MySpace Music To Compete with iTunes

4/3/2008 Kasey Bell According to the Los Angeles Times, News Corp.'s MySpace, the largest online social networking site, will unveil as early as today a joint digital outlet venture with the world's top three music labels. The service, to be dubbed MySpace Music, will be integrated into MySpace, which got its start as a launching pad for emerging bands seeking to connect with passionate music fans. MySpace Music would provide the labels with a digital outlet to compete against Apple Inc.'s iTunes, which has emerged as the second-largest music retailer in the U.S. after Wal-Mart Stores Inc. The service will be a one-stop shop offering music downloads, streams, videos and mobile phone ring tones, along with related items, such as merchandise and concert tickets. "It will likely give iTunes a run for its money," said one music industry executive who spoke on condition of anonymity because the deal has not yet been announced. "ITunes is a download store. This venture is not just a store, it is a thriving, growing community of people. So it will have a myriad of products that quite frankly iTunes does not offer." News Corp., Sony BMG Music Entertainment, Universal Music Group and Warner Music Group Corp. will each take an equity stake in the venture, people familiar with the deal said. EMI Group, the fourth-largest music label, is still in discussions with MySpace. MySpace executives approached the music labels about a possible joint venture several months ago, talking about how to capitalize on its already strong music platform, which attracted about 68 million people in February, according to online measurement firm ComScore Media Metrix. The site also hired Fred Davis, founding partner of Beverly Hills law firm Davis, Shapiro, Lewit & Hayes, to represent it in negotiations with the music companies. "In many ways, it is an unprecedented foray into music on the Web," said one person familiar with the deal. "Now, you have music discovery happening in some places, and music consumption happening somewhere else, and the non-recording aspects of music, such as ticket purchases and merchandising, happening even elsewhere. MySpace Music is going to aggregate all those disparate activities." MySpace Music would combine free and paid services. Music streams and music videos would be free to users, but carry advertising. Downloads, ring tones and ring-back tones would be sold. This article includes excerpts from an April 3, 2008 Los Angeles Times article.