MySpace is launching an ambitious music initiative, betting its broad reach, social tools and brand advertiser relationships can craft nothing less than a new business model for the ailing industry.
MySpace Music offers its 120 million users the opportunity to stream full songs for free, build playlists and buy tracks from Amazon or as ringtones from Jamster. MySpace also will offer concert ticket purchases and merchandise. The music will come free of digital rights management protection.
The initiative is part of a far-reaching effort by the News Corp.-owned company to play a pivotal role in the evolution of the music industry, which has suffered from declining CD sales and continued piracy.
"There's no question" advertising will play a major part of that model, said MySpace COO Amit Kapur, since consumers have clearly favored ad-supported models over paid content.
"In order to really meet the needs of users, you need to unlock the content," he said. "The only way you'll solve that is having a free, ad-supported environment."
MySpace chose to partner with Amazon over Apple because Amazon offers music free of rights management restrictions and variable pricing, Kapur said.
MySpace Music is running campaigns from McDonald's, Sony Pictures, State Farm and Toyota. The music player includes a persistent 300 x 250 pixels banner ad. MySpace also is adding custom integration. Toyota, for instance, signed to hold "Toyota Tuesdays" with an offer of free downloads. McDonald's is skinning the MySpace Music Player.
MySpace's unique position as a social hub will give it a leg up on other companies like iMeem, Spiralfrog and Last.fm that are building ad-supported online music services, according to Kapur.
"None of those have taken off at Web scale," he said.
As a sign of how seriously the music industry takes the initiative, MySpace has inked deals with major labels Sony BMG Music Entertainment, Universal Music Group, Warner Music Group and EMI. It also has an agreement with the Orchard, a distributor of independent artists.
Kapur declined to say if the labels have an ownership stake in MySpace Music, which is set up as a separate company, but he acknowledged, "They have incentives for this to succeed."
The music push is part of MySpace's quiet effort over the past two years to recast itself from a social network to a new type of portal. While attention has focused on Facebook, MySpace has built out its portal-like offerings, where it can sell broad reach to brand advertisers at a much higher premium than user-created profile pages.
Music is at the heart of MySpace, which built its huge audience in part on its popularity with bands. The site has over 5 million artists with profiles and 65% of users have players on their profiles.
Thanks to its social networking roots, MySpace can tackle what its execs deemed "the bookstore problem" of discovery, Kapur said. Music was an obvious first step for MySpace to explore social distribution, he said. With MySpace Music, friends can discover artists through their playlists and friend updates. The same model could easily apply to other content, including video, Kapur said.
"You see them being curators of what's cool," he said of users. "You can envision that taking place with other content."