Mr DeWolfe said MySpace Music was aiming to offer the majority of its tracks without digital rights management, which would allow them to play on any device, including the iPod. “We want the downloads to be DRM-free just because the iPod is so ubiquitous,” he said. He also indicated that MySpace Music would offer variable pricing – something that Apple has repeatedly resisted.

MySpace, which boasts more than 110m users, considers music to be one of the pillars of its site. Its previous efforts to sell music from artist home pages, which the record companies set up for promotional purposes, met with little success.

In order to launch the new service, MySpace had to first settle a lawsuit filed by Universal Music, which had accused it of copyright theft. One person familiar with the negotiations claimed that Universal will receive a roughly $100m payment from MySpace in addition to its equity stake. MySpace declined to comment.

The deal is expected to put new pressure on Facebook, one of MySpace’s chief rivals, to close its own deal with the record companies.

Источник: Financial Times

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