LOS ANGELES (AP) - MySpace, which has lured millions of big acts and garage
bands alike to build profiles on the popular social networking hub to attract
fans, said Thursday it will turn those pages into portals for selling music,
merchandise and more.
Helping back the new MySpace Music are three of the biggest recording
companies -- Vivendi SA's Universal Music Group, Sony BMG Music Entertainment
and Warner Music Group Corp.
Financial terms of the partnership were not disclosed, but each of the music
companies will receive an unspecified equity stake in the new company, said
Chris DeWolfe, MySpace co-founder and chief executive.
The fourth-largest music company, EMI Group PLC, is not part of the deal.
DeWolfe said MySpace is in licensing talks with "everyone" but declined to
say where discussions stand with EMI, home to artists such as Coldplay and Norah
Jones.
MySpace Music, which will roll out gradually in coming months, will enable
artists to sell music downloads, concert tickets and merchandise such as
T-shirts through their profile pages and to offer ringtones through a unit of
MySpace parent News Corp.
"We believe that the Web is becoming increasingly more social," DeWolfe said
during a conference call. "MySpace Music is a new way of experiencing music
online that everyone can participate in."
Fans also will be able stream audio and video for free through musical
artists' profile pages.
DeWolfe said some tracks will be sold without copy-protection safeguards but
noted that the major labels had committed only to experimenting with offering
content in an unrestricted format.
Selling music without the copy protections that make such tracks
incompatible with Apple Inc.'s iPod music players could place MySpace Music in
direct competition with existing digital music stores such as Apple's iTunes,
Amazon.com, Napster Inc. and others, analysts said.
"It's definitely got a lot of potential to it, but how much it really
changes the game is yet to be determined," said Michael Gartenberg, vice
president and research director for JupiterResearch. "This is one of those
important events in the history of digital music and it has a lot of potential
going forward."
MySpace may also be looking for ways to maintain its lead on rival social
network Facebook, which has been gaining in popularity.
James McQuivey, digital music analyst for Forrester Research, noted that the
venture is wisely aiming to serve as a one-stop portal for music fans.
"A MySpace music store is exactly the right step to get the music industry
to the next level because it recognizes that consumers don't just buy music,
they experience it ... That's what people do with music already on MySpace, it's
what has made Last.FM and iMeem.com so popular so quickly," he said.
The company declined to discuss pricing or other revenue details.
In 2006, MySpace began letting artists sell music from their profile pages
using a third-party technology, but that capability never was integrated into
the site the way MySpace Music's storefront will be, DeWolfe said.
MySpace has more than 5 million profile pages showcasing major label
artists, independents and unsigned acts. All those artists would eventually be
able to take advantage of MySpace Music's offerings, the company said.
MySpace Music will operate as a separate company, with a president who
reports to DeWolfe and to a board of directors that will include representatives
from the recording companies.
MySpace had been discussing the venture with music companies for several
months, during which MySpace and Universal Music apparently overcame a major
hurdle -- a copyright infringement lawsuit Universal brought against MySpace in
2006 over alleged illegal music sharing.
Sony BMG is a joint venture of Sony Corp. and Bertelsmann AG.
Shares of Warner Music rose 2 cents to close at $5.81. News Corp. shares
rose 17 cents to $20.17.
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