Published:
08-Apr-08
News Corp-owned social networking site MySpace will launch an updated MySpace Music service. The service, which will be overseen by a new company based in Los Angeles, is a joint venture with three of the four major music labels – Sony BMG, Warner Music Group (WMG) and Universal Music Group (UMG). Financial terms of the partnership have not been disclosed.
The updated service will integrate new features into MySpace Music:
a) DRM-free digital content downloads
b) Ad-supported audio tracks and music videos
c) A "mobile storefront", powered by Jamba, a unit of News Corp.
d) Advertising solutions
No pricing, format or other specific details on downloadable content have been released.
Integration of the features will be rolled out incrementally across three areas of MySpace: the MySpace Music homepage; artist profiles and conventional users' personal pages.
Currently artist pages can contain streamed music and video of the band or artist, live music event dates, member feedback and artist blogs and photos. Artists represented by partner labels will additionally be able to host digital content downloads, mobile ringtones, SMS services and wallpapers on their profiles; they will also be able to sell merchandise and tickets to live events. Normal members will be able to search and access music directly from their own personal pages while hosting playlists that other members can stream for free.
MySpace Music currently claims around 30m unique visitors, while there are reportedly 5m artist music profiles.
Our take...
The re-launch of MySpace Music broadens the service's focus from enabling artists to promote music and live events, towards becoming a fully developed music platform giving MySpace, labels and artists a way of directly generating revenues from the social network. The move also gives MySpace a direction that differentiates it from rival social networks - such as Facebook. Indeed, the update to MySpace Music was required in order to compete with an emerging breed of social networks focused on music, such as Imeem and iLike, which allow users to share digital content free of charge and receive content recommendations.
The announcement should be seen against the background of challenging business conditions for both MySpace and its Major partners. The social network's parent Fox Interactive Media recently announced that it expects to miss its earnings target for this financial year (ending June 30, 2008) by almost $100m. While MySpace is expected to account for the lion's share of revenues (circa $800m) it is indicative of the trouble associated with monetizing social networks which are afflicted with high usage but low ad-rates. For MySpace to grow its revenues it needs to improve how efficiently it monetizes its page views, and the MySpace music announcement is intended to help with that.
Similarly the major labels, faced with dwindling record sales, have begun to look at ad-funded models and so-called '360' strategies which seek to make money from sources not directly connected to selling recorded music (e.g. ticketing for live events). The joint venture from UMG, Sony BMG, WMG and MySpace is indicative of the labels' growing taste for equity in the emerging class of free music services – stakes in both YouTube (at point of Google acquisition) and Imeem are well documented.
While the ability to sell Major content, tickets and merchandise could open up a source of revenue for MySpace and its label partners it remains unclear as to how much of the MySpace audience, used to a free service, will evolve into a paying user base. Screen Digest believes that, at least in the short to medium term, the availability of full-length, free access, content supported by advertising is likely to see larger take-up, particularly if advertising remains unobtrusive.
