Monday, September 29, 2008

Does MySpace Music Point to the Future of the Music Industry?

If this works, then that is a good statement for the future of the music business. And if it doesn’t, then it tells where the industry is going. In other words, this is a must-win move for the record labels, who are increasingly looks hapless and, well, unable to deal with change.

- Om Malik, media-industry blogger

In Om Malik, "The Fact & Fiction of MySpace Music, Gigaom, September 24, 2008

On September 24, MySpace, the social-networking site owned by News Corp, introduced a service that lets users listen to streaming audio for free. They can also purchase song downloads, and make playlists. Four of the five major music companies (EMY, Warner Music, Universal Music, and Sony BMG) are on board in this joint venture with MySpace (EMI so far is missing), with the streaming part supported through advertising.

For MySpace, the new business is an attempt to derive more revenue from its site. Although it has about 120 million visitors to its site, MySpace has not been getting the amount of advertising this number would suggest. An important reason is that many advertisers don't want to take the chance of putting their messages next to lewd photos or writings put up by MySpace members. This new sub-site will, the firm hopes, provide a safer haven for commercial messages.

For the major music firms, MySpace Music represents yet another hope for finding revenue during a period in which CD sales are declining, piracy is still rampent, and Apple's iTunes, though successful, is not giving them the kinds of profits they want. Although hope runs high for great success among major recording-firm executives, Om Malik notes that his discussion with people in the record business, particularly among independent labels, was more sobering. He quotes MySpace's chief operating officer, Amit Kapur, as having told the Wall Street Journal, "We’re not only going to be [the music firms'] home on the Web…We’re going to be the place they make a living.” Malik comments, "Perhaps Kapur is right, and as one of our readers pointed out, they will be able to generate a lot of revenue through ticket sales and merchandise. But I wonder how many ways that revenue will be sliced and how much will actually end up in an artist’s pocket. What do you guys think?"

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