- Brian Morrissey

NEW YORK MySpace has struck deals with three major labels to launch a platform that will help them sell and stream ad-supported music.

Called MySpace Music, the service launches with Sony BMG Music Entertainment, Universal Music Group and Warner Music Group on board, selling songs without digital rights management restrictions for use on all MP3 players. The service will also provide artists with a new revenue source by giving them a cut of ad-supported video and music streams.

MySpace CEO Chris DeWolfe said the service points to the future of the music industry, which has been beset by declining CD sales and high rates of file-sharing piracy. ( Click here for an interview with DeWolfe.)

A key aspect of artists and labels finding new ways to make money, he said, is advertising.

"Our goal is to empower the artists ... to further diversify their models through MySpace music," he said on a conference call. With the ability to buy music, ringtones, merchandise and concert tickets, MySpace will evolve from "a promotional vehicle to a commercial vehicle," he said.
 
MySpace had long expressed interest in entering the music business, particularly since it has 5 million artists that already use its services to promote themselves and draws an estimated 30 million visitors to its music section. It even launched its own record label, MySpace Records. Last November, the company said it would run a test with independent band Pennywise to release its new album as an ad-supported download.

In addition to competing with Apple's iTunes in the music arena, MySpace hopes to fend off several other companies looking to establish new revenue streams for the music industry through advertising. SpiralFrog, iMeem and Rcrd Lbl all enable access to music with models that are supported by ads. And MySpace rival Facebook is also reportedly in discussions with labels to launch a music service.

Unlike those services, MySpace has a long history in advertising, DeWolfe noted, bringing relationships with advertisers and agencies as well as technology for serving, trafficking and targeting ads.

"One of the real keys is we have hundreds of people dedicated not only to our sales force but sales technology," he said.

MySpace executives said MySpace Music would become a separate company.

"We believe we have a huge head start over anyone who wants to compete with us," DeWolfe said.