The story broken last week about News Corp. (NYSE:NWS-A) putting its feelers out to the major music companies about creating a new online music venture with them via MySpace has garnered a lot of press and interest.
It's part of the ongoing strategy by News Corp. to differentiate from Facebook, and develop it into a media site, more than simply a social-networking community.
This of course fits in with their existing music focus with bands which are said to number over 7 million by the company.
News Corp. Working On Music ‘Hulu’ For MySpace
When Paidcontent first broke the story they said they learned that "News Corp. is pursuing a music joint venture for MySpace—similar to Hulu, its video joint venture with NBC Universal (NYSE: GE), but with variations on the theme. The constant in both instances is content for equity. Under this scheme, MySpace would be the operator with the major music labels—Universal Music Group, Sony BMG, Warner Music Group (NYSE: WMG), EMI—as content providers and equity partners. MySpace would be a distributer but, like Hulu, the idea would be a mixed portal-distribution experience. Music would be DRM-free and ad supported. No label has signed yet but a source familiar with the situation said that could change in a matter of weeks. The theory is that once one signs on, the rest will follow. (EMI would seem a likely candidate but Sony (NYSE: SNE) BMG already has an interesting deal with MySpace.) That doesn’t always work but, as Amazon (NSDQ: AMZN) has shown, it can."
Related Stories around the Web:
MySpace's Nutty "Hulu For Music" Plan
Silicon Alley Insider followed up on the same day, saying they were perplexed as to what value there would be in it and how it would work.
"OK, so what would what look like? Here's where it gets fuzzy. News Corp.'s social network, which has been talking about the idea for months, apparently wants to launch some sort of ad-supported music portal, and is proposing to give the four big labels equity in exchange for content.
"We believe MySpace is proposing a site that would offer free, on-demand streaming music, which is a model the labels are increasingly comfortable with. We don't believe they would offer free downloads, which is much more difficult to pull off. Just ask QTrax.
"OK, so who would join in? Fuzzier. In order for the service to work, MySpace would eventually need all four major labels, and so far we don't know of any who are close to signing on."
New details on MySpace's music play
"News Corp. has tested the record industry's interest in a site that would offer music in several different ways, including ad-supported downloads and streaming to PCs, according to a source with knowledge of the talks. This may be why PaidContent reported that News Corp. was proposing an ad-supported download service while the blog Silicon Alley Insider said the company was backing a streaming service.
"News Corp. has also broached the idea of a streaming service that featured a prominent "Buy Now" button that allowed users to purchase songs off the site, another source said."
Sources confirmed PaidContent's report that News Corp. has offered an equity stake in the new company to all the labels. But what's unclear at this point, according to the sources, is whether News Corp. is going to fully fund the new venture itself.
MySpace Seeks Venture For Online Music Service
The new proposal isn't fully fleshed out, but people familiar with the plan said it is likely to include both free, streaming music and paid MP3 downloads, which can be played on virtually any portable device, including Apple Inc.'s popular iPod.
The streaming service would be supported by revenue from advertising sales, which would be split with the labels, these people said. MySpace executives have also discussed the possibility of selling merchandise like T-shirts through the service, and of running a paid subscription service that would let users play rented music on some specially configured portable devices, though probably not on iPods, these people said.
MySpace mulls music joint venture: sources
Plans for the service, tentatively named MySpace Music, are still in the discussion phase. One source familiar with the matter said MySpace has held talks with companies over the past few weeks to gauge interest in such a service, which would compete with Apple Inc's popular iTunes.
It was not immediately clear if MySpace would build the store itself or strike a partnership with Amazon.com Inc for a so-called white label version for the service. The store may also sell merchandise from the companies.
A partnership could polarize the digital music retail world between News Corp and Amazon against Apple, whose iTunes online store dominates the music market.
MySpace In Talks To Launch Free Music Service
MySpace has already played a role in helping to popularize artists such as Lily Allen and Colbie Collet so this venture holds promise for the social networking site if the details can be worked out.
If the venture were to go forward MySpace would have to settle a lawsuit filed by Universal Music in November 2006. The record label sued MySpace over copyright infringement for allowing users to post its artists songs and videos on their profiles without permission.
Comment Preview