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April 2, 2008

Confirmed: MySpace To Launch New Music Joint Venture With Big Labels

Michael Arrington

32 comments »

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 the announcement today, 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.

CEO Search

MySpace is currently conducting a CEO search for the new entity, which is being led by MySpace COO Amit Kapur on an interim basis. Sources say that Kapur and MySpace CEO Chris DeWolfe heavily recruited Ian Rogers, who just left Yahoo for stealth startup Topspin Media.

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.

  • Sphere It

This entry was posted on Wednesday, April 2nd, 2008 at 11:59 pm and is filed under Company & Product Profiles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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Comments

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  1. PhilWil

    April 2nd, 2008 at 11:17 pm

    Wow… this is big news. Its great advertising for new music, teen kids can support and promote artists music on their pages, this could also set up future deal with sites like Facebook and Tagged. Even Last.fm can make something from this as people play their songs on their PC and it get shown on their profiles (and other websites as well).

    I do wonder how this will work out. Using widgets, personal pages, music downloads and advertising may not hook into the way they want… but I think it has more chances of working than not working. Let hope they have a great strategy for this and the music industry has an eye for future deals after making this one.

  2. Prashant

    April 2nd, 2008 at 11:20 pm

    isn’t that a strong case for making Pandora available around the world ??

  3. Rajavanya

    April 2nd, 2008 at 11:26 pm

    aha another good tactic learnt from bebo

  4. China Chair

    April 2nd, 2008 at 11:49 pm

    Myspace is good

  5. Marco Hansell

    April 2nd, 2008 at 11:56 pm

    Interesting news. I know my friends at Imeem aren’t the happiest about this. Let’s just hope its not a “myspacey” version of imeem full of rules restrictions and other unecessary bs. So long as they accomplish that it should be a winner.

  6. Ryan Merket

    April 3rd, 2008 at 12:02 am

    WOW - I hope someone finds a way to scrape the music so I don’t have to actually go to Myspace.

  7. Steve Robson

    April 3rd, 2008 at 12:36 am

    I’m not sure if this is good news or not. I don’t think the major labels are going to be giving up selling music as this precedent would be the end of good quality, independent music. The main people to suffer will be the many artists and bands who exist in the long tail. Lets all be honest here, the best music exists in the long tail. If the majors set a precedent for giving away music for free then everyone else will just give up.

    I hope that rather than move to a completely free model they will use this as a promotional tool in the same way that radio used to be. Hopefully they will just allow a sample of tracks to be streamed, encouraging us to buy the high quality version in a reasonably priced, easy to get and DRM free format.

  8. Chair

    April 3rd, 2008 at 1:45 am

    http://www.cnphotoframes.com
    I do wonder how this will work out. Using widgets, personal pages, music downloads and advertising may not hook into the way they want… but I think it has more chances of working than not working. Let hope they have a great strategy for this and the music industry has an eye for future deals after making this one.

  9. Sunil

    April 3rd, 2008 at 1:52 am

    It’s good to hear

  10. YouYap.com

    April 3rd, 2008 at 1:55 am

    How much does myspace worth?
    How much does youtube worth?

  11. willphipps

    April 3rd, 2008 at 2:52 am

    That’s nice for the majors, but no mention of the countless independent labels or artists that continually give their music away on myspace getting any money. Given they make up over a quarter of the industry, this strikes me as unfair.

  12. Caramelhoneys

    April 3rd, 2008 at 4:50 am

    This sounds like a cash settlement to me…It’s the old switcharoo…I dont personally dislike Myspace, but lets face it..out of millions of music profiles there is very little marketable talent…this whole Myspace path to stardom ( while there have been success stories) is still in its infancy stages and will take several years before a viable format is established……dre

  13. Ryan

    April 3rd, 2008 at 7:04 am

    Hopefully it will be iPhone compatible and you can cache the music to play later! With ad supported streaming and iPhone devices compatibility that cache your tunes there will even less of a reason to purchase music!

  14. Passing By

    April 3rd, 2008 at 8:58 am

    What’s amazing me about these comments is that half of them don’t appear to realise that this is an exact copy of imeem.com - even down to escaping litigation by partnering with the organisations suing you.

    Sucks to be imeem, they are far bigger than last.fm, seeqpod, or pandora and bloggers commit volumes to masturbating over those sites while imeem established itself as youtube for music. You only have to look at the bizarre outpourings of love for muxtape to realise that a site can be hugely popular and still ignored by the blogging cognoscenti.

  15. not a fan boy

    April 3rd, 2008 at 9:40 am

    hey Passing By, this little piece of third party data seems to disagree with your view on imeem vs. the rest

    http://mashable.com/2008/03/13.....tistics-2/

    youtube for music this ain’t just yet, good tagline though ;-)

  16. Passing By

    April 3rd, 2008 at 10:03 am

    That’s the great thing about statistics, you can pick the one you want
    so what posessed you pick the one that supported my statement, the only sites I mentioned which are on that nielsen list are imeem and last.fm and imeem has a significant lead over last.fm.

    but let me retort nevertheless with a statistic which justify’s my fanboyism

    http://www.quantcast.com/p-03Kgz0RV6Ztmc

    imeem network - almost 100million uniques per month, 1.8billion hits per month: rank #14 in the world.

    Of course that’s 100million users who write blogs about muxtape and pass their commentary of as ‘techcrunch for music’

  17. not a fan boy

    April 3rd, 2008 at 11:20 am

    hmm, imeem says themselves in the press they have 19mm UUs a month. do you think they would hide the fact that they had 100mm instead? I’d put that in a press release … sorry all don’t want a stats contest on here.

  18. Robert Gordon

    April 3rd, 2008 at 7:49 pm

    I think the 100million/month is the number of users who browse to pages at imeem or pages around the web that have the imeem player on them. The number of users coming to their site is the 20million/month.

    Still until myspace music actually launches they’re the biggest game in town by a loooooonng way.

  19. Jonathan Field

    April 4th, 2008 at 2:20 pm

    Read they may do ticketing too. Any thoughts on what it may do to ticketing industry, given Live Nation getting into the ticketing act?

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