MySpace to Launch New Music Joint Venture With Big Labels

We’ve confirmed through sources that MySpace has settled the pending litigation Universal Music, albeit in a very unique way. They’ll create a new MySpace Music joint venture, with equity stakes from all the major labels (except EMI, which is still negotiating).

Expect an announcement next week, and a launch of the new music property in July or August 2008. The news was first reported by Reuters, with additional information from SAI.

The new company will own the MySpace music property, get a cash infusion of $120 million or so from parent company News Corp, and distribute that $120 million to Sony BMG, Universal Music Group and Warner Music Group. In return, the litigation will be dropped and the labels will give streaming and downloading rights to their catalog to the new entity. Approximately $100 million of the News Corp. capital will go to Universal; the rest will go to Sony BMG and Warner.

Users will be able to stream music on demand, create playlists, and add widget music players to their profiles. The streaming will be advertising supported - at first via display ads (like Imeem), and later via in-stream audio ads. DRM-free downloads will also be available, either advertising supported or on a pay basis like Amazon’s Music Store.

Advertising revenue will be split among the joint venture partners according to their equity stakes, not based on play counts.

In case it isn’t abundantly clear - the big labels are all but giving up on charging for recorded music. Instead they’re trying to grab equity stakes in the distribution channels that directly touch consumers.

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Comments

[Linda Nelson:]

This is a giant leap into the future and actually a long time in the coming. When's the last time you bought a "record". As the brick and mortor record stores morph into virtual stores online, we will see the movie business quickly follow suit. It's time for "Music" companies to re-invent themselves and they better move quick.

2008 Apr 03 12:37 PM

[K. Lewis:]

Interesting to note how no independent labels were included despite much of MySpace's rise in popularity being due to independent bands embracing the platform. This deal effectively excludes the entire long tail.

2008 Jun 03 05:15 PM