Forbes.com on MySpace

This article from Forbes.com is just one of the sources I am using for my research on MySpace and Advertising but I think it is an interesting one to read because it looks at whether or not MySpace is going to become a major player in the music industry. If this is so I think MySpace could become another one of the gatekeepers of the music industry, further stifling the creative diversity of music.

Ashley

The Recording Industry
Does MySpace Music Deal Matter?
Louis Hau, 04.03.08, 2:40 PM ET

News Corp.'s MySpace finally unveiled on Thursday a long-rumored new digital music initiative under which the online social-networking giant's music community will be spun off into a separate joint-venture company co-owned with Vivendi's Universal Music Group, Sony-BMG Music Entertainment and Warner Music Group.

Under the joint venture, the expanded music service will feature free advertising-supported streams of songs and videos from Universal, Sony-BMG and Warner recording artists, as well as an online store where visitors will be able to purchase restriction-free song downloads, ringtones and other merchandise.

Conspicuously absent from Thursday's announcement was EMI Group. During a conference call to discuss the joint venture, MySpace co-founder and Chief Executive Chris DeWolfe said that "we'd like to do business with everyone. ... We're certainly talking to everyone out there."

In an evident sign that Universal has reached a settlement with MySpace over the label's previous claims of copyright infringement, Universal Chairman and Chief Executive Doug Morris said in a statement Thursday that "our partnership with MySpace fits perfectly within our overall digital strategy of driving innovation." 

DeWolfe declined to discuss the deal's financial terms. "This was a collaborative effort to build on a model that was extremely user-friendly and was based on what our users had asked us to build," he said.

With the deal, MySpace Music will evolve from what had been primarily a promotional vehicle for artists and labels to a commercial vehicle as well, he said.

Will they be able to pull it off? Since its music community was launched four years ago, MySpace has grown into a popular, even vital, means for newly emerging artists to expose their music to new fans. And for MySpace users, the site has become a key means of discovering new music and staying in touch with what their favorite artists are up to.

But converting the public's appetite for new music discovery into lots of cold hard cash has proved to be a challenge for the industry. New ad-supported businesses are sprouting up, such as imeem.com and CBS's Last.fm, but the jury is still out as to whether those are sustainable businesses.

Meanwhile, Apple's iTunes Store has been successful in selling song downloads, but its dominance of the paid download market has given the company uncomfortably heavy leverage over the recording industry in terms of pricing and promotions. Moreover, Apple's motivations are colored by the fact that its ultimate goal is to maximize sales of iPods, not iTunes merchandise.

Indeed, the MySpace joint venture is the most explicit move so far by the recording industry to counter iTunes. The first such effort was the agreement by all four major labels to make restriction-free music downloads available at Internet retail giant Amazon.com, which launched a music download service earlier this year. 

According to an Apple memo leaked Thursday to tech blog Ars Technica, Amazon tied in January with Target as the fourth-largest retailer of music in the U.S., online or off. It was an impressive finish. But who was at the top of the list, with a 19% market share? Apple.